Statutory Accountant Services for Off-Plan Sales Projects

A law that regulates the sale and lease of real estate units in all their forms before or during the development and construction phase, through a detailed description of the real estate unit as it will be upon completion of the project, and the collection of payments directly from buyers to finance execution. It is overseen by the Real Estate General Authority and was issued by Royal Decree No. M/44 dated 10/03/1445H.

The Real Estate General Authority is the only body legally empowered to issue licenses to practice the sale, lease, or marketing of off-plan real estate units, and to issue real estate developer registration certificates. The role of the accredited statutory accountant, such as HHAB, is confined to the financial and accounting supervision of the escrow account and does not extend to issuing the license itself.

The accredited statutory accountant monitors and reviews the financial data relating to the value of the contracted real estate units, verifies their deposit into the escrow account, prepares reports on the financial and accounting movements of the escrow account and the project's statement of financial position, and certifies disbursement documents in coordination with the engineering consultant. This does not include supervision of the technical or construction aspects of the project, which remain the responsibility of the accredited engineering consultant.

A bank account dedicated to the real estate project, into which the amounts paid by the project's financiers, buyers, or tenants are deposited. An independent escrow account is opened in the name of each real estate project, and is activated only after the project license is obtained and an annotation is placed on the title deed of the property to be developed; its funds are used exclusively for the purposes of the licensed real estate project.

The real estate developer may disburse from the escrow account under a disbursement document prepared by the developer in coordination with the account trustee (the bank), and the signature of the person authorized to disburse, or of the developer's representative, must be certified with the account trustee. Both the statutory accountant and the licensed engineering consultancy office certify the disbursement document, each within the scope of its responsibility, and both provide the bank and the Authority with copies of their signatures.

The total amounts disbursed from the escrow account on administrative, marketing, and other non-construction expenses of the project may not exceed 20% of the value of the sold real estate unit, and the accredited statutory accountant is responsible for verifying that this limit is not exceeded.

Reports are generally submitted every three months, and become monthly in defined cases: where the built-up area of the project exceeds 5,000 square meters, the number of real estate units exceeds thirty, the project is a government project or is located within government development areas, or in any other case the Authority determines.

The developer is deemed delayed if the project is not completed after its period ends for reasons attributable to the developer, and the Authority may grant an additional period not exceeding one year. The project is deemed distressed if it is not completed within this additional period, or if execution works stop for a period exceeding 180 days. In that case, a specialized committee at the Authority takes the measures necessary to protect the rights of the parties concerned, including appointing a qualified person to manage the relationship with the developer, requiring the developer to replace the party responsible for the distress, or replacing the developer with an alternative developer.

No. The role of the accredited statutory accountant is confined to the financial and accounting supervision of the escrow account and the project's financial movements. Technical supervision of designs and construction works rests with the accredited engineering consultant, and the two parties share responsibility for certifying disbursement documents, each within its field of competence.

The firm must hold a valid commercial registration, be licensed by the Saudi Organization for Chartered and Professional Accountants (SOCPA), and 10% of the firm's accountants, or 4 of them, whichever is fewer, must pass the qualification programme approved by the Real Estate General Authority.