Up until 11 March 2008, domestic companies with foreign capital were subject to no restrictions whatsoever when purchasing real estate in Turkey.
Due to the fear of the "sell-outof the country through foreign investors", however, the Turkish constitutional court ruled the relevant provision of Article 3 d of the law on foreign investment to be unconstitutional.
The new Article 36 (4) of the Turkish land register law, made public on 12 Nov. 2008 in the official journal, clearly states that domestic companies with foreign partners are permitted to purchase real estate. The bureaucracy seems, however, to be monstrous. Thisis also the case if a Turkish company, which originally only had Turkish partners, then passes on shares to foreigners. This is even the case if the sale of the property took place before the share in the business was transferred to a foreigner. A retroactive examination is conducted, as to whether the prerequisites for the purchase are still being fulfilled.
Four authorities are to be involved in the sale of real estate: the land register, the prefecture, the treasury and also the military if the land lies in a military safety zone. In this case, the General Staff must issue a clearance certificate.
The specific procedure is as follows:
The regulation also sets out that Art. 36 (3) of the Turkish land register law decrees that “real estate properties that have been purchased or used contrary to the law”, are to be "liquidated", i.e. sold compulsorily.
It is here that the investment security provided by the liberal commercial system that had recently been created in the Republic of Turkey has been visibly weakened.
Foreign private individuals can purchase real estate in Turkey when the principle of reciprocity and the legal prerequisites have been fulfilled. The principle of reciprocity means that Turkish citizens can also purchase real estate in the country of origin of the potential purchaser. This is, for instance, the case in Germany. The restriction of reciprocity does not exist in Germany, Turks can readily purchase real estate.
The purchase of real estate by foreign nationals is not permitted in restricted military areas and safety zones, so that permission has to be obtained from the military authorities for every purchase. This is usually granted within three months. The restrictions of the village regulations, according to which foreign nationals were not permitted to purchase property outside the municipal land utilisation plan, have been abolished.
In Turkey, the land registry (tapu dairesi) is based on similar principles as in Germany. However, the purchase contract for the transfer of property is concluded at the land registry office. A contract on the covenant to transfer title (satış vaadi sözleşmesi) is the instrument which is used for more extensive transactions. It is concluded with a notarised confirmation, and only contains the covenant, which means that its effect in law is purely between the parties (and not "in rem"). Therefore, immediately after the conclusion of this contract, the reservation should be entered into the land register in order to safeguard the transaction.
Attorney under German law, Bar certified specialist for Criminal Law Cüneyt Gençer
E-Mail: gencer@gencer-coll.de • Tel. +49-(0)-911-37 66 76-63