Commission Agreement (Real Estate) Template for Saudi Arabia

A Commission Agreement (Real Estate) is a legally binding contract that establishes the professional relationship between you as a property owner and a licensed real estate broker in Saudi Arabia. This document formalizes the broker's authority to market, show, and negotiate the sale or lease of your property while defining the commission structure and service expectations under Saudi law.

When do you need this document?

You need this agreement whenever you engage a real estate broker to handle property transactions in Saudi Arabia. This includes situations where you're selling residential or commercial property, leasing office spaces or retail units, or engaging property management services. The document is particularly crucial when working with real estate agencies that require formal authorization to represent your interests. You'll also need this agreement when dealing with high-value properties where clear commission structures prevent disputes, or when engaging brokers for investment property transactions that require compliance with anti-money laundering regulations.

Key legal considerations

Your commission agreement must clearly define the broker's scope of authority, including whether they have exclusive or non-exclusive rights to market your property. The commission structure should specify the percentage or fixed amount payable and the conditions triggering payment, such as successful completion of sale or lease execution. Include termination clauses that allow either party to end the relationship with proper notice, and ensure confidentiality provisions protect sensitive property and financial information. The agreement should address the broker's obligations regarding property marketing, client screening, and transaction documentation. Consider including clauses for dispute resolution through arbitration or mediation, and specify which party bears responsibility for marketing costs and legal fees.

Legal requirements in Saudi Arabia

Under Royal Decree No. M/85, your chosen broker must hold a valid license from the Ministry of Commerce and comply with Real Estate Broker Regulations. The agreement must include both parties' commercial registration details and specify compliance with Anti-Money Laundering Law requirements, particularly for transactions exceeding certain thresholds. Your contract should account for the 5% Real Estate Transaction Tax (RETT) under Royal Decree A/84 and clarify how this affects commission calculations. The document must be prepared in Arabic or include Arabic translation for legal enforceability, and both parties should retain signed copies. Ensure the agreement complies with Islamic Shariah principles, particularly regarding interest-based transactions and speculation. The broker must provide disclosure of any potential conflicts of interest and maintain professional insurance coverage as required by Saudi regulations.