Document Type : Research Article
Authors
1
Associate Professor, Department of Law, Faculty of Literature and Humanities, University of Guilan, Rasht, Iran.
2
PhD Student in Private Law, Faculty of Literature and Humanities, University of Guilan, Rasht, Iran.
Abstract
∴ Introduction ∴
The relationship between freedom of will and legal regulation has been a longstanding subject of legal discourse, particularly in the context of contract law. In the Iranian legal system, this relationship is grounded in Articles 190 and 191 of the Iranian Civil Code, which uphold the principle of consensual contracts and individual autonomy. This principle, rooted in the theory of individual freedom, asserts that parties to a contract possess the liberty to form and execute their agreements without external interference, provided there is mutual consent. The broad acceptance of this principle reflects a commitment to minimizing government involvement in private transactions, encouraging economic activity, and supporting social innovation.
However, the application of this principle is not without its drawbacks. The unqualified application of contractual autonomy can, in some instances, result in harm to third parties, or fail to protect the interests of weaker contracting parties. Moreover, the lack of formal requirements for certain transactions can lead to inefficiencies, disputes, and an overwhelming caseload for the judiciary. As a response, Iranian lawmakers have imposed limitations on the freedom of will, introducing formal requirements designed to safeguard collective interests, protect public order, and regulate significant social transactions. One notable example of such a restriction is the “Code on Mandatory Official Registration of Real Estate Transactions,” enacted in 2024, which mandates the official registration of real estate transactions for their validity. This study aims to critically examine the rationale behind these formal requirements and evaluate the effectiveness of their implementation in real estate transactions within the Iranian legal framework.
∴ Research Question ∴
The main research question that drives this study is: To what extent has the Iranian legislator’s approach to limiting freedom of will in the context of real estate transactions through mandatory official registration effectively achieved its intended objectives? This inquiry is rooted in the concern over the legitimacy and efficacy of imposing formalistic requirements on legal transactions, particularly when the underlying rationale for such formalism is examined within the context of Islamic law and the principle of individual autonomy. Further questions arise concerning the theoretical foundations that shaped the introduction of registration formalities and whether the Iranian legal system has successfully reconciled these formalities with the foundational principles of Islamic law.
∴ Research Hypothesis ∴
The central hypothesis of this research posits that the imposition of mandatory official registration for real estate transactions is an unavoidable necessity, given the failures of previous legal frameworks that allowed informal agreements to be valid. The study hypothesizes that the introduction of formal requirements aims to address the shortcomings of earlier laws by preventing potential abuses, reducing disputes, and ensuring greater protection for third parties. Despite this, the authors suggest that the legislator’s implementation of formalities in real estate transactions contains inherent deficiencies, which may undermine the effectiveness of the law. This hypothesis aims to challenge the efficiency of the legislator’s approach and calls for a more nuanced reconsideration of the extent to which formalism in real estate transactions is justified within the broader framework of Islamic jurisprudence.
∴ Methodology & Framework, if Applicable ∴
This study adopts a doctrinal methodology underpinned by an inductive approach to investigate the Iranian legislator’s performance concerning the formal requirements imposed by the Code on Mandatory Official Registration of Real Estate Transactions. The research begins with a theoretical exploration of the principle of consensual contracts, formalism in legal transactions, and the role of government intervention in contract law. By examining these concepts within the context of Shia jurisprudence, the study assesses the theoretical underpinnings of the law, considering the balance between individual freedom and social protection.
∴ Results & Discussion ∴
The enactment of the Code on Mandatory Official Registration of Real Estate Transactions represents a significant shift in the Iranian legal system, specifically in terms of contract formation and the recognition of formalities. The results of the research demonstrate that the imposition of formal requirements for real estate transactions has effectively addressed several long-standing issues inherent in the prior legal framework, particularly the challenges associated with informal, unregistered transactions. The study reveals that, while the principle of consensuality has long been dominant in Iranian contract law, its absolute application led to inefficiencies and vulnerabilities in the real estate sector, including widespread fraud, disputes over property ownership, and complications in judicial enforcement.
