The article deals with the role of urban dwellers in the formation of contemporary cities in Iran, where the concept of citizenship has not yet been transformed into a practical belief neither in the minds of the rulers nor in the general social context. Macro and micro urban laws and programs have clearly been inadequate in solving problems such as social justice, alleviating urban poverty, and reducing conflicts. In the absence of participatory governance and citizen-oriented urban management, local wars over land tenure continue in cities of developing countries such as Iran, destroying the socio-economic and physical fabric. The article refers to the role of profit-seeking urban dwellers and interest groups in bypassing laws and exacerbating tension and instability within the city in critical situations such as war, economic sanctions, and natural disasters. In democratic and citizen-centered societies, efforts are constantly made to limit these behaviours by attracting participation along with the application of urban management. In this study, by the method of reflective analysis, the themes consisting of the opinions of experts, statistics and information extracted from academic sources and the author's documented experiences are shown that in crisis-stricken societies with unstable urban management structures and strong beneficiary institutions, urban dwellers act in continuous efforts for unequal distribution of resources and most importantly disproportionate distribution of land ownership in the informal economy cycle, which exacerbate urban poverty. These stresses cause functional inefficiency, townscape shapelessness, environmental instability, insecurity of the property of the poor, and practically cause the deterioration of the existing tissue, the proliferation of dysfunctional and distorted urban organs at birth.