Power of Attorney (POA) for Selling Property from Abroad

The most significant legal hurdle for many Iranian citizens and dual nationals residing outside of Iran is managing the sale process without being physically present. The Power of Attorney (POA), or Vekalatnameh, is the indispensable legal instrument that allows you, the seller (the Principal or Muvakkil), to grant a trusted person or lawyer in Iran (the Agent or Vakil) the authority to act on your behalf.

The MIKHAK System: The Mandatory Starting Point

For Iranians living abroad, the preparation and authentication of a POA for use in Iran must follow a strict, multi-step process, almost exclusively centered around the MIKHAK System (سامانه میخک) operated by the Iranian Ministry of Foreign Affairs:

• Online Registration: You must register your application and draft the POA document through the official MIKHAK portal. Handwritten or manually prepared POAs are generally not accepted by Iranian Notary Public offices.
• Specific Powers: The document must meticulously specify the exact powers granted to your agent, clearly stating the authority to “sell, transfer, and receive the purchase price” of the designated property (including its full legal description). Vague language can lead to delays or rejection by Iranian authorities.
• Consular Authentication: Once drafted online, you must book an appointment at the nearest Iranian Embassy or Consulate (or Interests Section) to verify your identity, sign the POA in person, and have it officially certified.
• Transmission and Use: After certification, the POA is digitally transmitted to Iran via the MIKHAK platform. Your representative in Iran can then retrieve the legalized document from the relevant Notary Public Office (Daftar-e Asnade Rasmi) using the tracking code.

Critical Legal Considerations for the Seller

Granting a POA, especially for a high-value asset like real estate, requires extreme caution. Our role as your legal advisor is to help you mitigate the risks associated with remote transactions:

• Defining the Scope: We advise on restricting the POA to specific, time-bound actions to prevent misuse. While some POAs are irrevocable (Vakalatnameh be Surat-e Gheyre-Ghabele Azl), we strongly recommend limiting the agent’s authority to the actions required for the sale and ensuring the principal retains the right to revoke the power.
• Choosing Your Agent: The choice of agent is paramount. Whether you choose a family member or a licensed Iranian lawyer, they must be reliable and fully understand the legal scope and financial responsibilities involved.
• Revocation Process: If circumstances change or trust is compromised, a legal advisor is essential to properly and promptly initiate the formal revocation of the POA both through the consular process and through notification to the relevant Notary Public Office in Iran.

Without a validly executed POA compliant with the MIKHAK system and Iranian Civil Law, selling your property from abroad is virtually impossible.

Seller’s Obligations and Property Disclosure Requirements in Iran

In every real estate transaction, the seller has specific legal duties that extend beyond simply handing over the title deed. In Iran, these seller’s obligations are primarily rooted in Civil Law (Qanun-e Madani) and the contract terms (Mabaye’e-nameh). Failure to meet these requirements can lead to contractual rescission (فسخ قرارداد) or liability for damages.

Key Documents and Clearances Required from the Seller

Before the final transfer can take place at the Notary Public Office, the seller must obtain and present several mandatory clearances. These documents certify that the property is legally ready for transfer and free of certain liabilities:

• Municipal Clearance (Pāyān-e Kār – پایان کار): This document, issued by the Municipality, certifies that the construction of the building is complete and conforms to the approved permits and zoning regulations. Without a valid Pāyān-e Kār, the transfer of the title deed is prohibited for most properties.
• Tax Clearance (Ghivām-e Māliyāti – گواهی مالیاتی): The seller must obtain clearance from the Iranian National Tax Administration (INTR). This clearance confirms that all relevant property taxes, including capital gains tax on the sale (if applicable) and municipal renovation levies, have been paid. This is a non-negotiable step for the final transfer.
• Utility Debt Clearance: The seller is responsible for settling all outstanding utility bills (water, electricity, gas, and telephone) up to the date of the final transaction. Receipts or clearance letters from the relevant utility departments must be presented.
• Homeowners/Apartment Association Clearance: For apartment buildings, the seller must provide proof that all outstanding common area maintenance fees (Shārg – شارژ) have been paid.

Property Disclosure and Legal Defects

Under Iranian contract law, sellers have an obligation to transfer the property in its current state, free from known legal defects (Eybe Qānuni).

• Undisclosed Defects (Tadlis – تدلیس): The seller must not deliberately conceal known, material defects that would have influenced the buyer’s decision. If the buyer discovers a serious, latent defect after the sale, they may have grounds for annulment or claiming compensation based on the principle of Khiyār-e Eybe (حق خیار عیب – option of defect).
• Encumbrances (Rahn – رهن): The property must be free of all legal claims and encumbrances, such as mortgages (Rahn) or court orders attaching the property. If the property is currently collateral for a loan, the seller must fully clear the debt and release the mortgage before the transfer of the official deed can occur.

As your legal advisor, we ensure that these complex requirements are met proactively, shielding you from potential legal disputes post-sale and guaranteeing the legitimacy of your transaction in Iran.

 

Tax Implications of Selling Property in Iran and The Role of a Legal Advisor

Understanding the tax implications of selling property in Iran is not just an administrative task; it is a critical legal necessity that directly affects your final sale proceeds and compliance status. While Iran currently does not have a traditional Capital Gains Tax (CGT) on real estate sales (though changes regarding a tax on inflation-driven asset gains are being introduced), there are still significant transfer taxes and potential international tax complexities that demand careful management.

The Mandatory 5% Property Transfer Tax

The primary tax obligation for the seller in Iran is the Property Transfer Tax (Māliyāt-e Enteqāl-e Amīr). According to Iranian Tax Law (Article 59), the absolute transfer of real estate is liable to a tax calculated as 5% of the transaction value. This value is typically determined based on the government-assessed value (Arzesh-e Mo’āmelāti) or the officially declared value, whichever is higher.

• Who Pays: Although legally the tax is levied on the transfer, it is the seller’s legal responsibility to pay this amount and obtain the necessary tax clearance certificate (Ghivām-e Māliyāti) before the Notary Public will finalize the transfer of the deed.
• New Buildings: The tax rate for newly constructed buildings (those receiving their Pāyān-e Kār for the first time) may be subject to different rates, which adds another layer of complexity.

The Critical Role of Your Legal Advisor

The complexities deepen significantly for individuals selling property in Iran while being residents or citizens of countries with rigorous international tax laws, such as the United States (US Persons). This is where the specialized expertise of a Legal Advisor like Saeed Naghdi becomes indispensable:

1. Navigating Sanctions Compliance (For US Persons): For US citizens or residents, transferring property and repatriating funds from Iran is heavily restricted by US sanctions (e.g., OFAC’s ITSR). Your advisor will guide you on applying for the necessary OFAC licenses to legally conduct the sale, receive the proceeds, and transfer the money without violating federal law.
2. Mitigating International Tax Liability (Worldwide Income): If you are a resident of a country that taxes worldwide income, the proceeds from your Iranian property sale must be reported to your home country’s tax authorities (e.g., the IRS in the US). An advisor helps determine the correct tax basis and ensures you fulfill all international reporting requirements (like FBAR or FATCA reporting), preventing severe penalties for non-compliance.
3. Ensuring Local Tax Clearance: We liaise directly with the Iranian National Tax Administration to calculate the precise transfer tax amount, manage the payment process, and secure the tax clearance certificate quickly, preventing unnecessary delays in the closing process.

By entrusting your sale to a knowledgeable Legal Advisor, you ensure full compliance with both Iranian tax law and complex international regulations, securing your sale and maximizing the legitimate transfer of your funds.