How does the off-plan sales system protect the buyer's rights?

Many investors and buyers, especially non-Saudis, often hesitate before contracting for a real estate unit that has not yet been completed, fearing the project might halt or financial payments might be lost. This concern was entirely justified before the sector was regulated, but today it has become much less severe thanks to the Off-Plan Sale and Lease of Real Estate Projects System, in effect in Saudi Arabia since 2024 under the supervision of the General Real Estate Authority (REGA). In this guide, we explain in detail how this system works, how it protects the buyer’s money and rights, and what should be verified before signing any contract for an under-construction project.

What is the off-plan sale system, and who supervises it?

The off-plan sale and lease system is the regulatory framework governing the sale and lease of real estate units before their construction is completed in Saudi Arabia. It is supervised by the General Real Estate Authority as the sector’s regulatory body. The system aims at three main objectives: protecting buyers’ funds from project risks, raising the level of transparency and disclosure between the developer and buyer, and automating all licensing and monitoring procedures through a unified electronic platform known as the Wafi Platform (WAFI).

Practically, this means that any project offered for off-plan sale must be registered and licensed through this platform before it is advertised or marketed in any way, providing the buyer with a single reliable verification point before dealing with any developer.

Conditions for licensing the developer and project before offering for sale

No entity may engage in the activity of off-plan sale or lease except after fulfilling two separate stages that cannot be bypassed:

• Qualifying the company itself by registering in the list of approved real estate developers at the General Real Estate Authority.

• Licensing the specific project, which is an independent license issued for each project individually. A general developer license is not sufficient without a specific license for the project being offered.

This separation between qualifying the company and licensing the project is important for the buyer, as it means that the presence of a well-known developer in the market does not substitute for verifying the actual issuance of a license for that specific project through the Wafi platform before any payment is made.

Read also: Apartments for sale in Saudi Arabia under construction

Escrow account: the main mechanism for protecting the buyer’s funds

The system is based on the principle of complete separation between buyers’ funds and the developer’s personal accounts, by creating a dedicated escrow account for each real estate project individually. All amounts paid by buyers are deposited in this account without exception, and they cannot be seized for the benefit of the developer’s creditors in any separate financial dispute. Issuing ATM or credit cards linked to this account is also prohibited. Disbursement from this account is limited to checks or transfers documented with supporting documents directly related to the project’s activities.

An additional regulatory measure is also in place, which is annotating the title deed of the project land, preventing any action outside the system and ensuring the land is not used as collateral for other developer obligations during the execution period.

How are payments made during construction phases?

Disbursement from the escrow account is not done freely at the developer’s discretion but is directly linked to the actual engineering completion percentage of the project on the ground. Each disbursement is documented and certified by an independent engineering consulting office and a legal accountant, along with periodic reports submitted to the General Real Estate Authority to monitor the progress of implementation.

This mechanism means that the flow of funds to the developer is linked to tangible and documented progress in construction, not to a timeline agreement or marketing promises unconnected to actual engineering progress, which greatly reduces the risk of sudden project stoppage after receiving advanced payments.

Read also: Apartments for sale in Makkah under construction

What are the guarantees related to the delivery of the unit after completion?

The system obliges the developer to guarantee the delivered real estate unit for a full year from the actual delivery date. This period covers defects and works related to execution as specified by the system’s executive regulations. Practically, the buyer is advised to keep delivery documents and their date very accurately, as the warranty period is directly linked to this date, not the original contract date.

Practical steps to verify a project before contracting

Before signing any reservation contract or making any payment for an under-construction unit, it is essential to verify the following points in order:

1. Ensure the developer is registered in the approved real estate developers list via the Wafi platform.

2. Ensure a specific license has been issued for the project, not just the general developer license.

3. Request the project’s escrow account number and confirm it is actually activated, as this account is only activated after licensing and annotating the land deed.

4. Verify that the unit is within an approved geographic area for ownership if the buyer is non-Saudi, through the Saudi Real Estate Portal.

5. Review the officially announced completion percentage for the project and ensure it matches the marketing promises made, instead of relying solely on a verbal delivery date.

Any project that refuses to provide you with its license number or escrow account number, or requests payments outside this account directly to the developer’s personal account, is in clear violation of the system and should be avoided regardless of the size of discounts offered.

Read also: Cheap properties for sale in Riyadh

Does the system include foreign investors?

Yes, the path for non-Saudis owning property in Saudi Arabia includes properties sold off-plan, as well as ready properties, within the approved geographic scope for foreign ownership in each city. The foreign buyer in this case must meet both conditions: the requirements for non-Saudis owning property on one hand, and the regulations of the off-plan sale system explained above on the other, with neither exempting the other.

Also, buying off-plan property is included among the qualifying paths for certain types of residency linked to real estate ownership, provided the property value meets the minimum required by the system. This should be verified for each case with a specialized consultant before relying on it as a basis for the purchase decision.

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Why do many investors prefer off-plan purchases despite the waiting period?

Although buying off-plan usually means waiting months or years until delivery, it typically offers the buyer direct practical advantages that are hard to obtain in ready properties:

• Relatively lower entry prices compared to the completed unit in the same project after delivery.

• Payment plans extended over construction stages, instead of a full or near-full payment at contracting.

• Ability to benefit from price difference (Capital Appreciation) between the early booking stage and final delivery, especially in projects within areas of active urban growth.

• Greater freedom in choosing the unit’s location within the project (floor, direction, view) compared to the limited options in ready units.

On the other hand, strict adherence to verifying the license and escrow account is essential to actually benefit from these advantages without risk, highlighting the importance of choosing a developer and project committed to the system from the outset.

Read also: Osus Makan Project: Luxury Residential Apartments

How does Imtilak Global ensure compliance with this system in its projects?

The vast majority of projects in the Imtilak Global portfolio, whether with Dar Global, Reportage, Osus, or other developer partners, are offered for off-plan sale at various stages of implementation. For this reason, our team verifies the licensing status and activation of the escrow account for each project before presenting it to any client, and clearly explains to the investor the difference between what is officially documented and what is merely a marketing promise from the developer, instead of leaving this verification solely to the buyer after contracting.

How does Imtilak Global Saudi Arabia assist you?

Investing in an under-construction property requires careful verification of licensing and the escrow account before any financial commitment, a step often overlooked by investors unfamiliar with the system’s details. Our team at Imtilak Global handles this verification on your behalf for every project in our portfolio and clearly explains the actual completion stage and the associated payment plan, whether you are considering the Neptune or Etoile project in Riyadh, Trump Plaza and Trump Tower in Jeddah, or one of the Najd or Ain Osus projects. Before making your final decision, you can also book a free real estate tour to see the actual completion percentage of any of these projects on the ground.

Frequently Asked Questions

What is the difference between the developer license and the project license?

The developer license proves their registration in the approved real estate developers list in general, while the project license is a separate document issued for each project individually. No project may be advertised or marketed before its specific license is issued.

Can the developer use escrow account funds for another project they own?

No, the account is exclusively dedicated to the project for which it was created, and funds may only be disbursed for that specific project’s works according to the documented completion percentage.

What happens if the project stops during execution?

The system is originally designed to reduce the likelihood of this scenario by linking disbursement to actual progress, but if it happens, the mechanism for dealing with the remaining escrow account funds is subject to specific procedures overseen by the General Real Estate Authority. It is always advisable to consult a legal specialist in such cases.

Does this system include both villas and apartments?

Yes, the system applies to all types of real estate projects offered off-plan, whether residential units (apartments and villas) or commercial, as long as they are offered within this regulatory framework.