The Saudi Shoura Council has finished drafting the real estate agencies practice law that is expected to regulate the work of real estate offices.
The regulation had been studied for six months after a council's special 10-member committee was formed following long discussions on the first draft proposed by a Ministry of Commerce and Industry committee.
The draft regulation deals with the conditions have to be met by real estate agencies as well as their rights and duties and classification. The first draft was studied by the council's Economy Committee before a special committee was formed to study it six months ago. The special committee used a number of specialists and the study carried out by the Saudi Association of Real Estate Sciences.
Real estate agencies offer the real estate services of marketing, property management and appraisal
The law defines the real estate agencies as the ones that offer the real estate services of marketing, property management and appraisal. An agency has to acquire a separate license for offering property appraisal according to the regulation.
The regulation prevents agencies from practicing any other activity. It bans them from carrying out marketing or the procedures to manage, sell or buy a property without having checked the original title deed and obtained a copy of it. All contracts that must be printed on the agency's official letterheads should include all parties' rights and obligations in accordance with regulations and directives. The agencies are obliged to the Ministry of Commerce and Industry 's unified rent contract form.
All real estate agencies have to be electronically linked to the security authority
According to the new regulation, all agencies have to be electronically linked to the security authority if possible. If not, then the agency must provide the authority with a copy of each contract managed by it as per a mechanism approved by the Ministry of Commerce and Industry in coordination with the Ministry of Interior.
The regulation defined agencies' commission as no more than 2.5 percent of sale contracts and of one year rent of rent contracts
The sanctions in the new regulation included a fine of no more than SR 100,000, one-year agency closure and license revocation, with the penalty decision published in at least one newspaper on the expense of the violator.
The sanctions are to be issued by the Ministry of Commerce and Industry . The license revocation penalty can be issued by an official authorized by the minister. Those who inspect and detect violations are judicial officers appointed by the minster.