THE PERSONS’ OF FOREIGN NATIONALITY ACQUIRING REAL ESTATE IN REPUBLIC OF TURKEY

Acquiring immovable for foreign real and legal persons in Turkey was regulated by Article 19 of the Code dated 03.07.2003 and dated 4916 and Article 35 of amended Deed Code numbered 2644.

Provided that being mutual and legal limitations were conformed to, real persons of foreign entity and commercial companies that were founded in foreign countries pursuant to laws of such countries may acquire immovables within the borders of Republic of Turkey. In the application of reciprocity, it is essential that the foreign country grants the same rights to citizens or commercial companies of Republic of Turkey as it grants to its own citizens or commercial companies with legal entity that were founded pursuant to the laws of such county.

The immovables that the citizens of the states of countries that do not have reciprocity with Republic of Turkey acquired through inheritance, and the immovables in areas subject to legal limitations are liquidated and turned into cash after completing succession procedures.

Acquisition of immovables more than thirty hectares by real persons of foreign nationality and commercial companies in foreign countries that were founded pursuant to the codes of such countries is subject to the permission of Council of Ministers. This provision is not applied for the immovables that was inherited by legal bequest. And acquisition of immovables more than thirty hectares by real persons of foreign nationality via dispositions other than legal inheritance is subject to the permission of Council of Ministers as well. If the permission is not granted, exceeding amount is liquidated and turned into cash.

In order to ensure social benefit and security of the country, Ministry of Development and Housing selects the regions where this specification is invalid”.

1. Principle of reciprocity

Council of Ministers explained in its Decree dated 29.05.1940 and numbered 2/13394 how principle of reciprocity. According to the Decree, for the existence of reciprocity, actual application thereof is required as well as legal arrangement. In the decree in which the fact that legal reciprocity would not show the actual situation is taken into consideration, it was required the limitations which citizens of Republic of Turkey would face, in case of application in foreign countries to be taken as the basis. Therefore, in order to mention the existence of reciprocity between our country and a foreign state in the issue of immovable acquisition, such reciprocity should be legal and actual. Accordingly, acquisition of immovable in our country by a citizen or commercial company of foreign nationality depends on the fact that citizens and commercial companied of Republic of Turkey can acquire immovables in that country and are granted the right to do so and that this right can actually be applied.

In the new arrangement, in addition to the legal and actual reciprocity, instead of applying the principle of reciprocity one to one, the basis that the foreign country grants the same rights to the citizens and commercial companies of Turkey, as it does to its own citizens and commercial companies with legal entity that were founded pursuant to its laws was included.

In acquisition of real estate by the citizens of both the countries that have reciprocity with Turkey (87 countries) and those that do not have (35 countries), the decision is made after analysis of their applications by Council of Ministers.

2. Exclusion of principle of reciprocity

The first condition of the acquisition of immovables in our country by foreign real persons is reciprocity, but there are some exceptions for the real persons. These exceptions are as follows:

a. As the stateless are not of any nationality, there is not a respondent country with which principle of reciprocity may be determined. Therefore, stateless are exempted from principle of reciprocity.

b. According to provision of Article 7/2 of “Act on Legal Status of the Refugees” which was approved by Turkey with the Code dated 26.08.1961 and numbered 359, refugees become exempted from principle of reciprocity, after their three-year residence in the country they took refuge in. Refugees in Turkey are subject to the same provision. For exemption, it is sufficient for the refugees to prove their status with legal documents.

c . According to Article 8/E of Tourism Incentive Law numbered 2634, foreign real and legal persons that wish to make tourism investments in Turkey may acquire immovables in tourism regions and centers without being subject to the principles of reciprocity and legal limitarions for the foreign persons.

3. Legal limitations

Second condition for acquisition of immovables by foreign real persons is conforming to the limiting provisions imposed through law.

Concerning acquisition of immovables by foreign people, there are some limitations in our law. These limiting provisions are as follows:

a. According to the arrangements within Military Banned Zones and Security Zones Law numbered 2565 that limit acquisition, transfer and lease of immovables by foreign people, immovables within military banned zones and security zones is not possible.

b. Article 35 of Deed Law numbered 2644 imposed the rule that foreign real persons cannot acquire immovables of more than 30 hectares in or country, that they acquire more than this merely with Decree of Council of Ministers, and that legal inheritance is not included in this provision.

c. As Article 87 of Village Code numbered 442 was abolished with the new arrangement, foreign real persons became eligible to acquire immovables in villages.

ACQUISITION OF IMMOVABLES IN TURKEY BY FOREIGN LEGAL PERSONS

With the change in Article 35 of Deed Law, acquisition of immovables in Turkey by all foreign commercial companies became possible, provided that principle of reciprocity is present and they conform to the legal limiting provisions.

