SHL-FAQ
Juned Mohammad Khan
Frequently Asked Questions - SHL
o How are major and minor maintenance defined? When does SHL cover all major maintenance?
§The Lessee concurs and undertakes to bear full responsibility and at his own personal cost without the right of recourse on the Lessor that he guarantees the repair of any damages whatever the nature and/or size of damage and/or cost for repairs which may occur to the Leased Asset in the future.
o Can the same customer obtain two real estates?
§A customer can obtain more than one real estate as long as he/she qualifies based on the SHL credit requirements for each real estate lease application individually. The combined total financing amount must not exceed SAR 4 million for all properties.
o Is it possible to assign or delegate another person to pay on behalf of me?
§The customer cannot assign or transfer his rights and / or responsibilities to another person. The customer can co-delegate another person to pay on his behalf. However, the adherence to all the rights and / or responsibilities remains with the customer.
o Can I sub-lease the property? If so, what are the requirements of acceptance?
§The Customer can not sublease the housing unit without the prior written approval of the Lessor (SHL). The acceptance of such requests will be decided on a case by case basis. Information about the potential sub-lessee, as well as a copy of the sub-lease agreement will be required in order to consider requests to sublease.
o In case the customer delays in payment, is there a fine and is it legal?
§If the Customer fails to pay any amount under the Ijara contract when due (including any lease payments, repair expenses or damage elimination expenses), the Customer becomes liable to pay to the Lessor a “Delay Payment” of SAR 300 on each overdue amount. The Delay Payment is to compensate the Lessor for all actual costs and expenses suffered or incurred by the Lessor as a consequence of claiming the due amounts. This Delay Payment is legal and approved by the Shari’ah board of Saudi Home Loans.
o In case the customer is delayed more than one or two months, what are the consequences?
§All customers are expected to make timely payments as per their payment schedule. For each month’s delay in payment, the Customer becomes liable to pay to the Lessor a “Delay Payment” of SAR 300 on each overdue amount. Each delay in payment is also reported to SIMAH which can affect the score and borrowing power of the Customer in the future. If the delay continues, each case will be dealt with on an individual basis and the legal consequences will be determined as per the situation.
o Does the credit life insurance cover permanent disability as this is not mentioned in the lease contract?
§Permanent Total Disability benefit due to accident or sickness is an acceleration of the Death benefit due to accident or sickness and the Customer will be liable to receive the same benefits. The Lessor shall, in accordance with the Lessor’s internal policies and procedures and subject to the terms and conditions of any Takaful policies obtained by the Lessor to cover credit life risk, release and discharge the Customer from any further obligations under the Ijara contract based on the final decision of the Takaful provider.
o What is the process if I want to sell the property during the lease contract? How is the final settlement amount distributed?
§The first step in the sale process requires identifying a potential
purchaser. Once identified, the customer will arrange the following transaction between SHL and the purchaser:
a)The proceeds of the sale will be received by SHL from the new purchaser.
b)The title deed will be directly transferred to the purchaser at the Local Courthouse.
c)SHL will deduct the Lease Book Value and any other dues from the Customer and will transfer the balance of the payment received from the purchaser to the Customer.
o What is the procedure for exit during the tenure?
§In the case the Customer has to permanently exit Saudi Arabia
during the tenor of the contract, and depending on the time the Customer has and the intention of the Customer, there are several options available:
a) Sell the property and follow the steps as listed in final settlement situation.
b) If the Customer intends to return to the country, he/she can continue timely payments as per the contract and not make any changes to the contract with SHL
c) Provide the power of attorney to another person in Saudi Arabia who can sell the property on the behalf of the Customer. Until the property is sold, the Customer is liable to make timely payments to SHL as per the contract. At the time of the sale, the steps
listed in the final settlement section will be followed.
o What is the process of property deed transfer to the client once the client is fully paid-up at the end of the term?
§Upon receipt by the Lessor of a purchase request (“Purchase Request”)
from the Customer in accordance with the provisions of a sale undertaking issued the Lessor (“Sale Undertaking”), provided that the period of the Purchase Request is not less than thirty (30) days prior to the scheduled lease termination date, the Lessor shall,
sell the Leased Asset to the Customer and, within sixty (60) days from the date of the Customer’s payment of the purchase price, transfer its title, to the Customer, free and clear of any encumbrances and on an “as is where is” basis without any representation
or warranty whatsoever whether express or implied, and provided the Customer has settled all amounts due from him to the Lessor in accordance with this Contract.
