Many Iranians residing abroad continue to own apartments, houses, land, or other real estate in Iran. Selling such property may initially seem complicated, particularly when the owner is unable to be physically present in Iran. However, residing outside Iran does not, in principle, prevent an owner from selling property located in the country. In many cases, all or a substantial part of the sale process can be completed by granting a power of attorney to a person in Iran.
Selling property from abroad involves more than simply preparing a power of attorney. Matters such as the property’s legal and registration status, the scope of the attorney’s authority, required inquiries and clearances, real estate transfer tax, and, ultimately, the formal registration of the transfer of ownership must also be carefully considered.
This article outlines the principal stages involved in selling real estate in Iran for Iranians residing abroad.
Does the Owner Need to Travel to Iran to Sell the Property?
The owner may travel to Iran and complete the transaction in person. However, if the owner is unable or does not wish to be physically present in Iran, they may authorise another person to carry out the necessary procedures on their behalf.
Under the Iranian Civil Code, an attorney may act only within the scope of the authority granted by the principal. Accordingly, the wording of the power of attorney is particularly important in real estate transactions. Article 663 of the Civil Code further provides that an attorney may not act beyond the limits of the authority granted to them.
A general power of attorney may therefore be insufficient to cover every stage of a property sale. It is generally advisable to expressly include the powers required for the specific transaction in the power of attorney.
The principal stages of the sale process are outlined below.
Step One: Reviewing the Legal and Registration Status of the Property
Before proceeding with the sale, the legal and registration status of the property should first be carefully reviewed.
The matters that commonly require examination include:
- the details and current status of the title deed;
- the property’s registration particulars and their consistency with the property itself;
- whether the property is subject to attachment or seizure;
- whether the property is mortgaged;
- whether the property is jointly owned;
- the status of the completion certificate and subdivision certificate, where applicable;
- the legal and registration status of the property if it has been inherited; and
- the existence of any third-party rights over the property.
This review is important because certain legal or registration restrictions may prevent the formal transfer of ownership or require additional steps to be completed before the sale can proceed.
For example, the sale of a mortgaged property, a property subject to attachment, or an inherited property for which the relevant inheritance and registration formalities have not yet been completed may require separate preliminary legal or administrative procedures.
Step Two: Preparing a Power of Attorney for the Sale While Abroad
One of the most important steps for individuals who intend to sell their property without travelling to Iran is the preparation of an appropriate and sufficiently comprehensive power of attorney.
The Ministry of Foreign Affairs of the Islamic Republic of Iran provides services for the preparation and authentication of powers of attorney for Iranians residing abroad through the Integrated Consular Services Management System, commonly known as the Mikhak System.
The system facilitates various consular services, including those relating to powers of attorney.
In general, the applicant registers with the Mikhak System, enters the relevant section for powers of attorney, provides the details of the appointed attorney and the proposed text of the power of attorney, and receives a tracking code upon submission of the application.
The applicant must then complete the required identity verification and signature authentication procedures in accordance with the requirements of the relevant Iranian embassy or consulate in the country of residence. Requirements concerning in-person attendance, appointments, and other consular procedures may vary from one country to another. It is therefore advisable to review the specific instructions issued by the relevant diplomatic or consular mission.
Once the power of attorney has been authenticated, its authenticity can be verified through the Mikhak System.
What Powers Should Be Included in a Power of Attorney for the Sale of Property?
Authentication of the principal’s signature by an Iranian embassy or consulate does not necessarily mean that the contents of the power of attorney are legally sufficient to complete the intended property transaction.
The document should therefore be drafted carefully. Depending on the circumstances of the transaction, it may be necessary to expressly grant powers such as:
- negotiating the terms of the property sale;
- signing agreements and other documents relating to the transaction;
- appearing before notary public offices;
- appearing before the Registration Organisation and other relevant administrative authorities;
- obtaining and following up the required legal inquiries and clearances;
- paying applicable taxes, duties, and related expenses;
- signing the official deed of transfer;
- delivering possession of the property; and
- where expressly authorised by the principal, receiving all or part of the purchase price.
Granting an attorney the authority to receive the purchase price is particularly important and may have significant legal consequences.
It should therefore be determined from the outset whether the purchase price will be paid directly to the owner or whether the attorney will also be authorised to receive all or part of it.
It should also be expressly stated whether the attorney has the right to delegate all or part of their authority to another person. The more precisely the scope of the attorney’s authority is defined, the lower the likelihood of future disputes or practical difficulties.
Step Three: Finding a Buyer and Preparing the Sale Agreement
Once the legal prerequisites for the sale have been addressed, the owner or the owner’s attorney may negotiate the transaction with a prospective buyer.
