Eminent Domain
Synonyms: Expropriation، Compulsory Purchase، Compulsory Acquisition، Condemnation
Last updated: 2026-09-25
Short Definition
Expropriation for public interest (eminent domain) is the legal procedure by which the state takes ownership of private property, or temporarily takes possession of it, for a public-interest project in return for fair compensation based on market value, only in cases the law allows.
Overview
Legal Basis
Law of Expropriation of Real Estate for Public Interest and Temporary Taking of Real Estate, issued by Royal Decree No. (M/56) dated 12/3/1447H and Council of Ministers Resolution No. (177) dated 3/3/1447H, in force from 28/7/1447H (17 January 2026): Article 2 (expropriation only for public interest and with fair compensation), Article 4 (state property first), Article 6 (compensation at market value + 20% + damages), Articles 14-15 (valuation by three valuers and a review committee), Article 16 (cash or in-kind compensation), Article 17 (RETT exemption on buying a replacement property within five years), Article 32 (recovery if no longer needed), Article 34 (ban on subdivision, merger and licensing after notification) and Article 37 (it replaces the law issued by Royal Decree No. (M/15) dated 11/3/1424H). Civil Transactions Law, Article 610.
Practical Example
In March 2026 a decision is issued to start expropriation for a road widening in Dammam that includes a warehouse owned by Saad. The three accredited valuers put its market value at SAR 2,900,000, 3,000,000 and 3,100,000, and the committee adopts the average of SAR 3,000,000. Saad is entitled to SAR 3,000,000 market value + SAR 600,000 for the expropriation (20%) + SAR 150,000 for the damage of relocating his business, a total of SAR 3,750,000. Two years later he buys a replacement warehouse for SAR 3,500,000 and is exempt from Real Estate Transaction Tax (SAR 175,000) because the purchase is within five years of receiving compensation and within its amount. Because the decision was issued after the new law took effect, the new law applies rather than the 1424H law.
Common Mistakes
- ✗Relying on the 1424H law for cases started after 17 January 2026, when the new law applies to them and grants an extra 20%.
- ✗Making improvements or additions after the start decision is published in the hope of higher compensation, although they are disregarded in the inventory.
- ✗Missing the deadline set by the project entity for submitting ownership documents, delaying payment of compensation.
- ✗Not claiming compensation for damage caused by the expropriation (such as relocating a business) and settling for market value alone.
- ✗Losing the Real Estate Transaction Tax exemption by buying the replacement property more than five years after receiving compensation.
International Differences
In the United States, the Fifth Amendment guarantees 'just compensation' for takings, which courts usually measure at market value. In the UK the process is called compulsory purchase, and additional payments may go to owner-occupiers. In Turkey it is governed by the Expropriation Law (Kamulaştırma Kanunu), with the court setting the amount if there is no agreement. The UAE and Egypt have specific laws on compensation for expropriation in the public interest. The new Saudi law stands out for its express 20% uplift over market value, triple independent valuation, tax exemption for buying a replacement property and the right to recover the property if it is no longer needed.
