Turkey: The Draft Law On The Amendment Of Land Registry Law And Cadastre Law

Abstract

Articles 35 and 36 of the Land Registry Law Numbered 2644 ("Land Registry Law") are the two main articles which regulate the foreigners' right to acquisition of property in Turkey. The Draft Law on the Amendment of Land Registry Law and Cadastre Law ("Draft Law") introduces new legislation which decreases the restrictions imposed on foreigners' right to acquisition of property in Turkey.

1. The Current Legislation

a) Acquisition of Real Property by Foreign Natural Persons

Articles 35 and 36 of the Land Registry Law Numbered 26441 ("Land Registry Law") are the two main articles regulating the foreigners' right to acquisition of real property in Turkey. Article 35 (1) of Land Registry Law stipulates that "With reservation of reciprocity and compliance with legal restrictions, foreign natural persons can acquire real property in Turkey for the purpose of using it as residence or as business place, provided that such real properties are allocated and registered in the implemented development plans or localized development plans for these purposes". This paragraph further stipulates that the same conditions apply to the establishment of a 'restricted real right'2 and that the surface area of this real property and independent and continuous restricted real right, which a foreign real person can acquire country-wide, cannot exceed 2.5 hectares.

The last sentence of this paragraph, which authorized the Council of Ministers to increase the aforementioned surface area up to 30 hectares, was annulled by the Supreme Court's decision dated April 11th, 2007 and numbered 2006/35 E. and 2007/48 K.3. The annulled sentence initially stated that "the Council of Ministers is authorized to increase this area up to 30 hectares, within the framework of the same conditions set forth in this paragraph ". This remark was annulled by the Supreme Court through its aforementioned decision4, which was published in the Official Gazette of January 16th, 2008 along with its reasoning. According to the reasoning of the Supreme Court, the relevant sentence was annulled because it granted an excessive authority to the Council of Ministers to increase the legal limit that is 2.5 hectares to (2.5 x 12) 30 hectares. The Supreme Court considered this discretionary power to be emptying the purpose of the limitation that was deemed necessary by the legislature. Consequently, the maximum surface area of real property and the independent and continuous restricted real right, which foreign natural persons may acquire, remained to be solely 2.5 hectares.

On a final note, as per Article 35 (1) of Land Registry Law, reciprocity is one of the conditions, the existence of which is sought for the acquisition of real property and restricted real right by foreign natural persons in Turkey. Article 35 (6) of Land Registry Law stipulates that both legal and de facto status shall be taken into consideration when determining whether reciprocity regarding the relevant matter does exist between Turkey and the country in question. Article 35 (6) of Land Registry Law further stipulates that countries, which do not allow personal ownership of real property, should grant the same rights to citizens of Turkey, to which they grant their own citizens, regarding acquisition of real property.

b) Acquisition of Property by Foreign Legal Persons

As for foreign legal persons; the same article, i.e., Article 35, rules that solely the commercial companies, that have legal personality and are established in a foreign country in accordance with the local law of that foreign country, are allowed to acquire real property and restricted real rights in Turkey, as long as they fall under scope of certain specific legislation. It should be noted that the specific legislation allowing foreign legal persons to acquire immovable property and restricted real rights in Turkey is fairly limited.

This being said, Article 36 (1) of Land Registry Law stipulates that the companies having legal personality, which are established by foreign investors in Turkey, or in which foreign investors own shares, may acquire and use real property and restricted real right in Turkey to carry out the activities mentioned within the Articles of Association of the relevant company. Thus, the companies having legal personality, which are established by foreign investors in Turkey, or in which foreign investors own shares, can well acquire and use real property and restricted real rights in Turkey, to the extent that that they do so, to carry out the activities mentioned within their Articles of Association. In fact, Article 3 (d) of the Law of Direct Foreign Investments5 had stipulated that companies having legal personality, which are established by foreign investors in Turkey, or in which foreign investors own shares, could acquire and use immovable property and restricted real rights in Turkey, regardless of whether their purpose is to carry out the activities mentioned within their Articles of Association, or not. However, the relevant sub-paragraph was annulled by the Supreme Court's decision dated March 11th, 2008 and numbered 2003/71 E. and 2008/79 K.6. Consequently, Articles 35 and 36 of Land Registry Law continue to be the sole regulations regarding acquisition of real property by foreign legal persons.

An additional restrictive legislative tool regarding the acquisition of real property by foreigners, either real or legal persons, is stipulated under the Law of Military Forbidden Zones and Safety Zones7. Article 9 of the relevant law stipulates that foreign real or legal persons cannot acquire any real property within certain military forbidden zones. Additionally, as per the same article, they are not allowed to enter into these zones and buy or lease real property there.

Moreover, Article 28 of the Law of Military Forbidden Zones and Safety Zones stipulates that the Council of Ministers is authorized to determine additional zones in which foreigners cannot lease real property, unless a permit is obtained, or acquire real property. The same article rules that the reason for determining such zones can be either due to proximity to the military forbidden zones or due to other reasons. Article 29 of the Law of Military Forbidden Zones and Safety Zones additionally rules that the Council of Ministers is authorized to decide whether the foreigners, who own real property within the zones falling under scope of Article 28 of the Law of Military Forbidden Zones and Safety Zones, should discharge their real property, which is located within the zones stipulated under Article 28, or not.