When the Customer pays off the complete principal balance and pays the “Lease Termination Payment” the title of the property is transferred to the Customer. The non-Saudi Customers will follow the same internal procedures as the Saudi customers plus a few additional
steps:
a) The non-Saudi Customer has to obtain permit for owning real estate for residence purposes from the Ministry of Interior. This is the responsibility of the Customer and SHL has no obligation towards the customer in the obtaining of the permit. The Customer
can obtain the permit prior to the end of the tenor or payment of the Lease Termination Payment.
b) The Customer submits the “Purchase Request” included as an attachment to the “Sales Undertaking” provided by SHL to the customer, at least 30 days prior to the Lease Termination Date.
c) The Customer submits the Lease Termination Payment, clears all dues with SHL and provides a copy of the permit received from the Ministry of Interior.
d) SHL shall transfer the title to the Customer within 60 days of making the Lease Termination Payment at the Local Courthouse.
o Can a customer make structural changes to the subject property?
§A customer should first seek the permission of SHL in writing prior to making any modification. The customer should submit any plans and contractor estimates along with his request. SHL will then revert with an answer.
o What is the profit rates associated with SHL financing?
§SHL has the following profit rates for villa, apartment, land
and residential building (up to ten units) financing:
a) Up to fifteen years the profit rate is 4.5%.
b) Over fifteen years the profit rate is 4.75% .
o What is the Law of Saudi Arabia concerning foreigners owning property?
§Regulation of Ownership and Investment in Real Estate by Non-Saudis
issued Under:
Royal Decree No. M/15 dated 17/04/1421H Article (2) Non-Saudi natural persons enjoying normal legal residency status in Saudi Arabia may own real estate for use as a personal residence, subject to obtaining a permit from Ministry of Interior Article (5): With
the exception of transfer through inheritance, Non-Saudis may not obtain the title, easement or use of the real estate located within the city limits of Mecca and Madina. Non-Saudi Muslims may, however, lease real estate property inside the boundaries of Mecca
and Medina for a period not exceeding two (2) years. Such leases are renewable for similar periods. . *Source:http:// www.sagia.gov.sa/english/uploads/Reports%20/Real_Estate_En_2.3.5.pdf
o What is the qualifying age for financing with SHL?
§The qualifying age for financing with SHL is twenty-three (23).
o How long does it take to process an application with SHL?
§The entire process should take up to thirty (30) days from date of receiving a Complete Application with fees associated with the respective transaction & documents from the customer subject to his completing his medical if applicable on time. A Complete Application is one where all documentation required assessing the credit worthiness and the value of the villa, apartment or land has been received by SHL.
o What is the maximum age for financing with SHL?
§The maximum age for financing with SHL is as follows:
a) Salaried individuals: up to 62 years of age
b) Pensioners and Self-employed: up to 69 years of age.
o What is the maximum tenure for financing with SHL?
§The maximum tenure for SHL financing is thirty (30) years, depending on the age of the customer.
o How is the monthly installment distributed towards profit and ownership?
§Monthly lease installments are not distributed toward profit and ownership in an Ijara lease finance contract. The original cost of the property and the profit rate are used to determine the total lease obligation. The total lease obligation is divided by the tenor to determine monthly lease installments. SHL maintains 100% ownership in the property until the total lease obligation is received. At the point in time where the total lease obligation has been received, or an early termination has been negotiated, the property is transferred to the lessee in full.
o As a lessee, what are my homeownership rights and/or obligations?
§SHL as a financing company gives all the rights and benefits of home ownership to their customers, except for certain rights mentioned previously that require approval, such as subleasing and modifications to the property. SHL customers have the obligation to maintain the property and ensure the ongoing value of the property, much like a legal owner. They also have an obligation to pay costs of utilities, local services and common area fees or home owners association fees, when required.
Best regards
Juned Mohammad Khan
Finance Manager
Obeikan Investment Group
Cell: +966 553131365
Tariq Changgez
Dear Juned bhai,
It is very informative material that is asked for every now and then. Jazakallah.
Regards
Tariq Changgez
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Mohammed Mazher Shareef
Brother Juned,
Thanks for sharing this very informative and useful information, covering almost all aspect.
Best regards,
Mohammed Mazher Shareef
Asst. Managing Director – Sales
Rawabit Technology Ltd.
P O Box 5592, Riyadh 11432
(: +966-1-2791093 Ext 22
Ê: +966-1-4664193
From: myq...@googlegroups.com [mailto:myq...@googlegroups.com] On Behalf Of Juned Mohammad Khan
Sent: Thursday, September 5, 2013 9:28 AM
To: myq...@googlegroups.com
Subject: SHL-FAQ
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