This study was conducted to analyze the legal challenges arising from the exercise of rescission rights in real estate transactions, particularly in light of Note 1 of Article 1 of the Mandatory Registration of Transactions Act. The central question is whether the doctrine of Constructive Destruction (talaf-e ḥokmi), can provide a coherent solution, consistent with fundamental principles of private law, to resolve the conflict between a rescission-right holder's claims and the rights of bona fide third party? This conflict becomes particularly acute when the subject property has been formally transferred to a third party after the right of rescission has accrued. In addressing this legal dilemma, the legislature, drawing upon the legal-jurisprudential foundations of constructive destruction, has established a dual mechanism whereby, in certain cases, either restitution in kind (recovery of the asset itself) or a claim for its current fair market value may be pursued. However, the interpretation and implementation of this remedy face significant challenges, including conflicts with fundamental principles such as relativity of contracts, legal autonomy of transactions, and legal certainty derived from official registration.

The findings of this study reveal that in certain circumstances, the holder of the right of rescission may reclaim the actual property from a third party without having formally and explicitly exercised such right; a situation that conflicts with principles of ownership stability, protection of bona fide third party, and public trust in the official registration system. This study, employing an analytical-descriptive methodology and drawing upon jurisprudential, legal, and comparative foundations, ultimately proposes three remedial mechanisms:First, mandating actual and formal exercise of rescission by the transferor as a prerequisite for restitution; Second, compensating bona fide third parties in cases where the property is restored (to the original owner); and Third, enhancing informational transparency and implementing warning systems in the transaction registration process.