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Business Tenancy Agreement for Saudi Arabia

Business Tenancy Agreement Template for Saudi Arabia

A comprehensive legal document governed by Saudi Arabian law that establishes the terms and conditions for leasing commercial property between a landlord and a business tenant. The agreement incorporates local regulatory requirements, including Shariah compliance, and covers essential elements such as rent, duration, permitted use, maintenance responsibilities, and other commercial terms. It provides a framework for managing the landlord-tenant relationship while ensuring compliance with Saudi commercial property laws, municipality regulations, and Islamic principles of contract law.

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What is a Business Tenancy Agreement?

The Business Tenancy Agreement is a crucial document used in Saudi Arabia when a property owner (landlord) agrees to lease commercial premises to a business entity (tenant) for commercial purposes. This agreement is essential for establishing clear legal and commercial terms while ensuring compliance with Saudi Arabian law, including both civil code requirements and Shariah principles. The document covers key aspects such as rental terms, property specifications, permitted business activities, maintenance responsibilities, and dispute resolution mechanisms. It is particularly important given Saudi Arabia's evolving commercial real estate landscape and recent regulatory reforms affecting business properties. The agreement must align with local municipality regulations, commercial registration requirements, and zoning laws while providing adequate protection for both parties' interests.

What sections should be included in a Business Tenancy Agreement?

1. Parties: Identification of the landlord and tenant with full legal names, commercial registration numbers, and authorized representatives

2. Background: Context of the agreement including property ownership confirmation and intended use

3. Definitions: Definitions of key terms used throughout the agreement

4. Demised Premises: Detailed description of the leased property including location, size, and boundaries

5. Term and Commencement: Duration of the lease and commencement date

6. Rent and Payment Terms: Rental amount, payment schedule, and method of payment

7. Security Deposit: Amount, payment terms, and conditions for return of the security deposit

8. Permitted Use: Specified business activities allowed in the premises

9. Utilities and Services: Responsibility for utilities, maintenance, and service charges

10. Tenant's Obligations: Core responsibilities of the tenant including maintenance, repairs, and compliance with regulations

11. Landlord's Obligations: Core responsibilities of the landlord including structural maintenance and insurance

12. Insurance: Required insurance coverage for both parties

13. Assignment and Subletting: Conditions under which the tenant may assign or sublet the premises

14. Termination: Circumstances and procedures for early termination

15. Governing Law: Confirmation of Saudi law and Shariah principles as governing law

16. Dispute Resolution: Process for resolving disputes including jurisdiction and applicable courts

What sections are optional to include in a Business Tenancy Agreement?

1. Fit-out Works: Details of any permitted modifications or improvements to be made by tenant, used when premises require initial fitting out

2. Break Clause: Option for either party to terminate early under specific conditions, included when early termination flexibility is needed

3. Rent Review: Mechanism for periodic rent adjustments, included for longer-term leases

4. Option to Renew: Terms for lease renewal, included when parties want to pre-agree renewal terms

5. Force Majeure: Provisions for unforeseen circumstances preventing performance, particularly relevant post-COVID

6. Guarantees: Corporate or personal guarantees for tenant's obligations, used for higher-risk tenants

7. Service Charge: Detailed provisions for service charges in multi-tenant buildings

8. Common Areas: Rights and obligations regarding shared facilities, relevant for properties in commercial complexes

9. Marketing and Signage: Regulations for external signs and marketing displays, important for retail premises

What schedules should be included in a Business Tenancy Agreement?

1. Property Plan: Detailed floor plan and measurements of the premises

2. Inventory: List of any fixtures, fittings, or equipment included in the lease

3. Service Charge Budget: Breakdown of estimated service charges and calculation method

4. Fit-out Specifications: Technical specifications for any permitted tenant improvements

5. Building Rules: Operational rules and regulations for the building or complex

6. Handover Protocol: Condition report and handover procedures at the start of the lease

7. Required Permits: List of necessary governmental permits and licenses

8. Maintenance Schedule: Detailed breakdown of maintenance responsibilities between parties

Authors

Alex Denne

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

Jurisdiction

Saudi Arabia

Publisher

Genie AI

Document Type

Lease Agreement

Cost

Free to use
Relevant legal definitions








































Clauses








































Relevant Industries

Real Estate

Retail

Hospitality

Office Space

Industrial

Warehousing

Healthcare

Education

Financial Services

Professional Services

Technology

Manufacturing

Logistics

Entertainment

Food and Beverage

Relevant Teams

Legal

Real Estate

Facilities Management

Operations

Finance

Compliance

Risk Management

Corporate Services

Administration

Business Development

Property Management

Relevant Roles

Real Estate Manager

Property Manager

Facilities Manager

Legal Counsel

Commercial Director

Operations Manager

Business Development Manager

Chief Financial Officer

Compliance Officer

Risk Manager

Asset Manager

Leasing Manager

Corporate Services Manager

General Counsel

Managing Director

CEO

Finance Director

Real Estate 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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