At this stage, the parties should clearly agree on matters such as:
- the sale price;
- the method and timing of payment;
- the date for delivery of the property;
- the date for the formal transfer of title;
- responsibility for transaction-related costs and expenses; and
- the consequences and contractual remedies applicable in the event of non-performance.
Given that properties and title deeds may be subject to different registration requirements, it is also necessary to determine, before concluding the transaction, which registration procedures apply to the particular property at the time of sale.
Step Four: Obtaining the Necessary Inquiries and Clearances
Before the official deed of transfer is executed, the legal and registration status of the property must be verified through the relevant inquiries and clearances.
The specific inquiries, permits, and clearances required may vary depending on the type, location, and legal status of the property. Accordingly, the requirements applicable to each property should be determined on a case-by-case basis before the formal transfer takes place.
Step Five: Payment of Real Estate Transfer Tax
The sale of real estate in Iran is generally subject to real estate transfer tax.
Under Article 59 of the Iranian Direct Taxation Act, the definitive transfer of real property is subject to tax at a rate of five percent of the property’s transactional value.
Accordingly, the tax is calculated on the basis of the statutory transactional value of the property rather than its actual market value or the sale price agreed between the parties.
In the case of commercial properties where rights such as business goodwill, tenancy rights, or similar commercial rights are also transferred, additional tax provisions may apply and should be examined separately.
Step Six: Execution of the Official Deed of Transfer
The final stage of the sale process is the formal transfer of ownership to the buyer.
On the agreed date, the buyer and the seller, or the seller’s duly authorised attorney, attend the relevant notary public office with the required documents.
After reviewing the documentation, the scope of the attorney’s authority, the registration status of the property, the responses to the relevant inquiries, and the payment of applicable taxes and statutory charges, the notary public proceeds with the preparation and execution of the official deed of transfer.
An attorney may sign the official deed on behalf of the owner only if the power of attorney expressly grants the necessary authority to complete the formal transfer.
Once the official deed has been executed and the transfer formally registered, ownership is transferred to the buyer in accordance with the applicable legal and registration procedures.
What Happens to the Proceeds of the Sale?
The method and timing of payment of the purchase price should be clearly determined before the sale agreement is signed.
An owner residing abroad may specify how the purchase price is to be paid. For example, a portion of the price may be paid upon execution of the sale agreement, with the remaining balance paid simultaneously with the formal transfer of title.
If the attorney is authorised to receive all or part of the purchase price on behalf of the owner, this authority should be expressly and clearly stated in the power of attorney.
What If the Property Has Been Inherited?
A common situation for Iranians residing abroad is the sale of property acquired through inheritance.
Before such a property can be sold, it may be necessary to review and, where required, complete matters such as:
- obtaining the relevant certificate of inheritance or probate documentation;
- determining and settling any applicable inheritance tax;
- identifying each heir’s legal share in the property; and
- reviewing the property’s current registration status.
Depending on the circumstances, certain legal, tax, or registration procedures may need to be completed before the sale can proceed.
Where several heirs own the property, each heir may generally act only in relation to their own share, unless they have been duly authorised to act on behalf of the other heirs as well.
For this reason, it is advisable to review the legal and registration status of an inherited property before preparing a power of attorney for its sale. A power of attorney drafted without taking the property’s actual ownership and registration status into account may not provide sufficient authority to complete the formal transfer.
Conclusion
Iranians residing abroad are not generally required to be physically present in Iran in order to sell property they own in the country. They may authorise another person to carry out the necessary legal and administrative procedures on their behalf through a valid power of attorney. One of the principal mechanisms available for this purpose is the Mikhak System operated by the Iranian Ministry of Foreign Affairs, through which Iranians residing abroad may register and authenticate powers of attorney.
The effectiveness of such an arrangement, however, depends largely on a proper review of the property’s legal and registration status and on clearly defining the scope of the attorney’s authority. Once these preliminary matters have been addressed, the transaction will generally involve negotiating and preparing the sale agreement, obtaining the required legal inquiries and clearances, paying the applicable real estate transfer tax, and ultimately executing the official deed of transfer. Following the implementation of the Law Requiring the Official Registration of Transactions Concerning Immovable Property, certain procedures governing real estate transactions have changed from previous practice. Accordingly, before proceeding with a sale—particularly where the owner resides outside Iran—it is important to review both the property’s current registration status and the applicable legal requirements. Doing so can help reduce the risk of legal or practical difficulties arising at later stages of the transaction. For this reason, property owners residing abroad may benefit from obtaining legal advice from lawyers experienced in Iranian real estate matters before taking substantive steps toward the sale of property in Iran.
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