Law and practice are pro-landlord
July 27, 2006
The foreign ownership of real estate in Iran is subject to issuance of a purchase permit by the Government. The approval of the Board of Ministers may be also required, in certain cases.
Rents: Can landlord and tenant freely agree rents in Iran?
The rent can be freely agreed between the parties, according to the Landlord and Tenant Act passed in 1376 (1997), as well as the Civil Code of Iran.
The rent is fixed only for the lease period, and in case of extension of the lease agreement, both parties must mutually agree on the rental for the extension period, otherwise the landlord has the right to request the tenant to vacate his property.
However the parties are free to agree, at the time of signing the lease, an option for the tenant to renew the agreement, by increasing the rental for certain percentage acceptable to the parties. Such an increase can be equal to the increase in the cost of living index issued by the Central Bank, or any other mechanism acceptable to the parties.
The parties may agree any deposit. By general custom, a deposit of between five and ten (or more) months of rental is agreed, to secure the regular payment of rental and utilities, and to compensate for damage to the property during the lease period. Such deposits are both for security, and for rental.
What rights do landlords and tenants have in Iran, especially as to duration of contract, and eviction?
The lease period must be specified in the lease agreement. The agreement will not be valid if the period has not been specified.
The specified period is binding on both parties. Neither party may terminate before expiration of the lease period, unless a termination option has been provided for that party in the agreement.
At the end of the period, the tenant must vacate the property, without need for notice to be given by the landlord. If the tenant fails to vacate the property, the landlord can ask the court for an eviction order, in which case by law the eviction procedure must not exceed seven days.
How effective is the Iranian legal system?
- Rent arrears
If an application is made to the court for an eviction order after the end of the lease period, the court must order an eviction within seven days.
The collection of rent is subject to the general legal procedures. When a landlord applies to the court claiming unpaid rentals, his claim must be examined by the court, and it takes between six months to a year to obtain a judgment for collection of the rental.
The relation between the landlord and tenant is subject to Landlord and Tenant Act of the year 1376 (1997) and the Civil Code of Iran.
Before the Landlord and Tenant Act of 1376 (1997) was passed, eviction orders were only granted in very restricted circumstances, and the lease agreement was not enforceable as to the period of the lease.