Presale of 270 Units to 1,670 People; Warning Over Regulatory Gaps in Housing Market

Head of the Article 90 Commission, referring to the presale of 270 units to 1,670 people in Borazjan, said full implementation of the law on official registration of transactions is essential to prevent similar violations.

In a conversation with Mehr reporter, Hojjatul Islam Nasrallah Pejmanfar, referring to the field investigations of the 90th Principle Commission in Bushehr province, said: One of the issues we encountered during these investigations was a case related to the pre-sale of residential units in Barazjan. The dimensions of this case show that in addition to judicial proceedings, we must more seriously pursue mechanisms that can protect the rights of buyers before violations occur.

He said: Based on the available information, the builder has committed to build 340 residential units, but he has built and delivered only 70 units. But the remaining 270 units have been pre-sold to 1,670 people. A number of citizens have complained, the case is being processed in the judicial system, and 10 people have been arrested and imprisoned in connection with it.

The head of the 90th principle commission added: judicial investigation and dealing with the violators is necessary, but the problem of many people who lost their property still remains. These people have paid their capital and savings to buy housing, but they have not reached their expected unit and now they are facing financial and legal problems. Punishing the defendants does not necessarily mean the return of people's investment or compensation for their losses.

The possibility of violation should be limited before it occurs

Pointing to the necessity of strengthening preventive mechanisms in the field of pre-sale of buildings, Pejmanfar said: Pre-sale of housing, if done in a specific legal and financial framework, can help finance construction and facilitate access to housing for households.

He added: The problem arises when the information related to the number of authorized units, the status of the project, the previous commitments of the builder and the completed transactions are not available to the buyer in an integrated and queryable manner. In such a situation, the builder may make commitments more than the actual capacity of the project or a unit may be assigned to more than one buyer.

He clarified: the buyer is usually informed about these conflicts when he has paid a significant part of his capital. Therefore, it is not enough to take judicial action after a violation has occurred, and there must be a mechanism where the buyer can be sure of the legal and registered status of the transaction before paying his capital.

What mechanism does article 14 of the law foresee?

Referring to the "law requiring official registration of immovable property transactions", the head of the Article 90 Commission said: Article 14 of this law foresees a mechanism for determining the independent registration identity of building units.

He continued: According to this article, the country's documents and real estate registration organization is obliged to assign a unique identifier for each building unit based on the structured architectural plan issued by the legal authorities. The legal actions subject to the law will also be carried out for these units using this unique identifier. In the notes of this article, tasks have been determined for the building permit issuing authorities so that the information of the map order, building permit and work completion certificate is available to the registration system through electronic access.

He said: In simple words, the purpose of this mechanism is that each building unit has a clear and traceable identity and its information can be queried during official transactions. As a result, it becomes possible to control the number of units defined in the project and the registration status of the unit being traded.

A unique identifier can limit conflicting transactions

The Chairman of Principle Ninety Commission stated: With the full implementation of this mechanism, the field of repeated sales of a unit, creation of conflicting obligations towards a property, and pre-sale of units that do not have a clear registration status will be more limited.

At the same time, he emphasized: the unique ID alone does not guarantee the completion of the building, the builder's financial ability or the repayment of the buyers' funds; But it can be one of the important links of the violation prevention system and increase the security of transactions in addition to monitoring the performance of manufacturers, controlling contracts and judicial proceedings.

The implementation of Article 14 has not been widespread yet

Referring to the status of the implementation of this article, Pejmanfar said: the realization of the goals of Article 14 depends on the full establishment of technical infrastructure, connection of related devices, online exchange of information and coordinated implementation of legal duties.

He added: The city of Mashhad is considered as a pilot for the implementation of this mechanism, and some other cities are also connected to the relevant system. However, this mechanism has not yet been widely implemented in the country and its development is slow.

The head of the 90th principle commission said: The country's property and documents registration organization, municipalities, building permit issuing authorities and other related institutions should follow the implementation of their tasks more seriously, and technical and executive obstacles should also be removed so that the information of each project and building unit can be registered and queried at the right time.

What is the relationship between the Brazjan case and the implementation of Article 14?

Pejmanfar said: The Barazjan case raises the question that if the mechanisms provided for in Article 14 were fully operational, wouldn't the possibility of such a situation forming or expanding its scope decrease?

He added: If the information of the project units was recorded correctly and the transactions and obligations related to each unit were carried out through legal and controllable channels, it would be possible to identify conflicting transactions and limit the repeated sale of a unit to a few people. Buyers could also check the registration information of the desired unit before entering into the transaction and have more knowledge of its status.

The head of the Article 90 Commission stated: Of course, in order to definitively declare that the implementation of Article 14 would have prevented this case from happening, the details of the case, the way contracts are drawn up, the status of ownership and project permits, and the method of receiving funds must be examined. What is clear is that the full implementation of this article creates an important infrastructure to reduce the risk of transactions, increase the possibility of monitoring and prevent many similar violations.

Delays in implementing the law can cost people dearly

In conclusion, Pejmanfar said: the case of Brazjan is not just a case related to the violation of a manufacturer. When a large number of people face financial loss and long-term uncertainty in a case, in addition to dealing with the same case, it is necessary to remove the grounds that enable the repetition of such events. Article 14 of the law requiring the official registration of real estate transactions has an important capacity to increase transparency, create the possibility of inquiries and limit conflicting transactions in the field of pre-sale of buildings. It is expected that the responsible bodies will pass the implementation of this article from the limited and pilot stage and provide the context for its comprehensive implementation.

The head of the Article 90 Commission noted: Delay in the implementation of this law does not only mean a delay in setting up a system; Rather, it may cause home buyers to remain vulnerable to some of the violations in the field of pre-sale. The Ninety Principle Commission will also follow up the implementation of the legal duties of the responsible institutions from the perspective of protecting people's rights.