Executive Key Takeaways
- •Off-plan projects must be licensed through Wafi before any sale or marketing
- •Buyer payments go into a project escrow account, released against verified completion
- •Booking deposits are capped at 5% of the unit’s value
- •Structural works carry a 10-year warranty from handover; MEP works one year
What Wafi Is
Wafi is the Real Estate General Authority’s platform for licensing and supervising off-plan sale and lease projects. A developer cannot legally sell or even market units before construction without going through it. The programme issues several licence types — scope, marketing with deposit collection, marketing without deposit collection, and off-plan sale — and its stated purpose is to raise disclosure and reduce violations in exactly the transaction where buyers are most exposed.
The Escrow Account: Where Your Money Actually Goes
Payments do not go to the developer’s general account. Every licensed project operates a dedicated escrow account with a licensed bank, and funds are released against the project’s engineering completion percentage and the payment schedule in the sale contract — not on request. The land title is annotated to prevent the developer disposing of it, and progress is tracked through periodic reports. This is the core protection: the developer’s access to your money is tied to building progress.
The 5% Rule on Booking Deposits
Where a developer collects booking deposits, it must disclose the project’s status, collect no more than 5% of the unit’s value, and place everything received into the escrow account. If you are asked for a larger deposit, or asked to transfer to an account that isn’t the project escrow, that is the moment to stop and verify rather than negotiate.
What the Developer Had to Prove Before Selling
Licensing is not a formality. Among the requirements: a commercial registration permitting real estate development, the land title deed, approved architectural and engineering designs, contracts with a consulting office and a chartered accountant, a feasibility study, a sale contract model with fixed delivery dates, an escrow agreement with a licensed bank, and a commitment to begin construction within six months of licensing. A licensed project has already cleared all of this. An unlicensed one has cleared none of it.
If the Project Is Delayed
Delay compensation is agreed between the parties but may not be less than the unit’s rental value, as assessed by a certified appraiser — so a delay has a defined floor rather than being left to goodwill. Discrepancies between contracted and delivered area are governed by the unit area adjustment clause in the signed contract. Disputes go to the competent courts or to the Saudi Center for Real Estate Arbitration, depending on what the contract specifies, which is worth reading before you sign rather than after.
Verify Before You Pay
REGA publishes searchable directories of licensed projects — showing the developer, location and status such as in progress, not started, completed or cancelled — and of qualified companies, with licence number and validity dates. Check both before transferring anything, and confirm the project status matches what you were told. REGA’s unified number is 199011. After handover, structural works including foundations, concrete and insulation carry a ten-year warranty, and mechanical and electrical installations one year, both running from the handover date.
“In off-plan, your protection isn’t the developer’s reputation. It’s the escrow account and the licence number.”
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