The conditions for acquisition of a real estate property by foreign persons and Turkish citizens are different in accordance to Turkish Law.
For Turkish citizens, the conditions are stated mostly by the Turkish Civil Code, whereas the Land Registry Law dictates most of the conditions for foreigners. On the other hand, there is no difference between Turkish citizens and foreigners in terms of the documents required for application.
According to the Turkish Civil Code numbered 4721 and dated November 22, 2001, acquiring property requires registration to the Turkish Land Registry. However there are four ways to own a property without registration: occupation, inheritance, condemnation or acquisition by enforcement proceeding or verdict.
Real Estate Acquisition of Foreign Persons in Turkey
A. Real Estate Acquisition of Foreign Real Persons in Turkey
Real Estate acquisition by foreign real and legal persons is regulated in article 35 of the Land Registry Law. The previous version of Article 35 had many limitations regarding real estate acquisitions by foreigners; however, in July 2003 there was an amendment to Article 35 by a Law numbered 4916, which removed many limitations regarding real estate acquisitions by foreigners. Then, in March 2005, the Constitutional Court abolished Law 4916, and after a long debate, Article 35 was again amended by a Law numbered 54441, which has harsher conditions. The new form of Article 35, paragraph 1 of the Land Registry Law is as follows:
“With the reservation of reciprocity and compliance with legal restrictions, foreign real person 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. The same conditions shall be stipulated in the establishment of limited real rights on real estates. The total area of the real estates and limited real rights on real estates that a real person of foreign nationality can acquire all over the country can not exceed 25.000 m². Within the same conditions set out in this paragraph Council of Ministers is authorized to increase the area up to 30 hectares.
As is seen in this (first) paragraph of Article 35, the real estate acquired by a foreign real person should be;
Used for residential or business purposes.
Within the boundaries of implemented development plans or localized development plans.
Other conditions for acquisition of real estate by a foreign person are:
The acquisition should comply with the legal restrictions stipulated in Turkish Legislation;
There must be both de jure and de facto reciprocity between Turkey and the nationality of the foreign real person acquiring real estate according to Article 35 of the law2 and the Council of Ministers decision dated May 29, 1940 and numbered 2/13394. By this decision, for the existence of reciprocity regarding real estate acquisition between Turkey and a foreign country to be recognized, reciprocity must be both in law and in practice. This principle means that for real estate acquisition by a foreign country’s citizen in Turkey to be permissible, Turkish citizens must also have the right to acquire real estate in the aforementioned foreigner’s country, and this right must be accepted by laws and be practically applicable.3 The first condition is reciprocity for real estate acquisition of foreign real persons in Turkey, whereas the reciprocity principle has some exceptions in terms of real persons.
The total area of real estate acquisition and limited real rights on real estates by a foreign real person in Turkey cannot exceed 25.000 m² within the entire country.
B. Real Estate Acquisition of Foreign Legal Persons in Turkey
Article 35 of the Land Registry Law states:
“Companies having legal personality established in foreign countries according to the laws of these countries can acquire real estates and limited real rights on real estates in Turkey according to the provisions of private laws.
“With the exception of foreign real persons and trading companies having legal personality established in foreign countries according to the laws of these countries, no one can acquire real estates and limited real rights on real estates in Turkey.”(Paragraph 4)
Clearly put, this means that:
Foreign companies having legal personality established in foreign countries according to the laws of these countries may only acquire real estate in Turkey in accordance with the provisions of private laws. The private laws regulating the acquisition of real estate by foreign companies are;
Petroleum Law numbered 6326,
The Tourism Incentive Law numbered 2634,
Industry Regions Law numbered 4737.
As is seen clearly in Article 35, funds, associations, organizations, cooperatives cannot acquire real estate within Turkey in any manner.
The aforementioned reciprocity principle is also valid for the acquisition of real estates by foreign legal persons.
C. Legal Restrictive Provisions
The Land Registry Law states that the acquisition of real estates by foreign real and legal persons in Turkey must comply with the restrictive provisions in Turkish Law concerning real estate acquisition by foreigners.
According to the Military Forbidden Zones and Security Zones Law numbered 2565, which geographically restricts real estate acquisition by foreigners in Turkey, it is not possible to sell, transfer or rent real estate located within Military Forbidden Zones and Security Zones, to foreign real and legal persons.
Another provision is again Article 35 of the Land Registry Law. According to this article, foreign real persons can not acquire more than 2, 5 hectares (25.000 m²) of real estate in Turkey; however with a ruling by the Council of Ministers, the acquisition of up to thirty hectares (300.000 m²) is possible. Legal inheritance is an exception for this restriction.
D. Real Estate Acquisition of Foreign Investment Companies
It should be noted that foreign investment companies incorporated in Turkey are not subject to any of the aforementioned restrictions in Turkish Law. According to the Foreign Direct Investment Law numbered 4875 and dated June 5, 2003, foreign investors are subject to equal treatment with Turkish investors, and because of that, foreign investment companies that are established in Turkey are not considered as foreign companies, but regarded as Turkish companies. Foreign Direct Investment Law numbered 4875 was adopted to encourage and increase foreign direct investments, to protect rights of foreign investors, and to transform the permission and ratification system into an informative system. Due to the this Law, companies having legal personality which foreign investors participate in or establish in Turkey are allowed to acquire real estate or limited real rights in areas where the acquisition of these rights is allowed for Turkish Citizens.
Procedure of Real Estate Acquisition of Foreign Persons in Turkey
A. Authority of Applications
The duty and authorization to arrange the official sales contracts was given to the Land Registry Offices by the Law. Foreigners who want to acquire real estate or benefit from real rights must make their applications to the Land Registry Office where the real estate is located.
B. Required documents
There is no differentiation between Turkish citizens and foreigners in terms of required documents for application.
The following are necessary for Real Persons:
The title deed of the real estate if available. Otherwise, a document indicating the city blocks and parcel of the real estate or a verbal statement by the owner.
The identity card or passport of the foreigner and two small photographs.
If the person applying for demand of registration is a representative, a power of attorney of the representative, an identity card and two small photographs of the representative are required. If some of the purchasers are not present during the transaction, an identity card, two small photographs and a power of attorney for each representative that represents a purchaser are required.
The following are necessary for Legal Persons:
With regard to charges and taxes required to be paid in the course of transactions, there is no difference between foreign persons and citizens of the Republic of Turkey. However, when asking the competent military post to determine whether the real estate demanded by foreign real or legal persons is located outside of Military Forbidden Zones and Security Zones or not, if any control in the field is needed to mark on a map of 1/25000 scale where the real estate is, a kind of service value will be paid as a transaction named “showing the parcel in its place.
Real property transactions usually involve the following costs; The Land Registry Fee is 1.5%. This charge is paid by both the buyer and seller. Thus, the total title deed charge over the property that has to be paid is 3%.
The Notary Public Fee is not required for real property acquisitions.
The Legal Consultancy Cost is usually calculated on the basis of hourly rates by International Law Firms while lawyers prepare a legal due diligence relating to the real property and prepare the sale purchase agreement.