Law of Disposition of Municipal Real Estate in the Kingdom

The Law of Disposition of Municipal Real Estate in the Kingdom of Saudi Arabia refers to the set of legal rules governing municipal real estate in the Kingdom. The law deals with the limits of the disposition of municipalities in their public funds as approved by the laws, regulations, and licenses to utilize them whether for a fee or at no cost, in a manner not conflicting with their designated purposes.

The Law of Disposition of Municipal Real Estate was issued in 1972 during the reign of King Faisal Bin Abdulaziz Al Saud. The Implementing Regulations of the Law of Disposition of Municipal Real Estate was issued in 2003. Draft amendments to the regulations of the disposition of municipal real estate were introduced in 2017.

The Law of Disposition of Municipal Real Estate has detailed its provisions in six articles. It has recognized that municipal public funds are not subject to disposition. However, they may, subject to applicable laws and regulations, be utilized at no cost or for a fee in a manner not conflicting with their designated purposes. The law has authorized municipalities' disposition of their private funds by selling or bartering, leasing, or utilization at no cost or for a fee.

The Regulations of the Law of Disposition of Municipal Real Estate detailed the terms and conditions governing the issuance of a usufruct license for municipal property, as well as real estate prohibited from issuing usufruct licenses to others.

The Ministry of Municipal and Rural Affairs and Housing has worked on updating the Implementing Regulations of the Law of Disposition of Municipal Real Estate and adopting several related and regulatory regulations. These include the adoption of the Executive Instructions of the Regulations of Disposition of Municipal Real Estate (updated in 2020). The aim is to achieve the objectives of the Saudi Vision 2030, increase the contribution of the private sector, and assist it in investing in, rebuilding, and organizing infrastructure. This is expected to culminate in the development of cities and regions and enhance service provision in municipalities.

The updates seek to improve the performance efficiency of infrastructure provided by municipalities, such as public utility markets, parks, municipal facilities, and administration methods. They also aim to enhance commitment to contracts concluded, both in terms of guaranteeing investors' rights and addressing difficulties, or with regards to obligating investors to adhere to the contracts they conclude.