II. The Draft Law on the Amendment of Land Registry Law and Cadastre Law ("Draft Law")

The first difference which stands out is that Draft Law no longer stipulates that reciprocity is required for the acquisition of real property and restricted real right by foreign natural persons. Instead, Draft Law introduces quasi a list, which is to be determined jointly by Ministries of Environment and Treasury, and upon receipt of the opinion of the Ministry of Foreign Affairs, in cases where national benefits so require, and stipulates that the citizens of the countries found within the aforementioned list may acquire immovable property and restricted real rights. This list is to be drawn up jointly by Ministries of Environment and Treasury, and upon receipt of the opinion of the Ministry of Foreign Affairs, in cases where national benefits so require8.

Another amendment which is introduced by Draft Law is concerning the maximum surface area of real property and the independent and continuous restricted real right, which foreign natural persons may acquire. While the current legislation determines it to be 2.5 hectares, as explained above, under Section 1 (a), the Draft Law regulates that the relevant surface area may not exceed 30 hectares9. Additionally, as per Article 1 of Draft Law, the Ministries of Environment and Treasury have the authority to double the relevant amount, in cases where the national benefits so require.

The Draft Law does not differentiate between the main handling of acquisition of real property and restricted real right by legal foreign persons. The Draft Law, as does the current legislation, stipulates that only the commercial companies, that have legal personality and are established in a foreign country in accordance with the local law of that foreign country, are allowed to acquire real property and restricted real rights in Turkey, as long as they fall under scope of certain specific legislation.

One of the changes the Draft Law brings along is that foreign natural persons, acquiring real property without any buildings on, should submit the project which they will develop on the acquired real property, to the approval of the relevant ministry. The relevant ministry will thereafter send the said project to the land registry, where the acquired real property is registered, for the said project to be annotated to the explanations part of the land registry. It is then the relevant ministry's responsibility to follow up whether the promised project is realized or not. In case the approval is not applied for, or the project is not realized on time, then the discharging of the immovable property and restricted real right will be realized as per Article 1 of Draft Law.

III. The Reasoning of the Draft Law

The official reasoning of the Draft Law10 refers to the legislation prior to the current legislation. The legislation prior to the current legislation stipulated that the surface area of real property and restricted real right, which a foreign real person can acquire country-wide, could not exceed 30 hectares. It was furthermore stipulated that the acquisition of real property and restricted real rights exceeding the aforementioned amount was possible upon permission of the Council of Ministers. Thus, the former law rendered it possible that a real foreign person could acquire immovable property and restricted real rights with a surface area of an unrestricted amount, provided that the permission of government was obtained and that reciprocity existed. Thus, the amendment brought by the current legislation, i.e., the decrease of such amount to solely 2.5 hectares, was of a dramatic nature. The Draft Law states that with its proposed amendment, a similar approach to that of the legislation prior to the current legislation, which was in force for almost 70 years, was adopted regarding the maximum surface area of real property and restricted real right, which a foreign real person can acquire country-wide.

Above being the case, because the Supreme Court annulled a similar regulation, which was one to authorize the Council of Ministers to increase the maximum surface area of real property and restricted real right, which a foreign real person can acquire country-wide, up to 30 hectares, through its aforementioned decision11, it is likely that the Supreme Court will annul the relevant provision of Draft Law as well. On a different note, for the first time in history, the principle of reciprocity is left out of the relevant legislation

The general public response was positive to Draft Law and it is widely believed that the adoption of Draft Law would ease investments especially from the Gulf Countries, Russia and Turkic states. Thus, overall public opinion on Draft Law is welcoming.

Footnotes

1. The Land Registry Law No. 2644, published on the Official Gazette numbered 2892.

2. A restricted real right under civil law is one which grants the owner only one or two of the rights of usus, fructus, abusus; as opposed to unrestricted real right of ownership, which grants the owner all three of the aforementioned rights.

3. Supreme Court Decision, E: 2006/35, K: 2007/48, published in the Official Gazette numbered 26758.

4. Id

5. The Law of Direct Foreign Investments No. 4875, published on the Official Gazette numbered 25141.

6. Supreme Court Decision, 2003/71 E. and 2008/79 K, published in the Official Gazette numbered 26849.

7. The Law of Military Forbidden Zones and Safety Zones No. 2565, published on the Official Gazette numbered 17552.

8. Article 1 of Draft Law.

9. Article 1 of Draft Law.

10. The official reasoning of the Draft Law is available in Turkish on the website of the Prime Ministry, www.basbakanlik.gov.tr/Handlers/FileHandler.ashx?FileId=12472

11. Please see Footnote 6.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Oncel, Aydın, Duman & Uygun Attorney Partnership
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Oncel, Aydın, Duman & Uygun Attorney Partnership
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions