From Formalism to Flexibility:

Mitigating the Legal Rigidity of Real Estate Transactions in Iraq

Mansour Hatem Mohsen

Mohammed Jaafar Hadi

 

Abstract: Iraqi law considers formality a fundamental requirement for the validity of real estate transactions; failure to meet this condition renders the transaction void. A key consequence is that a seller may withdraw from a preliminary sale contract if registration is incomplete, often in pursuit of a more profitable deal. In such cases, the buyer may claim restitution under the doctrine of unjust enrichment. To address this issue, the legislature issued Resolution No. 1198 of 1977, which allowed the buyer to claim compensation or judicial transfer of ownership if they had occupied or improved the property, provided the seller had not objected in writing within a specified timeframe. The judiciary has also sought to reduce the harsh effects of formalism, particularly in the sale of residential units under construction, which are typically governed by unregistered preliminary contracts. The absence of registration may lead to the loss of buyers’ rights if the seller refuses to transfer ownership. Courts have responded by recognising the validity of such contracts in accordance with Islamic Sharia, an official source of Iraqi law. This note argues for reform through a real estate registration system based on publicity, limiting the role of formality to protecting third-party rights without making it a precondition for the contract’s validity.