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Understand the Aqd-e Khareed o Foroosh

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When it comes to buying real estate in Iran, making sure you fully grasp the property sales contract is essential.

Indeed, not fully understanding the document you will sign can lead to financial losses, including the forfeiture of deposits, payment of penalties, unexpected costs, legal expenses, and potential poor investment decisions.

We've heard countless stories of people making costly mistakes when signing their property agreement in Iran. We want to help you avoid the same experience.

We'll give here a very brief overview regarding the property sales contract in Iran ; if you want a full checklist, please check our property pack for Iran.

What is the Aqd-e Khareed o Foroosh in Iran?

In Iran, the property purchase agreement is known as "Aqd-e Khareed o Foroosh."

It's a legally binding contract that formalizes the terms and conditions of a real estate transaction between a buyer and a seller. This agreement is crucial as it provides legal protection and sets out the responsibilities and rights of both parties involved in the property sale.

The agreement typically includes details like the property's description, price, payment terms, and any other conditions agreed upon by the parties.

It's important to note that in Iran, all property transactions must be registered with the property registration office to be legally binding. This registration process is a critical step in ensuring the legality and legitimacy of the property transfer.

For international buyers or non-residents, there are additional considerations. Iran has certain restrictions on foreign ownership of real estate, so it's essential to be aware of these regulations.

Foreign buyers may need to obtain special permissions or comply with specific conditions to purchase property in Iran.

The signing of the purchase agreement usually takes place after initial negotiations and once both parties have agreed on the terms.

At this stage, a deposit is often paid by the buyer to secure the property. This deposit amount can vary, but it's typically a percentage of the property's total sale price. The deposit acts as a guarantee for both parties, signaling the buyer's commitment to purchase and the seller's commitment to sell the property as agreed.

Comparatively, real estate transactions in Iran might differ from those in other countries, especially regarding the registration process, restrictions on foreign ownership, and specific legal frameworks governing property sales.

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What should be included in the property purchase agreement in Iran?

In Iran, the property purchase agreement is a critical document in real estate transactions.

It's governed by the Civil Code of Iran and specific real estate laws. The agreement must contain several essential elements to be valid and enforceable.

Firstly, it should clearly identify the parties involved - the buyer and the seller. It must also include a detailed description of the property, including its location, size, boundaries, and any other relevant characteristics.

The sale price and payment terms are another crucial component. This part should detail the total price, any advance payments or deposits, and the schedule for the remaining payments.

Mandatory clauses in the agreement typically include the obligations of both parties, warranties regarding the property's legal status (like confirming there are no liens or encumbrances), and the condition of the property at the time of sale.

It's also necessary to specify the process for transferring property ownership, including any necessary steps for registration with the relevant authorities.

Additional clauses might cover aspects like penalty terms for late payments, provisions for resolving disputes, and any specific conditions related to the property's use. Conditions or contingencies can also be included, such as the sale being subject to the buyer obtaining financing or the completion of a property inspection.

Authentication of the agreement is crucial in Iran. It usually requires notarization to ensure its legal validity.

A notary public will verify the identities of the parties, witness the signing, and apply an official seal. This step is essential for the subsequent registration of the property transfer.

Regarding the role of real estate agents, they often facilitate the transaction, helping with negotiations, drafting the preliminary agreement, and guiding both parties through the legal requirements.

However, their involvement doesn't replace the need for legal advice and notarization, as they primarily act as intermediaries rather than legal representatives.

What's the signing process like?

In Iran, the signing process of a property purchase agreement is a structured and formal procedure, crucial for the validity of the real estate transaction.

The property purchase agreement is a bilateral contract, meaning it requires signatures from both the buyer and the seller. It can involve multiple parties on either side. For instance, if a property is co-owned, all owners must sign as sellers.

Similarly, if the property is being purchased by more than one individual, all buyers must sign the agreement.

Both parties need to provide certain documents and information for the signing process:

- The seller must present proof of ownership, such as the title deed.

- Both parties should have valid identification documents, like national ID cards or passports.

- Details about the property, including its exact location, size, and legal status, should be available.

The timeline for signing the property purchase agreement in Iran typically involves several steps:

Step Description

Initial Agreement

Once the terms are negotiated, a preliminary agreement is often drafted.

Documentation Gathering

Both parties collect and prepare the necessary documents.


The final agreement must be signed in the presence of a notary. This ensures the legality of the document.

Generally, Iranian law requires physical presence for the signing of such critical documents, especially for notarization.

However, if one party cannot be present, they might grant power of attorney to a representative to sign on their behalf. Remote signing is not commonly practiced for property transactions in Iran.

There’s no standardized deadline for signing the property purchase agreement, as it depends on the mutual agreement between the buyer and seller.

Once signed, the duration of the contract is typically until the completion of the transaction, including the transfer of ownership and payment.