The legislator’s decision to introduce mandatory registration is viewed as a response to these problems, offering clear benefits in terms of transactional security, judicial efficiency, and economic stability. The registration requirement ensures that all real estate transactions are properly documented and accessible for legal verification. This formalism not only strengthens the credibility of transactions but also provides a safeguard against potential legal challenges and the subsequent impact on the judiciary, which previously bore the burden of numerous unresolved cases related to unregistered transactions. This approach has the dual effect of fostering greater legal certainty in real estate dealings and streamlining judicial processes, as courts are now presented with documented, verifiable transactions rather than relying on testimonial evidence alone.
Furthermore, the study discusses the positive secondary effects of the mandatory registration law, such as the reduction in fraudulent activities, including unauthorized property sales, forgery, and fraudulent claims. By setting clear and enforceable requirements for the validity of transactions, the law helps prevent these criminal activities and protects both the true property owners and third parties acting in good faith. This protection extends to ensuring that wrongful claims are penalized and compensated for at current market values, thus deterring opportunistic actors who may seek to exploit gaps in the previous legal system. Additionally, the law has improved the transparency of real estate ownership, contributing to better management of property rights and reducing ambiguities that could arise in property disputes.
Another crucial aspect of the law is its impact on economic development. By promoting the formal registration of transactions, the law ensures greater stability and security for domestic and foreign investors, ultimately fostering increased investment in the real estate sector. With greater certainty around property rights, the law helps create an environment conducive to business growth and reduces the risk of disputes over land and property ownership. In this sense, the law plays a key role in encouraging economic activity by creating a clear and trustworthy system for property transactions, which, in turn, benefits the broader economy.
While the law has achieved many of its objectives, the analysis suggests that there are areas where its implementation could be refined. For example, while Article 1 of the law addresses concerns about secondary transactions and contract rescission, further clarification on specific scenarios involving contract enforcement could improve the overall efficacy of the legal framework. Moreover, while the law has increased the protection of third parties, there may be instances where its enforcement leads to unintended consequences for individuals who lack the means to comply with the registration requirements, potentially exacerbating socio-economic inequalities. These considerations highlight the need for a more balanced approach in future amendments to the law, ensuring that it continues to align with both legal principles and contemporary economic realities.
∴ Conclusion ∴
In conclusion, the Code on Mandatory Official Registration of Real Estate Transactions represents a pivotal development in the Iranian legal system, marking a significant departure from the traditional emphasis on consensual contracts without formal requirements. By imposing formalities on real estate transactions, the Iranian legislator aims to address the shortcomings of the previous legal system, which had led to inefficiencies, fraud, and an overburdened judiciary. The law’s introduction of mandatory registration requirements has achieved several key objectives, including improving legal certainty, reducing fraud, enhancing judicial efficiency, and fostering economic growth.
The results of this study suggest that, in many respects, the law succeeds in addressing the legal and practical challenges posed by informal real estate transactions. The imposition of formal requirements has not only strengthened the integrity of property rights but also contributed to the overall stability of the real estate market, benefiting both the contracting parties and society at large. Furthermore, the law’s focus on protecting third parties and penalizing fraudulent claims has proven to be a prudent approach to ensuring fairness and transparency in real estate dealings.
However, the study also highlights areas where the law’s implementation could be improved. Some of the law’s provisions, while effective in many respects, may need further refinement to better align with the socio-economic realities of modern Iranian society, ensuring that the law is both effective and equitable. Future amendments to the law should consider these factors, taking into account the evolving nature of real estate transactions, the protection of individual rights, and the need for greater inclusivity in the legal system. Overall, the Code on Mandatory Official Registration of Real Estate Transactions represents an important step in balancing individual autonomy with the broader interests of society, while also aligning with the evolving economic and social needs of Iran.
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