Master Lease
Synonyms: Head Lease، Wholesale Lease، Building Lease
Last updated: 2026-05-06
Short Definition
Comprehensive lease for entire property or multiple units, signed by main tenant who then leases units to subtenants with landlord's permission.
Overview
Legal Basis
Master lease is regulated by the Civil Transactions Law which implicitly permits lessee subletting with lessor consent. The Ejar Platform Regulation requires registering master lease and sub-leases linked. For large commercial property management, the Real Estate Brokerage Regulation may require special license for the intermediary from REGA.
Practical Example
An owner of a residential tower with 80 apartments in Riyadh. Instead of managing it himself, signs a 7-year master lease with a property management company. Arrangement: owner receives SAR 4,800,000 annually (SAR 60,000 × 80 apartments) guaranteed, company handles leasing, maintenance, marketing, and rent collection. The company targets leasing 75% of apartments at SAR 70,000 average (= SAR 4,200,000). If achieved more, the difference is their profit. If less, they bear the difference. The company improves services to attract tenants at higher prices. Each sub-contract with tenant is registered in Ejar linked to master lease. Result: owner receives fixed income, company manages professionally, and tenants enjoy organized service.
Common Mistakes
- ✗Not specifying clear limits to intermediary's authority — may make modifications displeasing the owner or impose harmful terms.
- ✗Intermediary relying on overly optimistic occupancy rate — loses if targets not achieved, may go bankrupt before contract end.
- ✗Failing to include minimum condition clause at contract end — property may be returned to owner dilapidated.
- ✗Not registering sub-contracts in Ejar — weakens their legal standing in dispute.
- ✗Assuming end tenant knows intermediary as owner — the tripartite relationship must be transparently clarified.
International Differences
In the UAE, master lease is very common in hospitality and office sectors. In the US, 'Master Lease' is a common investment instrument. In the UK, 'Head Lease' is a common term in property law. The Saudi advantage: Ejar integration makes managing master and sub-leases highly efficient with full transparency for all parties.