A guide to real estate legal culture: How to protect your investments and guarantee your rights?

Real estate investment is often considered a "good son," but this "son" can become a heavy legal burden if not handled within a precise legal framework. With the development of modern real estate regulations, familiarity with the laws has become essential to avoid disputes that could drag on for years in the courts.

In this article, we highlight the most important legal pillars governing the real estate sector.

1. Due Diligence

Before paying any amount of money, a thorough legal due diligence must be conducted on the property. This includes:

Validity of the Title Deed: Ensuring that the title deed is electronic, up-to-date, and free of any mortgages or restrictions preventing its transfer.

Verification of the Owner's Record: Confirming the seller's status (original owner, agent, or heirs) and the validity of any legal powers of attorney.

Compliance with Plans: Ensuring that the property's boundaries and area on the ground match what is recorded in the title deed and official permits.

2. Standardized Lease Agreements and Their Enforceability

The era of haphazard paper contracts is over. In modern systems, the "unified electronic lease agreement" has become the standard.

Enforceability: The biggest advantage of contracts documented through official platforms (such as the "Ejar" platform) is that they are considered "enforceable documents." This means that if the tenant defaults on payments, the landlord can go directly to the enforcement court without having to file a lawsuit that takes months.

Obligations of Both Parties: The law clearly defines who is responsible for routine maintenance (the tenant) and who is responsible for essential and structural maintenance (the landlord).

3. Off-Plan Sales

Buying off-plan is an excellent investment option, but it carries high risks. Therefore, laws have established strict controls to protect the buyer, including:

Escrow Account: The real estate developer is not entitled to receive funds directly; instead, they are deposited into an escrow account to ensure they are spent solely on the project.

Sale License: Always ensure that you have an official license to sell off-plan units issued by the relevant authorities (such as Wafi in Saudi Arabia).

Right of Termination and Compensation: The law protects the buyer in case the developer delays delivery on the agreed date or the execution differs from the agreed-upon specifications.

4. Real Estate Unit Ownership and Subdivision System

When you purchase an apartment in a residential tower or a villa in a complex, you enter into the "owners' association" system.

Common Areas: The law defines your responsibility for maintenance in common areas (elevators, corridors, gardens).

Owners' Association: Paying service fees is a legal obligation, and failure to do so may subject you to legal action, including forced eviction.

5. Expropriation for Public Interest

Real estate laws include provisions regulating expropriation for vital projects.

Fair Compensation: The law guarantees the owner compensation equivalent to the property's market value at the time of expropriation.

Right of Appeal: The owner has the right to appeal the compensation assessment before administrative courts if they believe the assessment is unfair.

6. Real Estate Brokerage and Commissions

The law regulates the real estate brokerage profession to limit manipulation.

Licensing: Brokerage is only permitted for those holding an official license.

Legal Commissions: The law sets a ceiling on commissions and specifies the party responsible for paying them, thus preventing disputes between the seller, buyer, and broker.

Real estate is a fixed asset, but its laws are subject to change and are linked to updates in economic systems. Consulting a specialized lawyer before signing any sale or real estate investment contract is not an additional cost, but rather an "insurance policy" that protects your wealth from loss.

Do you have a real estate case or wish to notarize a sale contract? Our office includes a select group of real estate law experts to assist you. Contact us now.