After signing, the agreement must be registered with the property registration office in Iran. This process involves submitting the signed and notarized agreement along with all relevant property documents. Registration is crucial for the legal transfer of ownership.

Any amendments to the contract after signing are generally not permitted unless agreed upon by both parties.

If changes are needed, both the buyer and seller must consent, and the contract may need to be re-notarized and re-registered.

The timeframe for completing all necessary paperwork and approvals can vary. It usually takes a few weeks to a few months, depending on the complexity of the transaction, the speed of payments, and the efficiency of the local registration process.

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How is the payment handled when signing a property purchase contract in Iran?

In Iran, understanding the financial aspects of a property purchase agreement is key to navigating the process smoothly.

When you sign the sales agreement, a down payment is typically required. This acts as a commitment to the transaction and secures the property.

The standard down payment in Iran varies, but it's commonly around 20% to 30% of the property's total sale price. This can fluctuate based on the agreement between the buyer and the seller.

Aside from the down payment, there may be other upfront costs. These could include fees for notarization, legal services, and any real estate agent commissions. It’s important to factor these into your budget.

Payments are usually made directly to the seller.

However, in some cases, especially in more formalized transactions or when a real estate agent is involved, an escrow account may be used. This ensures that funds are securely held until all aspects of the sale are finalized.

The due date for the payment is typically outlined in the sales agreement. It can vary – some agreements require immediate payment upon signing, while others may allow payment at a later date, often tied to specific milestones in the property transfer process.

In Iran, property sales are subject to certain taxes. This includes a property transfer tax, which is calculated based on the value of the property. Both buyers and sellers should be aware of these tax implications.

The down payment amount can often be negotiated with the seller. This depends on factors like the seller's urgency, the property's demand, and market conditions.

If the sale falls through, the down payment's refundability depends on the terms of the sales agreement.

Usually, if the buyer backs out without a justified reason (like a failed inspection or financing issues), the down payment may not be refundable. If the seller is at fault, the buyer might be entitled to get the down payment back.

Whether you can use a mortgage loan for the down payment depends on your financial arrangement with the lender. Some buyers use personal funds for the down payment and finance the remaining amount through a mortgage.

An attorney or real estate agent can play a crucial role in handling the payment process. They can ensure that all legal requirements are met and that payments are made securely and appropriately.

You should always request a receipt or confirmation of payment for the down payment. This serves as proof of transaction and is essential for your financial records.

Both the buyer and seller have tax implications to consider.

The buyer needs to be aware of property transfer taxes, while the seller might have capital gains tax considerations, depending on the duration of property ownership and the profit made.

What are the potentials risks and pitfalls?

You might be interested in reading our article about the common risks and pitfalls surrounding a property transaction in Iran.

In Iran, like in many countries, the property purchase agreement involves certain risks and pitfalls that both buyers and sellers should be aware of.

Both the buyer and the seller have the potential to withdraw from the agreement, but this is typically bound by the terms specified in the contract.

Usually, a valid reason is required for withdrawal, such as failure to meet contractual obligations or unforeseen legal issues with the property.

In Iran, there isn’t a universally mandated cooling-off period for real estate transactions as seen in some Western countries. The inclusion of such a period would be subject to the terms of the individual agreement between the buyer and the seller.

If a buyer or seller withdraws from the agreement without a valid motive or contrary to the terms of the contract, they may face penalties. For instance, a buyer who backs out without justification might forfeit their deposit.

If a buyer is unable to secure financing and this contingency is included in the agreement, they may be able to withdraw without penalty.

However, if there’s no such clause and the buyer fails to complete the purchase due to financing issues, they might lose their deposit or face other penalties.

If one party fails to fulfill their obligations, the other party may seek legal recourse. Penalties can vary, including financial compensation, forfeiture of the deposit, or legal action to enforce the contract.

The handling of money, especially the deposit, depends on the agreement's terms. If a party backs out unjustifiably, the deposit may be forfeited or returned, subject to the contractual terms.

Real estate transactions in Iran differ from those in other countries in several ways, particularly in terms of legal frameworks, the role of notaries, and specific cultural and market practices. For instance, the cooling-off period and certain buyer protections may be more pronounced in Western countries.

Potential risks include issues with the property’s legal status, hidden defects, or discrepancies in the property’s description. Buyers should conduct thorough due diligence and consider legal advice before proceeding.

Disputes during the signing period are often resolved through negotiation or mediation. If unresolved, the matter may be taken to court. It’s essential to have a clear dispute resolution mechanism outlined in the agreement.

Discovering defects or issues post-signing can lead to disputes. The course of action depends on the agreement’s terms and whether the seller disclosed these issues beforehand.

Legal action might be pursued if the seller knowingly hid significant defects.

Disputes in real-life scenarios can arise over property boundaries, defects, or breaches of contract terms. These are typically resolved through mediation or legal proceedings, depending on the severity and the agreement’s terms.

This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.