Any transfer of ownership of agricultural land in Turkey is subject to the Law on Land Protection and Use of Agricultural Land Nr. 5403 (the "Law") and the Regulation on the Transfer of Agricultural Land published in the Turkish Official Gazette on December 31, 2014 numbered 29222. Similarly, division, allotment of agricultural land, increase in their shareholders, except for sales of real estate owned by the Treasury, is prohibited. If an allotment below the legally required size is inevitable for land not used for agricultural purposes, or land with a special climate, or land requirements, smaller parcels can be established after obtaining the opinion of the Turkish Ministry of Food, Agriculture, and Livestock (the "Ministry").
Agricultural land are categorised by the Ministry based on their natural features and importance within the local agriculture. Additionally, they become an undividable asset if they reach a minimum size as determined by the Ministry. The minimum agricultural land size cannot be less than 2 hectares for strict agricultural land, marginal agricultural land, and agricultural land for special seeds; 0.5 hectares for sown agricultural land and 0.3 hectares for agricultural land upon which production under protective cover is made. Categorising the agricultural land in four different groups, the Ministry also took the proceeds gained from an agricultural land into consideration when allowing their transfer. Agricultural land cannot be divided into shares or parcels determined by the Ministry unless they constitute an agricultural land with sufficient proceeds, meaning an economic entirety. Such categorisation, however, depends not only on the size of the land but also its location within Turkey. Assuming that agricultural land is within the criteria sought by the Ministry for its transfer, the following needs to be adhered to for transfer.
The following general rules shall apply to any transfer of the ownership of agricultural land within Turkey
Although there is no explicit permission requirement for the transfer of agricultural land available for transfer according to the Law and the Regulation, an application should be made to the city or district directorates of the Ministry in order to determine if such availability exists.
On the other hand, generally, the following rules apply to any transfer not being subject to inheritance estate whatsoever:
- In the event there is only one agricultural land owned by a landlord within the same district, such land shall be freely transferred.
- If there are several agricultural lands owned by a landlord within the same district, they will be only transferred if they are all subject to transfer of ownership.
- If there are several agricultural lands owned by the same person, those parts of the agricultural land that do not maintain any economic entirety can be freely transferred. Such economic entirety will be determined after the economic evaluation to be contemplated, according to Article 7 of the Regulation. The mentioned evaluation is mostly based on the distance between the agricultural land, i.e. certain measurements are set to determine whether they would constitute an economic entirety or not. However, it is clearly stipulated that there would be no economic entirety among agricultural land passed into the ownership of deposit banks, participation banks, development and investment banks, Turkish branches of the afore mentioned institutions established abroad, financial holding companies, financial leasing, factoring and financial institutions along with agricultural loan co operatives in consideration of their receivables. Agricultural land assigned by such institutions from the same person shall be subject to economic evaluation to be performed according to the Regulation. Economic Evaluation of agricultural land is performed by city or district directorates of the Ministry.
- On agricultural land constituting an economic entirety, land exceeding the size of agricultural land with sufficient proceeds and land being under the size of agricultural land with sufficient proceeds, but do not require any allotment, can be transferred. Agricultural land with sufficient proceeds are the agricultural land determined under the 1st List attached to the Law determined as per cities and districts.
- The whole transfer of a share on any jointly owned agricultural land to one or several shareholders, would also enable the transfer of such land's ownership.
Transfer of agricultural lands subject to inheritance
The above rules apply when there are no agricultural land subject to inheritance. In transfers of agricultural land subject to inheritance and agricultural land with sufficient proceeds, the transfer of ownership is essential. Within one year following the establishment of an inheritance estate, the heirs are enabled to transfer the ownership of the agricultural land according to the following methods: (i) transfer to one or several heirs considering the minimum agricultural size and size of the agricultural land with sufficient proceeds; (ii) heirs can establish a family property partnership or family property partnership with profit share by virtue of a notarial deed, which are both regulated under the Turkish Civil Code, in which case such notarial deed shall be submitted to land registry and the related partnership shall be recorded within the statements section of the land register; (iii) heirs can establish a limited liability company (Ltd. Sti.) of which all heirs shall be partners in proportion to their shareholding in the inheritance; (iv) heirs can sell the agricultural land subject to inheritance to third parties.
If the heirs would not finalise the transfer of the agricultural land's ownership within the above mentioned one year and no one would initiate a lawsuit in the competent civil court, the Ministry grants to the heirs a period of three months in order to implement the provisions of the Law. If after the expiry of such period, the transfer of the ownership could not be completed, the Ministry would be entitled to initiate a lawsuit in the competent lawsuit ex officio or upon notice to transfer such agricultural land to the competent heir having the intention to assign the ownership thereof or selling to any third party.
Conflict with Turkish Civil Law & Right of First Refusal
If the heirs would establish a family property partnership or family property partnership with profit share and one of the heirs would transfer its share to any third party, the other shareholders have a right of first refusal in purchasing the share subject to sale. Interestingly, this provision is in conflict with Article 376, which clearly prohibits any transfer or disposal of a share within a family property partnership as long as the partnership continues. Since an undertaking for a transfer would be deemed a disposal under Turkish law, we consider that the provision granting a right of first refusal to other heirs when one of the heirs would like to transfer its share within the family property ownership to a third party, aims to overcome such conflict.
In the event of the sale of agricultural land, another right of first refusal is granted to the land owners whose land borders the agricultural land subject to sale. If the agricultural land is sold to either of the land owners bordering the agricultural land subject to sale, other land owners cannot use their right of first refusal even if their land are also bordering the agricultural land subject to sale. If several land owners would like to use their right of first refusal at the same time, the judge of the competent court shall decide to transfer the ownership of the agricultural land subject to sale to the owner of the land constituting an agricultural entirety.
In summary, anyone who would like to purchase agricultural land in Turkey has to check whether the land it intends to purchase is available to transfer based on the criteria of the Ministry (size and economic entirety); whether it is subject to inheritance or not; whether there would be anyone who would like to use its right of first refusal when the agricultural land is sold. Although, there is no doubt that the Turkish subsidiary of foreign companies and foreign companies aiming to purchase agricultural land in Turkey have to comply with the provisions of Land Registry Law Nr. 2644, it seems that the Law or the Regulation does not require anything further with regard to their purchasing of agricultural land in Turkey except to comply with the mentioned legislation.
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.