• Real Estate
  • Real estate acquisition of foreign real persons
  • Real estate acquisition of foreign companies (established in other countries).
  • Real estate acuisitions of foreign capital companies (established in Turkey).

• Registering Property in Turkey

• “Regulation Concerning  the Acquisition of Real Property and Limited Rights of the Foreign Capital Companies"

Real Estate

Turkey's legislation in the field of real estate acquisition by foreigners is currently inconsistent with the article 56 of the Treaty establishing the European Community. Rules for the acquisition of real estate by foreigners are regulated by the Land Registry Law. Real estate acquisition by foreigners is one of a few critical issues to which Turkish public opinion are particularly sensitive. Hence it is esential to remind recent developments regarding legal framework of acquisition of real estate by foreigners in Turkey in order to have full understanding of Turkey's position on this issue.

In 2008, The Constitutional Court of Turkey has overruled some provisions of Article 35 of the Land Registry Law No.2644 on real estate acquisitions by foreign real and legal persons and Article 3/d of the Foreign Direct Investment Law No.4875 on real estate acquisitions by foreign capital companies. Taking into account the legal reasonings and standpoints of the Court decision the Government drafted new provisions in the Land Registry Law and they became effective after enacted by the Turkish Grand National Assembly very recently. With this final change, there are three different regimes in Turkey regarding the acquisition of real estate by foreigners depending on their statutes:

1- Real estate acquisition of foreign real persons
2- Real estate acquisition of foreign companies (established in other countries).
3- Real estate acuisitions of foreign capital companies (established in Turkey).

1- Real estate acquisition of foreign real persons

Foreign real persons can acquire real estates for the purposes of using as residence or business aims in Turkey that are separated and registered for these purposes in the implemented development plans or localized development plans with the reservation of reciprocity and compliance with legal restrictions. The total area of the real estates and limited real rights on real estates that a foreign real person can acquire shall not exceed the 10% of the areas within the borders of implemented development plans or localized development plans in the each cities of the province and 2.5 hectares for all over the country. The Council of Ministers is authorized to determine a different percentage within this limit considering the importance of a city in terms of infrastructure, economy, energy, environment, culture, agriculture and security.

2- Real estate acquisition of foreign companies

Foreign companies (established in other countries) shall acquire real estate and limited real rights on real estates in Turkey according to the provisions of special laws. Relevant special laws are, Law for Encouragement of Tourism No: 2634 and Petroleum Law No: 6326. According to the Law for Encouragement of Tourism (Article No: 8) the real estate within tourism areas and tourism centres for which land use plans have been prepared can be allocated to the Ministry of Culture and Tourism by the public agency having ownership. The Ministry is authorized to allocate such real estates to real persons and legal entities of Turkish and foreign nationality. According to the Petroleum Law (Article No: 87), a holder of a petroleum right (either a Turkish or foreign company) is entitled to acquire a surface lease of such land in or in the vicinity of his license, lease or certificate area as required for his operation, by agreement or by expropriation if the land is privately owned or by recording it on his license, lease or certificate if the land is not owned by anybody.

The Council of Ministers is authorized to determine the places where foreign real persons and foreign companies shall not acquire real estates and limited real rights on real estates within the areas of irrigation, energy, agriculture, mine, and protected areas, and belief and cultural featured areas and special protection areas and sensitive areas due to flora and fauna features, strategic areas due to public interests and country security upon proposals with registry based coordinated maps and plans of relevant public institutions and organizations.

3- Real estate acuisitions of foreign capital companies

Article 36 of the Land Registry Law regulates the real estate acquisition of foreign capital companies (established in Turkey). Foreign capital companies which are established in Turkey and are registered in Turkish Commercial Registries are legally accepted as 'Turkish companies” regardless of the citizenships of their shareholders. Accordingly foreign capital companies shall acquire real estate in Turkey to conduct business activities listed in the articles of association of their company. However acquisitions in military zones (military forbidden zones, military security zones and strategic zones) and special security zones require permissions from the Turkish military authorities and province governorship respectively.

Registering Property in Turkey

REAL ESTATE ACQUISITION OF FOREIGN CAPITAL COMPANIES

Principles and procedures for the implementation of Article 36 of Land Registry Law No: 2644 were regulated in the “Regulation Concerning  the Acquisition of Real Property and Limited Rights of the Foreign Capital Companies”[1]. On the other hand, both investors and relevant public institutions faced some problems during the implementation process of the legislation. Within this context, a new Regulation was prepared with the participation of all relevant institutions and organizations.

According to the new Regulation, the major procedures of the real property ownership  and limited real rights acquisition process are as follows:

·          Initially, foreign capital companies have to apply to the Provincial Directorate of Planning and Coordination, which is an organizational unit of the Governorship.

·          Following the application procedure, “location determination” process is initiated. Within this context, the Provincial Directorate of Planning and Coordination connects with the relevant security institutions and units in order to determine whether the real estate stays within the boundaries of military or special security areas. These units are  required to complete the determination process within a fortnight. In the event that time limit is exceeded, the Governorship concludes that such property was not within the specified areas.

·          In case that the real estate stays within the security zones, the relevant units evaluates the demand in certain period of time (15 days for military zones, 5 days for special security zones) whether it is appropriate in terms of security concerns. If the time limits are exceeded, the Governorship concludes that the demand was not objectionable within the context of security interests.

·          In case that the property in question is outside the specified regions, the Governorship gives written information to both the company and the Land Registry Directorate in order to complete the registration process.

·          Mortgage applications will be directly made to the relevant Land Registry Directorates instead of Governorship.

Application Documents:

·          Petition,

·          Record information regarding the real estate title and a copy of coordinated diameter,

·          A written commitment indicating that the real estate was being requested to carry out the main activities of the company and would be used to this end. The relevant signature document of the company’s representative is also required.

·          The certificate of authorization (including the information that the company is authorized for the real estate disposal. This document also indicates the representative of the company).

·          Information document regarding the foreign investors (name, title, nationality, rate of participation) which is obtained from either Land Registry Office or Central Registration Agency (Merkezi Kayıt Kuruluşu).

Additional Info Concerning the Application Process:

·          The Governorship gives written information to foreign capital companies regarding the result of the application. In case that the company is authorized to acquire the ownership of the property or limited real rights, it has to apply to the relevant Land Registry Office within three months from the receipt of this information. If the time limit is exceeded, the Governorship declaration becomes invalid and the company has to make a new application for the real property.

·          Application documents are submitted in two copies. In case of multiple applications concerning the real estates located within the same province, a set of application documents is valid for all applications, except for a limited number of documents.

·          Relevant information concerning the application process and documentation is published on the official website of the General Directorate of Land Registry. This information may also be announced to the public by the Governorships.