The Standby Letter of Credit for Lease is a crucial financial instrument in Saudi Arabia's commercial leasing landscape. It is typically used when a landlord requires additional security beyond a standard lease deposit, particularly in high-value commercial leases or when dealing with new tenants without an established local presence. The document combines elements of traditional banking practices with Islamic finance principles, ensuring compliance with both international standards and local Saudi Arabian regulations. This type of SBLC serves as a bank's irrevocable commitment to pay the landlord a specified sum in case of tenant default, subject to presentation of stipulated documents. The instrument is particularly valuable in Saudi Arabia's growing commercial real estate market, where it provides landlords with a secure, Shariah-compliant mechanism for protecting their interests while offering tenants a way to demonstrate their financial credibility without tying up significant capital.
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1. Letter Reference Number and Date: Unique identifier for the SBLC and issuance date
2. Issuing Bank Details: Complete name, address, and contact information of the issuing bank
3. Beneficiary Details: Complete name and address of the landlord/lessor who will receive the SBLC
4. Applicant Details: Complete name and address of the tenant/lessee who requested the SBLC
5. Credit Amount: The maximum amount available under the SBLC, typically expressed in both numbers and words
6. Lease Property Details: Specific description of the leased property covered by the SBLC
7. Purpose of SBLC: Clear statement that the SBLC is issued to guarantee lease payments
8. Expiry Date: Clear statement of when the SBLC expires
9. Drawing Terms: Specific conditions under which the beneficiary can draw on the SBLC
10. Required Documents: List of documents that must be presented for drawing
11. Governing Law: Statement that the SBLC is governed by Saudi law and Shariah principles
12. Authorization: Bank officer's signature and authentication details
1. Automatic Extension Clause: Used when the SBLC needs to automatically extend beyond its initial expiry date unless notice is given
2. Partial Drawings: Include when multiple drawings are permitted under the SBLC
3. Transfer Rights: Include when the beneficiary has the right to transfer the SBLC to another party
4. Language Preference: Include when the SBLC needs to be issued in both Arabic and English
5. Force Majeure: Include specific provisions for force majeure events affecting the lease
6. Islamic Finance Compliance: Detailed section on Shariah compliance when specifically required by parties
1. Schedule A - Lease Agreement Details: Copy or key details of the underlying lease agreement
2. Schedule B - Drawing Certificate Format: Pre-approved format for the beneficiary's drawing certificate
3. Schedule C - Property Documentation: Details of the leased property including official documentation
4. Schedule D - Payment Schedule: Schedule of lease payments covered by the SBLC
5. Appendix 1 - Required Documents Checklist: Detailed checklist of all documents required for drawing under the SBLC
6. Appendix 2 - Bank's Standard Terms and Conditions: Standard terms and conditions applicable to all SBLCs issued by the bank
Relevant legal definitions
Clauses
Relevant Industries
Banking & Financial Services
Real Estate
Commercial Property
Retail
Industrial
Office Space
Manufacturing
Logistics & Warehousing
Healthcare
Education
Hospitality
Islamic Finance
Legal Services
Corporate Services
Relevant Teams
Legal
Finance
Treasury
Real Estate
Facilities Management
Risk Management
Compliance
Islamic Banking
Operations
Corporate Services
Property Management
Trade Finance
Relevant Roles
Chief Financial Officer
Treasury Manager
Real Estate Manager
Facilities Manager
Legal Counsel
Corporate Banker
Trade Finance Manager
Property Manager
Leasing Manager
Risk Manager
Compliance Officer
Islamic Banking Specialist
Commercial Director
Operations Manager
Corporate Real Estate Manager
Finance Director
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