Disputes & ResolutionPayment Plan
Synonyms: Instalment Plan، Repayment Plan، Arrears Rescheduling، Instalment Agreement
Last updated: 2026-09-25
Short Definition
A payment plan is an agreement between a creditor and a debtor — such as a landlord and tenant — to reschedule overdue amounts into instalments with set amounts and dates, instead of demanding everything at once or going straight to execution.
Overview
A payment plan is an agreement between a creditor and a debtor — such as a landlord and tenant — to reschedule overdue amounts into instalments with set amounts and dates, instead of demanding everything at once or going straight to execution. It serves both sides: the landlord secures a regular cash flow and avoids the cost and time of litigation, and the tenant avoids execution measures such as a travel ban and credit reporting.
In Saudi Arabia a payment plan can be documented with several tools of differing strength. The unified residential lease itself allows the parties to agree on a different payment deadline through the Ejar platform. A settlement document issued on the Ministry of Justice’s Taradhi platform is an executive instrument that can be enforced directly if breached. During a lawsuit, the parties may ask the court to record their settlement in the case minutes, and the court issues a deed accordingly (Article 70 of the Law of Civil Procedure). A private written agreement is binding between the parties, but usually needs a judgment before it can be forcibly enforced unless it meets the conditions of an executive instrument.
Substantively, the plan is governed by the settlement contract under the Civil Transactions Law: a contract that resolves an existing dispute or prevents a potential one through mutual concessions, extinguishing the rights and claims each party waived without recourse, with waiver wording interpreted narrowly (Articles 391, 400 and 401). A plan should ideally include an acceleration clause making the balance due if a set number of instalments is missed — bearing in mind that the law does not allow agreed compensation for late payment of money (Article 178). In exceptional cases the court may also grant the debtor a reasonable period to pay if his situation requires it and the creditor suffers no serious harm (Article 275).
⚖️ Legal Basis
Civil Transactions Law, Royal Decree No. M/191 dated 29/11/1444H: Articles 391–401 (settlement contract and its effects), Article 178 (no agreed compensation for money obligations) and Article 275 (granting the debtor a reasonable period). The Execution Law (M/53 dated 13/8/1433H) treats settlement records issued by authorised bodies or certified by courts as executive instruments (Article 9). The Law of Civil Procedure (M/1 dated 22/1/1435H) allows a settlement to be recorded in the case minutes (Article 70). The Ministry of Justice treats settlement documents issued through Taradhi as executive instruments.
💡 Practical Example
A tenant renting a Jeddah apartment at SAR 6,000 a month falls three months behind after losing his job, so arrears reach SAR 18,000. Instead of an execution request, he and the landlord agree a payment plan: six monthly instalments of SAR 3,000 paid alongside the current rent — SAR 9,000 a month — with the whole balance falling due if two consecutive instalments are missed, and no late fee. They document the agreement on Taradhi, so the settlement document becomes an executive instrument. The tenant pays four instalments (SAR 12,000) and then misses two in a row; the remaining SAR 6,000 falls due and the landlord files the settlement document with the Execution Court without a new lawsuit.
⚠️ Common Mistakes
- ✗Agreeing a schedule verbally — hard to prove and not an executive instrument; document it via Ejar, Taradhi or the court minutes.
- ✗Leaving out an acceleration clause — the creditor then has to wait for each instalment separately or file a lawsuit.
- ✗Adding a late fee to instalments — agreed compensation is not allowed for money obligations (Article 178).
- ✗Using a vague, general waiver — waivers in a settlement are read narrowly and extinguish the waived rights irrevocably, so their scope must be precise.
- ✗Not separating arrears instalments from current rent — this leads to later disputes over which debt each payment settled.
🌍 International Differences
Most systems recognise payment plans, but their enforceability differs. In Turkey, a debtor at the enforcement stage can give an instalment undertaking before the enforcement office; in common-law systems, court settlements are often recorded as consent orders; in Dubai, the Rental Disputes Settlement Centre encourages amicable settlement before adjudication. Saudi Arabia is distinctive in letting a payment plan become a digital executive instrument through Taradhi, and in barring agreed compensation on money debts, which makes an acceleration clause the usual safeguard.
FAQs
How do I make a payment plan binding and enforceable?▾
Document it on Taradhi so the settlement document becomes an executive instrument, ask the court to record it in the case minutes if a lawsuit is pending so a deed is issued, or agree the new payment deadline through the Ejar platform.
Does a payment plan mean writing off part of the debt?▾
Not necessarily; it may simply reschedule without any discount. If it includes a waiver, the waiver is read narrowly within the rights that were in dispute and extinguishes those waived rights.
What happens if the tenant breaks the plan?▾
If it is documented in a Taradhi settlement document or a court deed, an execution request is filed directly with the Execution Court for the instalments due — or the whole balance if the plan has an acceleration clause.
Can penalties be added to payment-plan instalments?▾
The Civil Transactions Law does not allow agreed compensation where the obligation is a sum of money, so late fees on instalments should be avoided; an acceleration clause is the usual safeguard.
Can a court give the debtor time to pay without an agreement?▾
Yes, in exceptional cases the court may grant the debtor a reasonable period to perform if his situation requires it and the delay causes the creditor no serious harm (Article 275 of the Civil Transactions Law).
