Property Collateral Agreement Template for Saudi Arabia

The Property Collateral Agreement is a crucial security document used in Saudi Arabian financing transactions where real property serves as collateral. It is essential for various financing arrangements, from corporate facilities to real estate development financing, and must comply with both Sharia principles and Saudi regulatory requirements. The agreement details the creation of security interests over property, includes comprehensive property descriptions, sets out secured obligations, and establishes enforcement mechanisms. It requires careful consideration of local property laws, registration requirements, and enforcement procedures under Saudi jurisdiction. The document is particularly important given recent reforms in Saudi Arabia's real estate sector and security enforcement framework, requiring alignment with the Saudi Vision 2030 initiatives and modern banking practices while maintaining Sharia compliance.

1. Parties: Identification of the Security Provider (Property Owner) and the Secured Party (Beneficiary), including full legal names and registration details

2. Background: Context of the security arrangement, reference to main facility agreement or underlying obligations, and purpose of the security

3. Definitions: Key terms used throughout the agreement, including specific Saudi law concepts and Arabic terminology where relevant

4. Creation of Security: Express provisions creating the security interest over the property, ensuring Sharia compliance

5. Secured Obligations: Clear definition of the obligations being secured, including principal amounts, profit rates (avoiding interest terminology), and other secured amounts

6. Property Description: Detailed description of the collateral property including title details, location, and registration information

7. Representations and Warranties: Security Provider's confirmations regarding ownership, authority, and property status

8. Covenants: Security Provider's ongoing obligations regarding the property, including maintenance, insurance, and restrictions on disposal

9. Enforcement: Rights and procedures for enforcement in accordance with Saudi law, including appointment of delegates and judicial enforcement procedures

10. Power of Attorney: Irrevocable authorization for the Secured Party to perfect and enforce the security

11. Notices: Communication procedures between parties

12. Governing Law and Jurisdiction: Confirmation of Saudi law governance and submission to Saudi courts