Transfer of Property Act at Iran
In Iran, the Transfer of Property Act does not exist in the same form as it does in some other countries, such as India or the United Kingdom. However, property transactions and the transfer of property in Iran are regulated by a combination of civil law principles, primarily drawn from Islamic law (Sharia) and Iranian civil code.
Iran operates under a civil law system that is influenced by Islamic principles, particularly in areas concerning property, contracts, and ownership. The transfer of property, particularly real estate, follows detailed regulations, and this is primarily governed by the Iranian Civil Code (revised from 1928), along with other specific property laws.
Key Laws Governing Property Transfer in Iran:
The Iranian Civil Code (1906): The Civil Code is the fundamental source of property law in Iran. It regulates many aspects of civil transactions, including property ownership, contracts, and the transfer of property rights. The code has specific provisions for the transfer of both movable and immovable property.
Article 10 of the Civil Code: Defines a contract as an agreement that produces legally binding obligations, which includes property transactions.
Articles 46-52 of the Civil Code: Deal with the transfer of immovable property (real estate), including the requirements for a valid transfer and contract, such as the necessity of both parties' consent, an agreement on the terms, and a clear identification of the property.
Islamic Law (Sharia): As Iran is an Islamic republic, the principles of Islamic law (Sharia) play an important role in property transactions. Under Sharia law, property ownership is considered a right granted by God, and transactions must adhere to certain moral and legal principles. For example:
Transfer of Ownership: The transfer of property ownership must be done with mutual consent, and it is required that the terms of the contract be clear and just.
Prohibition of Riba (Usury): Islamic law prohibits transactions involving interest (usury), so financing methods involving interest-bearing loans are not permitted.
The Registration of Property Law: To ensure the legality of property transfers and protect the rights of both parties, real estate transactions in Iran must be registered with the Real Estate Registration Office (Sazman-e Sabt Asnad). The registration process is crucial for the formal recognition of ownership and helps prevent disputes over property rights.
The Land Law (1971): This law regulates land tenure, especially concerning land use and ownership. It includes provisions on land acquisition, as well as restrictions on foreign ownership of land. Foreigners generally cannot directly own land in Iran, though there are exceptions, particularly for investment purposes or in certain regions, and such transactions are subject to government approval.
Process of Transferring Property in Iran:
Agreement to Sell: The process begins with an agreement between the seller and buyer on the terms of the sale. This contract should clearly state the terms of the transfer, the price, and a detailed description of the property involved.
Drafting the Contract: A sale agreement (aqd-i-forush) is drafted in writing. This document is signed by both the buyer and the seller, often in the presence of witnesses. This is the primary contract that outlines the transaction.
Notarization: For a property transaction to be legally recognized, the sale agreement is typically notarized by a notary public (official authorized under Iranian law). This ensures that the agreement complies with the law and that both parties understand the terms and consequences.
Property Registration: After the sale agreement is notarized, the transaction must be registered with the Real Estate Registration Office. The buyer must submit the notarized sale agreement, along with any required documentation (such as proof of payment or identity verification), to the office for registration.
Payment of Taxes: The buyer and seller are responsible for paying certain taxes related to the transfer. This includes the property transfer tax (known as Bimeh-e Forush-e Mal), as well as other possible fees associated with registration.
Issuance of New Title: Once the property transfer is registered, a new title deed will be issued to the buyer. This title deed serves as the official record of ownership.
Key Considerations:
Foreign Ownership: As mentioned, foreigners face restrictions on owning land in Iran. However, foreigners may still be able to acquire land for business purposes, such as in the context of a joint venture, but such transactions require government approval.
Inheritance and Succession: Inheritance laws in Iran are based on Islamic law. When a property owner passes away, the property is transferred according to Shia Islamic inheritance principles, which stipulate how assets are divided among heirs. This system can sometimes complicate property transfers if inheritance matters are not settled before a sale.
Mortgage and Encumbrances: If the property is mortgaged or subject to other encumbrances, these must be cleared before a transfer can occur. Any liens or debts attached to the property should be resolved to ensure a clear transfer of title.
Summary:
In Iran, property transactions are primarily governed by the Iranian Civil Code and Islamic law, with additional regulations on registration and land use. The process of transferring property involves an agreement between the buyer and seller, notarization, registration with the Real Estate Registration Office, and the payment of taxes. Foreigners face restrictions on land ownership, and property transfers must adhere to both civil law and Islamic principles. The formal registration process is crucial to ensuring that property transfers are legally recognized in Iran.
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