For foreign commercial companies, condition of reciprocity and conforming to the legal limitations were imposed, as well as for foreign real persons. Whether there is a reciprocity between our country and a foreign country is determined by asking Ministry of Foreign Affairs.

The rules valid for foreign real persons in terms of legal limitations are valid for foreign commercial companies as well. Additionally, the rule that reciprocity is nor requested when a limited real right is being constituted for foreign real persons is imposed for the foreign commercial companies as well.

ACQUISITION OF IMMOVABLE BY COMPANIES WITH FOREIGN CAPITAL

The term companies with foreign capital is often confused with the term foreign company. First of all, it should be stated that companies with foreign capital are founded in Turkey pursuant to the provisions of Turkish Commercial Code and registered in Turkish Commercial Registry. Therefore, these companies are subject to legal rules of Republic of Turkey. Only a part or all of their capital belongs to foreign real or legal persons. Having foreign shareholders does not make the company a foreign legal person, because nationality of the company and nationality of its shareholders are two different issues.

“Direct Foreign Investments Law” dated 5 June 2003 and numbered 4875 that was entered into effect by being published in Official Gazette dated 17 June 2003 and numbered 25141, and Foreign Capital Incentive Law dated 18.01.1954 and numbered 6224 were arrogated and new terms are imposed for encouraging and increasing foreign investments, protecting rights of foreign investors’ rights, transforming permission and approval system into information system in realization of foreign investments.

Notice on the issue dated 07.08.2003 and numbered 1363–100/841 announced to all our units through our regional directorates and it was notified that the application will be carried out within the framework of following terms:

With Foreign Direct Investments Code numbered 4875, foreign investors were subjected to the equal treatment with domestic investors; permissions and approvals such as investment permission, company foundation permission were abolished; the companies with legal entity founded or participated in our country by foreign investors to acquire immovable ownership or limited real right in the regions open for the acquisition by the citizens of Republic of Turkey is decontrolled.

Companies that would activate pursuant to the Code numbered 4875 concerning the activities of companies with foreign capital in our country or that were founded pursuant to the Code numbered 6224 that ceased to have effect, are considered as Republic of Turkey companies with foreign capital in terms of foundation place and administration. Therefore, acquisition of immovables by companies with foreign capital that obtained activity permission pursuant to Foreign Capital Incentive Code numbered 6224 that ceased to have effect and that would realize activities pursuant to Foreign Direct Investments Code numbered 4875 and other requests aimed at deed registry are completed by the related Deed Registry Directorates by evaluation of their authority certificates that were issued by commercial registry offices by being subject to the same terms and procedures as the companies that were founded pursuant to Turkish Commercial Code, and that show the authority and authorized person of the company to acquire immovables.

TRANSFER

It is free to transfer the revenues of the immovables and real rights obtained by foreigners either by exchanging currency or without exchanging and sales prices via banks and private finance institutions.

I. APPLICATION AUTHORITY

Pursuant to Article 26 of Deed Code numbered 2644, duty and authority to issue agreements concerning ownership and real rights other than ownership is granted to Deed Registry Directorates.

Foreign people that wish to acquire immovables or make use of real rights other than ownership will apply to Deed Registry Office of the place where the immovable is located.

Detailed information on the issue may be obtained from General Directorate of Land Registry.

II. REQUIRED DOCUMENTS FOR APPLICATIONS

In terms of required documents for application there is no difference between Turkish citizens and foreign people.

A) FOR REAL PERSONS

1- Title deed of the immovable, if any and document stating its block and plot no, if not or oral declaration of the owner,

2- Identity card or passport of the country of nationality and two snapshots,

3- If the person requesting is representative, power of attorney concerning representation and identity card with photograph of the representative and snapshot, if there are the ones among the buyers that do not participate in the operation in person, identity cards, snapshots with photograph of their representatives and documents concerning their representation.

B) FORE LEGAL PERSONS

1- Companies that were founded pursuant to Foreign Direct Investments numbered 4875 should submit certificate of authority obtained from Commercial Registry Office, list of authorized signatures and power of attorney issued to the authorized person,

2- Companies that were founded in foreign countries pursuant to the laws of such country should submit a document equivalent of the certificate of authority obtained from related authorities pursuant to the regulations of the country it was founded.

As for the charges and taxes required to be paid during deed operations, there is no difference between people of foreign nationality and citizens of Republic of Turkey.

