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Real Estate Operating Agreement for Saudi Arabia

Real Estate Operating Agreement Template for Saudi Arabia

A comprehensive legal document governed by Saudi Arabian law that establishes the terms and conditions under which a professional operating company manages and maintains real estate assets on behalf of the property owner. The agreement details operational responsibilities, financial arrangements, compliance requirements with both local regulations and Sharia law, and sets forth the framework for property management services, including maintenance, tenant relations, financial reporting, and performance standards. This document is particularly important in the Saudi Arabian context as it must align with both modern commercial practices and traditional Islamic principles.

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What is a Real Estate Operating Agreement?

The Real Estate Operating Agreement is a crucial document in the Saudi Arabian real estate sector, used when property owners wish to delegate the management and operation of their real estate assets to professional operating companies. This agreement has gained increasing importance with the modernization of Saudi Arabia's real estate sector under Vision 2030 and the growing sophistication of property management services in the region. It covers essential aspects such as operational responsibilities, financial management, compliance with local regulations and Sharia law, risk allocation, and performance metrics. The document is particularly relevant for commercial, retail, and mixed-use properties where professional management is essential for maintaining asset value and ensuring optimal operational performance. Recent regulatory changes in Saudi Arabia have made these agreements more standardized and comprehensive, reflecting the kingdom's move toward international best practices while maintaining compliance with local legal requirements.

What sections should be included in a Real Estate Operating Agreement?

1. Parties: Identification of the property owner and operating company, including full legal names, registration details, and authorized representatives

2. Background: Context of the agreement, including property details and purpose of the operating arrangement

3. Definitions: Detailed definitions of terms used throughout the agreement, including technical and legal terminology

4. Appointment and Scope: Formal appointment of the operator and detailed scope of services to be provided

5. Term and Renewal: Duration of the agreement and conditions for renewal or extension

6. Operator's Obligations: Comprehensive list of operator's duties, including maintenance, security, tenant management, and reporting

7. Owner's Obligations: Responsibilities of the property owner, including providing necessary documentation and authority

8. Financial Terms: Management fees, operating expenses, budgeting, and financial reporting requirements

9. Compliance: Obligations to comply with Sharia law, local regulations, and industry standards

10. Insurance and Liability: Required insurance coverage and allocation of liability between parties

11. Termination: Grounds for termination, notice requirements, and consequences of termination

12. Handover Procedures: Process for property handover at the beginning and end of the agreement

13. Governing Law and Dispute Resolution: Application of Saudi law and mechanisms for dispute resolution

14. General Provisions: Standard legal provisions including notices, amendments, and force majeure

What sections are optional to include in a Real Estate Operating Agreement?

1. Capital Expenditure: Procedures for major capital improvements and renovations, used when operator has authority for significant property improvements

2. Marketing Services: Specific provisions for marketing and leasing services, included when operator is responsible for tenant acquisition

3. Staff and Employment: Terms regarding on-site staff employment and management, used when operator will employ dedicated property staff

4. Environmental Compliance: Specific environmental obligations and sustainability measures, included for properties requiring special environmental management

5. Mixed-Use Provisions: Special provisions for managing mixed-use properties, included when property has multiple usage types

6. Religious Facilities: Provisions for managing prayer rooms and religious facilities, included when property includes such facilities

7. Retail Management: Specific provisions for retail property management, included for shopping centers or retail properties

What schedules should be included in a Real Estate Operating Agreement?

1. Property Details: Detailed description of the property, including location, facilities, and current condition

2. Services Specification: Detailed scope of services to be provided by the operator

3. Fee Schedule: Detailed breakdown of management fees, performance fees, and other charges

4. Operating Budget: Initial operating budget and budget preparation procedures

5. Key Performance Indicators: Performance metrics and reporting requirements

6. Maintenance Schedule: Planned maintenance programs and procedures

7. Emergency Procedures: Emergency response and business continuity procedures

8. Required Insurance: Detailed insurance requirements and minimum coverage levels

9. Handover Checklist: Detailed checklist for property handover procedures

10. Authorized Signatories: List of authorized representatives for both parties

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Saudi Arabia

Publisher

Ƶ

Cost

Free to use
Relevant legal definitions




















































Clauses







































Relevant Industries

Commercial Real Estate

Retail Property

Residential Property

Mixed-use Development

Hospitality

Industrial Real Estate

Shopping Centers

Office Buildings

Logistics Facilities

Religious Properties

Relevant Teams

Legal

Real Estate Operations

Asset Management

Property Management

Facility Management

Compliance

Finance

Maintenance

Leasing

Risk Management

Relevant Roles

Real Estate Manager

Property Operations Director

Facility Manager

Asset Manager

Chief Operating Officer

Real Estate Investment Manager

Property Services Director

Compliance Officer

Legal Counsel

Operations Manager

Building Manager

Maintenance Manager

Leasing Manager

Financial Controller

Real Estate Development Director

Industries










Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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