Renewing an Expired Building Permit in Iran: What Can the Municipality Charge?

Neka, early 2002. The municipality issues a permit for a Bank Mellat building. According to the bank, construction finishes in 2004. When it applies for the completion certificate, the case goes to the Article 100 commission over a small amount of extra floor area and a fine follows. So far, a familiar story.

In 2015, when it comes to paying, the bank sees the municipality has added another figure: nearly 2 billion rials at that year’s value, labelled “permit non-renewal fees”. This for a building the bank said had been finished eleven years earlier.

The bank complains and the case reaches the General Board of Iran’s Administrative Justice Court. Before we get to the end of the story, let’s see what the law says; because if your villa’s permit has expired too, this is now your question.

What does the law actually say?

The main basis is Note 2 of Article 29 of the Urban Renewal and Development Act of 1968. It says a permit must state the maximum time needed to finish the building. Then, for those building on a city’s main squares and thoroughfares, it sets a stepped penalty: if work is still unfinished two years after that period, the charges under this Act double, and they double again every two years, up to 4 percent a year.

So keep three things in mind from the start: your own permit sets the deadline, not the law (as we said in the completion certificate article). This penalty concerns unfinished buildings on main thoroughfares. And nothing in this note mentions paying the permit fees again.

Source: Article 29, Urban Renewal and Development Act — Edalatsara (in Persian)

What has the Administrative Justice Court said?

Even so, city councils have put permit-renewal lines into their fee schedules, and these have repeatedly been taken to the court. We read three cases:

Tehran, 2019. In ruling 1555, the court struck down a Tehran council resolution charging renewal fees for the permits of half-finished buildings. Its reasoning was that the legislator set its own method in that same note, and that councils imposing this fee exceed their powers.

Eslamshahr, reported in 2020. The same reasoning was repeated for Eslamshahr’s 2018 schedule, and renewal fees for half-finished permits were struck down.

Neka, ruling dated January 2019: the end of our story. The court struck down the clause under complaint. The ruling says charging a “difference” for buildings built within the permit’s period and according to its terms is against the law.

Sources: Mehr News, 20 September 2019 — ruling 1555 (in Persian); Mehr News, 20 March 2020 — Eslamshahr (in Persian); Ruling 1923 of the General Board — Ekhtebar (in Persian)

So is renewal free? It’s not that simple

This is where many people jump to conclusions. Do these rulings mean “nobody ever pays anything”? No. Some important caveats:

The rulings concern specific texts. Each struck down one line of one city’s schedule. In the Neka case only clause 3 was under complaint, and the rest of that line stayed. That includes a note saying that if someone hasn’t started work after the 5-year period, the permit is void, and validating it costs the full permit fee at current rates. So not starting isn’t the same as leaving work half-finished.

It varies by city. For example, the head of Tehran’s council urban planning committee explained in 2019 that there they give 2 years to start, take the completion time from a table based on storeys and floor area, and then have “extension” fees. That’s just one example from one city and one year, not a rule for the north.

The rulings are older than this year’s schedule. The latest item we read dates from 2020. A newer ruling or law may have come since. For your own property, look at the municipality’s current schedule.

Article 100 is a separate story. Even in the Neka case the extra-area fine stayed in place, and the complaint wasn’t about it. Renewing a permit doesn’t fix what was built against it.

These rulings concern city council resolutions. If your villa is in a village and its permit came from the village council, don’t assume these arguments carry over; ask that authority.

Sources: Ruling 1923 — Ekhtebar (in Persian); Student News Network, 4 February 2019 (in Persian)

Which is your situation?

Three things you can do this week

Take the permit out of its folder. Check the issue date and the deadlines written on it, and put them in your calendar. Many of these cases start with nobody having looked at the date.

Gather evidence of dates. Supervisor’s reports, contracts and dated photos. Bank Mellat’s argument, too, was that work had finished in 2004. If you ever need to prove when your building was finished, these will help.

Get the itemised calculation in writing. When the municipality names a figure, ask which line and which year of the schedule each amount comes from. The Neka figure also came from a specific line, and that line is what could be challenged. If the dispute is serious, talk to a lawyer familiar with municipal cases before paying or signing an undertaking. This article is general information, not legal advice.

It’s best to see these deadlines in the project plan from day one, because a project that runs short of money or decisions midway reaches this point quickly. We covered part of this in the hidden costs of building a villa, and the permit route in the villa building permit.

If you have a half-finished project in Babol, Babolsar, Sarkhorud, Amol or Sari and don’t know where to restart, bring the drawings and permit and let’s look at them together.