Companies with foreign capital and foreign real persons may purchase immovable property in Turkey. However, this possibility has certain legal limitations. Within the framework of this Newsletter Article, the acquisition of immovable property by foreign real persons shall be examined.
Legal Grounds
As per the Land Registry Law No. 2644 ("Land Registry Law"), it is possible for foreign real persons to acquire immovable property in Turkey. The reciprocity condition regulated under the former Article 35 of the Land Registry Law was abolished by the amendments brought by Law No. 6302. Therefore, Article 35 of the Land Registry Law reads as follows: "in order to comply with the legal restrictions, foreign real persons, citizens of countries determined by the Council of Ministers pursuant to international relations and the country's benefits may acquire immovable property and rights in rem in Turkey".
Legal Restrictions
Pursuant to Article 35 of the Land Registry Law, the total area of the real property and limited rights in rem that a foreign real person may purchase cannot exceed 10% of the total area of private properties within the related district and 30 hectares in Turkey. Therefore, acquisition of immovable property by foreign real persons is subject to an areal limitation.
In addition to the areal limitation, there is a territorial limitation. As per Law No. 2565 on Military Forbidden Zones and Military Security Zones, foreign real persons are obliged to obtain permission from the military authorities in order to acquire immovable property. Where the area desired for purchase is within the borders of a military forbidden zone or military security zone, foreigners cannot acquire an immovable there.
Moreover, it should also be noted that Article 35/3 of the Land Registry Law states that "in case the country's benefits necessitate, the Council of Ministers is authorized to determine the acquisition of immovable property or limited rights in rem of foreign real persons with regard to country, person, geographical area, duration, number, proportion, qualification, area meter and quantity, limit the acquisition, cease it entirely or partially or forbid it".
Matters to be considered by Foreign Real Persons when Acquiring Immovable Property
First, it should be emphasized that, an immovable property sale is only valid if the agreement is concluded pursuant to the official form and registered according to Article 237 of Turkish Code of Obligations No. 6098. Similarly, the official form is also required for the immovable property's sale commitment agreement, which can be defined as a pre-agreement for the sale of the immovable property.
In order to fulfill the official form requirement in a contract concluded for a sale of immovable property, the contract should be prepared as an authenticated document by the Land Registry Directorate where such immovable property is situated. The official form requirement of an immovable property's sale commitment agreement is fulfilled when it is executed before a notary public. Pursuant to Article 26 of the Land Registry Law, it is possible to annotate sale commitment agreements in land registries. Similarly, rights of easement can be also annotated. Pursuant to the same Article "if, within five years as of the annotation, the sale is not effectuated or the right of easement is not granted and postponed by the Land Registry, this annotation shall be automatically removed by the director or other officials of the Land Registry Directorate".
In case the acquired immovable property is unconstructed, pursuant to Article 35 of the Land Registry Law, foreign real persons should submit their project that will be developed on the unconstructed property to the relevant Ministries for approval within two years.
Pursuant to the last paragraph of Article 35 of the Land Registry Law, immovable properties, which are acquired in violation of the stipulations of Article 35 of the Land Registry Law, which are identified by the relevant Ministries and administrations as "being used in violation of purpose of purchase", and for which no application to the relevant Ministry is made within the time prescribed or none of the committed projects are materialized on time shall be liquidated and paid to its owner if is not liquidated by the owner within the term given by the Ministry of Finance, which shall not exceed one year.
In addition to the foregoing, a guideline entitled "Buying Property in Turkey: Guide for Foreigners" has been published on the website of the Ministry of Foreign Affairs.1 Pursuant to the relevant guideline, the documents that are required by the relevant Land Registry Directorates for immovable property acquisition by foreign real persons are the following:
- Identification document or passport;
- Residence permits issued by the relevant police departments for those the acquisition of real property is conditioned such permit; and
- In case the transaction is being made through power of attorney authority issued in a foreign country, the original of the power of attorney or a duly authorized copy of it together with its translation.
Conclusion
As explained above, the acquisition of immovable property in Turkey is possible for foreign real persons, but is subject to certain limitations. In addition to these limitations, in order to avoid issues arising from the lack of knowledge of the legislation and practice in Turkey, foreigners should take into consideration the above-mentioned matters before any acquisition. The most important of these matters is compliance with the official form requirement and registration. Moreover, it is advisable for foreign real persons to check the land registries before the acquisition in order to see if there are any pre-existing mortgages or any obstacles to the sale of the immovable property.
Footnotes
1. htttp://www.mfa.gov.tr/guidance-for-foreigners.en.mfa
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.