However, in order to determine whether the immovables that real and legal persons of foreign nationality that wish to acquire immovables in our country are within Military Banned Zone and Security Zones, authorized military authority is asked, and during this procedure, if land should be visited in order to mark the place where the immovable is located on map of 1/25000 scale, floating assets service charge is collected according to the procedure of “show the lot on-site”.

COUNTRIES THAT HAVE RECIPROCITY WITH TURKEY IN THE ISSUE OF ACQUISITION OF IMMOVABLES

1. GERMANY, UNITED STATES OF AMERICA, ANDORRA, ARGENTINA, AUSTRALIA, AUSTURIA, BAHAMAS, BANGLADESH, BARBADOS, BELGIUM, BELIZE, BENIN, BOLIVIA, BOSNIA-HERZEGOVINA, BOTSWANA, BRAZIL , DENMARK, DOMINIC REPUBLIC, EQUADOR, EL SALVADOR, ESTONIA, IVORY COAST,
PHILIPPINES, FINLAND, FRANCE, GABON GANA, GUINEA, GRANADA, GUATEMALA, GUYANA, REPUBLIC OF SOUTH AFRICA, HAITI, CROATIA, NETHERLANDS, HONDURAS, ENGLAND, IRELAND, SPAIN,
ISRAEL, SWEDEN, SWITZERLAND, ITALY, JAMAICA, JAPAN, CAMERUN, CANADA, TRNC, COLOMBIA,
COREA (SOUTH), COST RICA, LATVIA, LICHTENSTEIN, LLITHUANIA, LUXEMBOURG, HUNGARY, MALAWÝ, MALAYSIA, MALI, MALTA, MAURITUS, MEXICO, MONACO, MAURITANIA, MOZAMBIC, NIGERIA,
NICARAGUA, NORWAY, CENTRAL AFRICAN REPUBLIC, PANAMA, PARAGUAY, PERU, POLAND, PORTUGAL,
SAN MARINO, SENEGAL, SERBIA AND MONTENEGRO (YUGOSLAVIA) SINGAPORE, SOMALI, SRI LANKA, SWAZILAND, CHILIE, TANSANIA, URUGUAY, VENEZUELA, NEW ZELAND, CABO VERDE ISLANDS.

GREECE- Requests of real persons of Greek nationality concerning acquisition of immovables in our country will be brought to conclusion pursuant to the notice still in force dated 22.3.2000 and numbered 1361-121-T/302-317.

COUNTRIES THAT DO NOT HAVE RECIPROCITY WITH TURKEY IN THE ISSUE OF ACQUISITION OF IMMOVABLES
AFGHANISTAN, UNITED ARAB EMIRATES, BURMA, ALGERIA, CZECH REPUBLIC, INDONESIA, ERITRE ,
ARMENIA, ETHIOPIA, FIJI, INDIA, IRAQ, ICELAND, CAMBODIA, QATAR, COREA (NORTH), KUWAIT,
CUBA, LAOS, LÝBYA, MALDIVS, MONGOLIA, NEPAL, NIGERIA, OMAN, PAPUA NEW GUINEA, SLOVAKIA,
SUDAN, SURINAM, SAUDI ARABIA, THAILAND, TUNUSIA, VIETNAM, YEMEN.

THE COUNTRIES THAT CAN ONLY ACQUIRE BUILDING OWNERSHIP IN OUR COUNTRY

AZERBAIJAN, BAHRAIN, BELARUS, CHAD, CHINA, MOROCCO, GEORGIA, IRAN (under condition f five-year residence and permission from related Ministries), KAZAKHSTAN, KENYA, KYRGYZ REPUBLIC, MACEDONIA, EGYPT, MOLDOVA, NAMIBIA, UZBEKISTAN, ROMANIA, RUSSIAN FEDERATION, SLOVENIA, TAJIKISTAN, TURKMENÝSTAN, UGANDA, UKRAINE, JORDAN.

Purchasing of an immovable

Purchasing-sales procedure of any immovable is carried out by Regional Land Registry Directorates.

Documents required in deed registry procedure

Turkish translation of the passport by the sworn translator from the notary

Buyer’s Father’s Name

2 newly shot snapshot of 3 X 4 size.

During land registry procedure, a sworn translator witnesses to the purchasing-sale procedure,

After the signatures are put, buyer is submitted “Title Deed” which is the certificate for the property he/she purchased.

Purchasing-sale tax of 2% overt the market value is paid by the buyer during sales.

In addition to this, an expense of 500 YTL for the charges, correspondences and sworn translator is paid.

(Moreover, property tax of 02% over the market value is paid to the municipality that the property is within.)

Land registry procedures are completed within 6 or 12 weeks after their initiation. The reason for such long duration is correspondences (correspondences between authorized institutions and land registry directorates in order to determine whether the property sold is within military borders)