RIYADH: Buyers should pay only 20 percent of the value of real estate at the time of striking a deal and that too through check or bank draft only, the Ministry of Commerce and Industry (MCI) has said.

The announcement was made on Friday, as part of the ministry’s consumer protection program. With the new rule, the ministry has confirmed the requirements and conditions that preserve the consumers’ rights while purchasing real estate units through off-plan sale, an official from the MCI said.

He said that according to these conditions, a real estate developer or marketer is prevented from receiving payments in cash. They can be paid only through checks or bank transfers to the account allocated to the project security deposit, and the down payment should not exceed five percent of the real estate unit value. The first payment should not exceed more than 20 percent of the total value.

The official said the guarantee period related to the basement, concrete and insulation works for the buildings should not be less than ten years from the date of handing over the property. Also, the warranty period for mechanical, electrical and other contractors’ work should not be less than one year from the date of handing over, he said.

In case of any delay in the payment of installment during the contract period, the deadline given to the buyer should not be less than 60 days. Besides, all notices or correspondence between the developer and the customer should be in writing and not verbal, and the period of handing over the unit, as stated in the contract, should not be extended by more than 180 days. The legal procedures related to property transfer should not exceed 30 days from the date of issuing the certificate of building completion.

The ministry has allowed the developer to sell some real estate units against one payment contracts. The developer is compelled to pay similar fee in case of any delay in handing over the real estate unit at the time specified in the contract, and not to exceed five percent of the unit value for one year after the end of the additional deadline (if any). In case of more delay, a similar fee would not be limited to any ratio, and then it would be subject to the market price.

The official said the contract should include a draft of the “Owners Association” system, related to the real estate project (if needed), with a brief statement about the customer’s financial obligations arising under this contract.

Under these new conditions, the developer is committed to provide all the public services for the real estate unit, such as electricity and water for the sold unit, bearing all relevant charges. Also, the developer must connect the real estate unit to the public sewage system or provide an alternative drainage facility.