Preliminary Lease Agreement Template for Saudi Arabia

The Preliminary Lease Agreement is a crucial document used in Saudi Arabian real estate transactions when parties have agreed in principle to a lease but need to formalize their intentions and establish a framework for moving forward to a final lease agreement. This document is particularly relevant in commercial leasing where due diligence, regulatory approvals, or fit-out works may be required before finalizing the lease. It typically includes key commercial terms, timelines, exclusivity provisions, and any conditions that must be met before proceeding to the final lease. The agreement must comply with Saudi civil law, Sharia principles, and the Ejar system requirements, while providing both parties with security during the preliminary phase of their leasing relationship.

1. Parties: Identification of the landlord and prospective tenant, including full legal names, addresses, and official identification numbers as required by Saudi law

2. Background: Context of the preliminary lease arrangement, property overview, and purpose of the agreement

3. Definitions: Key terms used throughout the agreement, including property definition, commencement date, and other relevant terminology

4. Property Details: Specific description of the property, including location, size, and permitted use

5. Term and Commencement: Proposed duration of the final lease and expected commencement date

6. Rent and Payment Terms: Proposed rental amount, payment schedule, and any advance payments or deposits required

7. Conditions Precedent: Conditions that must be satisfied before proceeding to the final lease agreement

8. Due Diligence: Rights and obligations regarding property inspection and documentation review

9. Timeline to Final Agreement: Deadlines and process for moving to the final lease agreement

10. Good Faith Deposit: Terms regarding any deposit required and conditions for its return or forfeiture

11. Exclusivity Period: Period during which the landlord cannot negotiate with other potential tenants

12. Governing Law and Jurisdiction: Confirmation of Saudi law application and relevant jurisdiction

13. Termination Rights: Circumstances under which either party can terminate the preliminary agreement

14. Notices: Process and requirements for formal communications between parties