When a buyer pays for a unit that has not yet been built, where does the money go? The answer is the escrow account, the cornerstone of the off-plan sales system. The money does not go into the developer's current account, but into an independent account in the project's name, and it leaves only for project purposes with three parties' signatures. This mechanism is what makes buying off-plan safer than it was before regulation. This guide explains the law's provisions, the bank agreement terms, disbursement at the authority's request, additional buyer protection, and the engineering consultant's role in all of this.
The Law's Provisions
- An independent escrow account in each project's name, activated only after obtaining the project licence and annotating the title deed (Article 9).
- Disbursement from it by a disbursement document signed by the developer, the consulting office and the chartered accountant, and in emergencies at the request of the competent authority (Article 11).
Bank Agreement Terms (Article 26 of the Regulations)
- An independent account with a unified number as the deposit reference.
- In Saudi riyals.
- No disbursement except for project purposes, and only by cheques or transfers.
- Each deposit has a reference number stating the unit number.
- No closure by agreement with the developer without the authority's approval.
- No ATM or credit cards on the account.
Table: Who Does What in the Escrow Account?
| Party | Role |
|---|---|
| Buyer | Deposits payments directly into the escrow account and may request the accounting record for their unit |
| Developer | Requests disbursement for project purposes and signs the disbursement document |
| Consulting office | Verifies technical progress and the justification for disbursement, and certifies. Read: The consultant in Wafi |
| Chartered accountant | Audits deposits and expenditure and prepares account reports |
| Bank | Manages the account under the agreement terms |
| Authority | Monitors, and may request disbursement in specified cases |
Disbursement at the Authority's Request
The authority may request disbursement to pay government dues, refund buyers, pay project parties' dues when the developer does not cooperate, transfer the assets to a replacement developer's account, and repair defects. Read: A delayed off-plan project.
Additional Buyer Protection
- The developer must deposit buyers' payments directly into the escrow account.
- The buyer may request to see the accounting record for their unit, and the developer provides a copy within 10 working days.
- The chartered accountant audits the deposits and prepares the account reports.
- Defects in construction or finishing prevent release of the retained amount.
On the consultant's role in reports: Progress reports in Wafi. For the whole buyer journey: From contract to deed.
How Is Disbursement Linked to Progress?
The disbursement document states the amounts and their justification, and the engineering justification is the actual progress measured by the consultant. So accurate progress measurement protects the buyer from disbursements that run ahead of the work, and protects the developer from delays to payments it is entitled to. Read: The progress report and contractor payments.
Frequently Asked Questions
Can the developer withdraw money freely?
No; disbursement is by a document certified by the consultant and accountant, and for project purposes only.
Is the land value paid from the account?
The regulations treat paying the land value to the owner and repaying financing as non-construction expenses of the licensed project.
What happens to my money if the project is troubled?
It remains in the escrow account, and the authority may request disbursement to refund it or to complete the project through a replacement developer.
Can I pay the developer directly?
The developer must deposit buyers' payments directly into the escrow account, so check the account number and the unit reference.
When is the account closed?
It is not closed by agreement with the developer without the authority's approval. Read: The stages of an off-plan project.
How Abak Engineering Consultancy Helps
Abak is an accredited engineering office that measures and documents actual progress on Wafi projects, prepares the progress reports that justify escrow disbursements, and certifies disbursement documents after site verification. See our progress reports and escrow service, or contact us.
Regulatory information is based on the Balady platform and the Ministry of Municipalities and Housing, and procedures may be updated by the competent authority. Last reviewed: October 2026.