Leases in Saudi Arabia: The Parties' Duties, Ending and Terminating a Lease

Under the Civil Transactions Law, a lease is a contract under which the lessor enables the lessee to use a non-consumable thing for a specified period in return for rent (Article 407). The 1447H regulatory provisions on the landlord and tenant relationship add rules for residential and commercial property within the urban boundary. This guide covers the duties of each party, when a lease ends or may be terminated, the unified lease contract and the Ejar platform, and where disputes are heard.

The Landlord's Duties Under a Lease

• Handing over the property and its appurtenances in a condition that allows the intended use in full, by enabling the tenant to use it without hindrance, and keeping that up until the lease term ends (Article 416).
• Carrying out the necessary repairs to keep the property fit for use. If the landlord delays after being given notice, the tenant may obtain the court's permission to carry them out and recover the cost from the landlord to the customary extent, and may carry out urgent or customarily minor repairs without the court's permission and deduct their cost from the rent to the customary extent, giving the landlord an account of the repairs. The parties may agree otherwise (Article 419).
• Not interfering with the tenant's use of the property throughout the lease, including by making a change that prevents or impairs the intended use, and answering for interference by a third party that rests on a legal ground (Article 423).
• Answering for defects that prevent or reduce the use of the property, except defects that custom tolerates or that the tenant knew of when contracting (Article 425).
• If the landlord sells the property, the sale is valid and does not affect the tenant's rights (Article 428).

The Tenant's Duties Under a Lease

• Paying the rent on the agreed dates; if no dates are agreed, on delivery of the property, and where the term is divided into periods, at the start of each period. No rent is due for a period that passed before delivery, unless the tenant caused the delay in delivery (Article 429).
• Taking care of the property as an ordinary person would, compensating the landlord for harm caused by the tenant's wrongful act or negligence (Article 430), and maintaining it during the lease as custom requires, unless agreed otherwise (Article 433).
• Using the property within the agreed use or, without an agreement, for the purpose it was prepared for (Article 431), and making no change to it without the landlord's permission, unless a repair of the property requires the change and it causes no harm (Article 432).
• Not subletting all or part of the property, or assigning the lease, without the landlord's permission or ratification (Article 437).
• Returning the property at the end of the lease in the condition in which it was received, apart from what ordinary use entails. If the tenant keeps it without right, the landlord is entitled to the market rent, without prejudice to compensation (Article 435).

Ending and Terminating a Lease

A lease ends when its specified term expires, unless automatic renewal has been agreed. If the lease ends and the tenant continues to use the property with the landlord's express or implied consent, the lease is treated as renewed on its terms and warranties, except warranties given by third parties, and the new term is set under Article 413: where the rent is for a set unit of time, the lease runs to the end of that unit; otherwise the court sets the term according to custom and the circumstances of the contract (Articles 440 and 413). A lease of residential or commercial property within the urban boundary renews automatically under the 1447H provisions unless one party notifies the other that it does not wish to renew, as the next section explains. Before its term expires, a lease may be terminated or ended in ways the law provides, including:

• Mutual consent: the parties may agree to rescind the contract, in whole or in part (Article 105).
• Breach by one party: after giving notice to the party in breach, the other party may ask for performance or termination, with compensation where warranted, and the court may refuse termination if the unperformed part is of little importance. The parties may agree that the creditor can terminate without a court judgment, but that agreement does not remove the need for notice unless the parties expressly agreed to waive it (Articles 107 and 108).
• Destruction of the property or loss of use: if the property is wholly destroyed during the lease term, the lease ends by operation of law; if it is partly destroyed, or its use is reduced, for a reason not attributable to the tenant, the tenant may ask for termination or a rent reduction (Articles 420 and 421).
• Interference or defects: if interference or a defect the landlord answers for deprives the tenant wholly or partly of the use of the property, the tenant may ask for termination or a rent reduction, without prejudice to compensation (Articles 423 and 426).
• An unforeseen excuse: either party may ask for termination if an unforeseen excuse arises on their side, and must compensate the other party for the harm the termination causes. If the landlord is the one asking, the tenant need not return the property until compensated or given adequate security (Article 442).
• Death of a party: a lease does not end on death, but the tenant's heirs may ask for termination within a reasonable time if they prove that, because of the death, its burdens have become too heavy for their resources from the estate, that it exceeds their needs, or that it was made on considerations personal to the deceased. The landlord may ask for termination if the tenant dies and the lease was made on considerations personal to the tenant (Article 441).

What the 1447H Provisions Add

The regulatory provisions on the landlord and tenant relationship were issued by Royal Decree M/73 dated 2/4/1447H, and apply to buildings and land within the urban boundary used for residential or commercial purposes, or both (Item 1). Where they contain no specific provision, the Civil Transactions Law applies (Item 12). Their additions include:

• Automatic renewal: a lease renews automatically unless one party notifies the other, at least the notice period set in Item 8 before the lease term ends, that it does not wish to renew, and REGA may lengthen that period in model contracts to suit the lease's length and type. The exceptions the provisions set include leases the parties agree to end by consent after the deadline for notice of non-renewal has passed (Item 8).
• Registration on Ejar: a landlord with a lease not registered on the Ejar electronic network for rental services must apply to register it, and the tenant also has the right to request registration. The other party may object to the lease data before REGA within the period set in Item 7 from notice of the registration; if that period passes without objection, the lease data is treated as correct (Item 7).
• Items with a set scope: the provisions include items that bar increases in the total rent and limit the cases in which a landlord may refuse to renew when the tenant wishes to renew. These items apply only within the geographic scope the provisions set and for a set period, and a decision of REGA's Board of Directors, after approval by the Council of Economic and Development Affairs, may apply them to other cities, governorates and centers (Items 2 to 6).

The Unified Lease Contract and Ejar

The Real Estate General Authority (REGA) describes Ejar as an integrated electronic network that aims to regulate the real estate rental sector and protect the rights of the parties to a lease, namely the tenant, the landlord and the real estate broker. REGA states that the unified lease contract contains mandatory clauses that must be followed, and that brokers must use the unified contract under Council of Ministers Resolution 405 dated 22/9/1437H. A residential lease is prepared on the network in five sections (contract details, the parties' details, financial details, terms and conditions, and properties and units) and then sent to all parties for electronic documentation. The network's published services include renewing an expired or expiring lease at one party's request with the other's acceptance, ending a documented lease by mutual consent, and canceling it unilaterally where there is a judicial order from the Enforcement Court to evict the tenant, except leases linked to sublease contracts.

Where Lease Disputes Are Heard

General courts hear claims relating to real estate, including claims for eviction, payment of rent and preventing interference with possession, unless the law provides otherwise (Article 31 of the Law of Civil Procedure). Committees formed under the Real Estate Brokerage Law hear violations of the items on rent increases, refusal to renew and registration on Ejar, without prejudice to an injured party's right to claim compensation (Items 9 and 10 of the 1447H provisions). REGA lists on its website conciliation and arbitration services for Ejar users, provided by the Saudi Center for Real Estate Arbitration; both require a documented lease, and arbitration rests on the parties agreeing on arbitrators to decide the dispute instead of going to the competent court. As the two service pages state, the Center's remit excludes criminal disputes, and claims for payment of rent and eviction brought under the lease if the lease is an enforceable instrument.

This is general information based on the cited laws when this page was prepared. It may change, and it is not legal advice on a specific case.