Foreign Ownership of Real Estate in Iran: A Complete Legal Guide

Can Foreigners Legally Buy Property in Iran? (Rules and Restrictions)

The short answer is: No, not for residential purposes leading to absolute title.

Under Iranian law, the absolute ownership of real estate (malikiyyat) by foreign nationals for purposes such as personal residence or general investment is highly restricted. The government maintains a policy that reserves long-term, absolute property rights for Iranian citizens.

Defining the Foreign Buyer

The restrictions apply to:

• Non-Iranian Citizens: Any person holding only a passport from a foreign country.

• Dual Citizens: Individuals who are considered Iranian citizens under Iranian law (e.g., through paternal lineage) but also hold a foreign passport. Iranian law primarily recognizes their Iranian nationality, yet the property purchase may still be subject to intense scrutiny if the funds or actions originate from abroad.

The Key Legal Restriction

Foreigners are prohibited from owning property in a manner that leads to “absolute and perpetual title” (malikiyyat-e mutlaq va dā’imi). This restriction is enforced to prevent foreign influence over Iranian land and resources.

Exception via FIPPA (Foreign Investment Promotion and Protection Act): The only practical path to legally secure property rights for foreigners is if the property purchase is directly linked to an approved foreign investment project. In this scenario, the foreign investor may be permitted to lease the land or acquire necessary property for the operation of their industrial, commercial, or service facility, but this is tied strictly to the duration and necessity of the approved investment.

Required Permits and Declarations for Non-Iranian Buyers

Due to the fundamental restriction on absolute ownership, a foreigner must obtain specific Permits and Declarations before attempting to acquire property or property rights in Iran. These permits transform the property acquisition from a prohibited act into a conditional one.

1. Authorization from the Council of Ministers: The primary legal requirement for acquiring property rights is securing a permit from the Council of Ministers (Hey’at-e Vazīrān). This permit specifies the purpose, area, and duration of the foreign ownership.

2. Official Declaration of Use: The foreign applicant must submit a binding declaration promising that the property will be used only for the specific purpose (e.g., commercial office, factory site, or embassy) outlined in the permit and that they will transfer the property upon the termination of the permitted use or their departure from Iran.

3. Registration and Transfer Restrictions: Even with a permit, the title deed usually carries annotations (legal notations) explicitly stating the foreign ownership restrictions and the requirement for divestment upon the cessation of the authorized use.

Legal Advice is Non-Negotiable

Attempting to acquire property without these explicit permits leaves the buyer exposed to the serious legal risk of the government mandating the divestiture of the property and being forced to sell the asset at short notice. Your Legal Advisor manages the entire application and declaration process with the relevant government bodies, ensuring compliance with both the letter and spirit of FIPPA.

The Risks of Buying Property in an Iranian National’s Name

Due to the complex permit process, some foreign buyers, particularly dual citizens, are tempted to purchase property in the name of a trusted Iranian national (a family member or friend). This practice is highly risky and is strongly advised against by all reputable Iran Real Estate Lawyers.

Legal Perils for the Buyer

• Lack of Legal Ownership: In the eyes of Iranian law and the Deed Registration Organization, the Iranian national is the sole legal owner. The actual foreign investor has no legal standing to claim the property.

• “Bequest” Risk: If the Iranian nominee dies, the property will be distributed according to Iranian inheritance law (Qanun-e Mirāth) among their legal heirs, irrespective of any informal agreements made with the foreign investor.

• Fraud and Disputes: The Iranian nominee may legally sell, mortgage, or dispose of the property without the consent of the foreign investor, leaving the investor with little to no legal recourse to recover the asset or the funds.

• Tax Evasion Liability: This practice can be construed as an attempt to circumvent tax laws or foreign investment regulations, potentially leading to additional legal and financial penalties for both parties.

To genuinely secure property rights, the investment must follow the official, permit-based legal channel, not rely on informal, high-risk nomination arrangements.

U.S. Sanctions and Property Acquisition in Iran (Compliance Issues)

For US citizens, US permanent residents, and entities subject to US jurisdiction (US Persons), buying or selling property in Iran involves navigating the additional layer of compliance with the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC).

• ITSR Compliance: Transactions often fall under the Iranian Transactions and Sanctions Regulations (ITSR), which generally prohibit US Persons from engaging in transactions related to real estate in Iran.

• Specific Licensing Required: For any permissible activity (e.g., managing inherited property or acquiring property for residential use by immediate family members in Iran), a specific license from OFAC must be secured before entering into the transaction. General licenses rarely cover large real estate transfers.

• Repatriation of Funds: Even if the purchase or sale is legally completed in Iran, the transfer of funds (purchase money or sales proceeds) to or from the US banking system requires explicit OFAC authorization.

An Iran Real Estate Lawyer with experience in international sanctions is crucial to ensure that the entire acquisition process, including funding and eventual sales, does not lead to severe penalties from US authorities.

📞 Final Encouragement: Secure Your Investment Legally

The legal restrictions and regulatory environment for foreign ownership of real estate in Iran are designed to protect national interests and do not forgive mistakes made due to lack of knowledge.

Do not risk your capital by attempting to bypass the law. For reliable guidance on FIPPA compliance, permit applications, or sanctions navigation, consult the specialized Iran Real Estate Lawyer team at Saeed Naghdi Law Firm. Contact us today to ensure your property rights are legally established and fully protected.