LEGAL INFO

LEGAL INFO REAL ESTATE ACQUISITION OF FOREIGNERS IN TURKEY

Article 14- Duties of Directorship of Foreign Affairs Office:

I.REAL ESTATE ACQUISITION OF FOREIGNERS IN TURKEY

It is stated in the article 12 of the Constitution of the Republic of Turkey that every person has individual, inviolable, untransferable, unrenouncable fundamental rights and freedoms, and it is expressed in the article 16 that fundamental rights and freedoms can be restricted for foreigners by law in accordance with international law. It is also accepted in the article 1 of the Protocol numbered 1 of the European Human Rights Convention that property rights of foreign persons can be restricted in conformity with general principles of international law.

I.A.REAL ESTATE ACQUISITION OF FOREIGN REAL PERSONS IN TURKEY

Real estate acquisition of foreign real and legal persons has been regulated in the article 35 of the Land Registry Law numbered 2644 that was modified by the article 19 of the Law numbered 4916 and dated July 3, 2003. By this amendment new regulations have been introduced concerning real estate acquisition, in our country, of real persons of foreign nationality and trade companies having legal personality and established in foreign countries according to the laws of these countries, and article 36 of the Land Registry Law was abrogated and its content was added to the article 35. Besides, the article 87 of the Village Law numbered 442 was completely abrogated.

New form of the article 35 of the Land registry Law is as follows:

"With the reservation of being reciprocal and complying with legal restrictions, real persons of foreign nationality and trade companies having legal personality established in foreign countries according to the laws of these countries, can acquire real estate within the boundaries of the Republic of Turkey. In implementation of reciprocity principle, it is essential that real estate acquisition rights given by a foreign country to its own citizens and to trade companies established in foreign countries according to the laws of these countries, are also given to the citizens and trade companies of the Republic of Turkey.

Real estate acquired through legal inheritance by citizens of a country that does not have reciprocity with Turkey and real estate located in the areas subjected to legal restrictions, are liquidated after being transferred by inheritance and converted to its value.

Real estate acquisition of real persons of foreign nationality and trade companies having legal personality and established in foreign countries according to the laws of these countries, more than thirty hectares, depends on permission of the Council of Ministers. This provision is not implemented for real estate transferred by the way of legal inheritance. Real estate acquisition of real persons of foreign nationality more than thirty hectares through transactions depending on death apart from legal inheritance is also subjected to permission of the Council of Ministers. If permission is denied, the exceeding part is converted to value by means of liquidation.

In case of registration of limited real right on real estate in favor of real persons of foreign nationality and trade companies having legal personality and established in foreign countries according to the laws of these countries, reciprocity principle is not stipulated.

With regard to public interest and state security, the Council of Ministers is authorized to determine where this article will not be implemented."

I.A.1.RECIPROCITY PRINCIPLE

The Council of Ministers expressed what should be understood from the reciprocity principle in its decision dated May 29, 1940 and numbered 2/13394. According to this decision, in addition to legislative regulation of reciprocity principle, practical applicability of it is also required for its existence. By this decision, in which it's taken into consideration that reciprocity in law will not indicate actual situation, restrictions encountered in a foreign country by the citizens of the Republic of Turkey, in case of their application, are wanted to be taken as a basis in implementation of reciprocity. Therefore, for the existence of reciprocity between our country and a foreign country about real estate acquisition, reciprocity must be both in law and in practice. According to this principle, for real estate acquisition of a foreign country's citizen or trade company in our country, the citizens and trade companies of the Republic of Turkey should also have the right to acquire real estate in this foreign country and this right must be accepted by laws and must be practically applicable.

In the new regulation, instead of exact equivalent implementation of reciprocity principle, it's stipulated that the rights given by a foreign country to its own citizens or trade companies having legal personality and established according to its own laws, should also be given to citizens and trade companies of the Republic of Turkey.

Today, in terms of real persons, countries that have (annex-1) and do not have (annex-2) full reciprocity, countries that have reciprocity only for building acquisition (annex-3) between our country, and the countries, the citizens of which can acquire real estate with permission of Ministry of Interior and Ministry of Foreign Affairs(annex-4), are listed at the end of this text. The demands of citizens of countries that are not involved in the first two lists will be concluded by consulting the General Directorate.

I.A.2.EXCEPTIONS OF RECIPROCITY PRINCIPLE

Although the first condition is reciprocity for real estate acquisition of foreign real persons in our country, reciprocity principle has some exceptions in terms of real persons. These exceptions are as follows:

a. Since haymatlos persons have no state citizenship, there isn't any state to decide about reciprocity. For this reason, haymatlos persons are exempted from reciprocity principle.
b. According to the article 7/2 of "Convention on Legal Situation of Refugees" dated July 28, 1951 and ratified by Turkey with the law dated August 26, 1961 and numbered 359, the refugees are exempted from reciprocity principle in a country after three years of residence. The refugees in Turkey are also subjected to the same provision. It is enough for refugees to prove this situation with an official document for exemption.
c. According to the article 8/E of the Law for Encouragement of Tourism numbered 2634, foreign real and legal persons who want to make investment for tourism objective in Turkey, can acquire real estate by the decision of the Council of Ministers in tourism areas and centers being exempted from reciprocity principle and restrictions formulated for foreigners.

I.A.3.LEGAL RESTRICTIVE PROVISIONS

The second condition for real estate acquisition of foreign real persons in our country is to comply with restrictive provisions involved in law. Some restrictions are involved in our laws concerning real estate acquisition of foreigners. These restrictive provisions are as follows:

a. According to regulations involved in the Military Forbidden Zones and Security Zones Law numbered 2565 which restricts geographically real estate acquisition of foreigners in our country, it is not possible to sell, transfer and rent real estate located within military forbidden zones and security zones, to foreign real and legal persons.
b. According to the article 35 of the Land Registry Law numbered 2644, foreign real persons can not acquire real estate more than thirty hectares in our country, however for acquisition of more than thirty hectares, decision of the Council of Ministers is required. Legal inheritance is exception of this rule.
c. Since the article 87 of the Village Law numbered 442, was repealed by the new regulation it is possible for foreign real persons to acquire real estate in villages.

I.B.REAL ESTATE ACQUISITION OF FOREIGN LEGAL PERSONS IN TURKEY

By the amendment in the article 35 of the Land Registry Law, the right to acquire real estate in Turkey was given to all foreign trade companies on condition of being reciprocal and complying with legal restrictive provisions.

Conditions of being reciprocal and complying with legal restrictions are also valid for foreign trade companies, as it is for foreign real persons. Whether there is reciprocity between our country and a foreign country in terms of trade companies, is determined by consulting the Ministry of Foreign Affairs.

Provisions that are valid for foreign real persons in terms of legal restrictions are also valid for foreign trade companies. Furthermore the rule which involves that reciprocity will not be stipulated when a limited real right is registered in favor of foreign real persons, is also formulated for foreign trade companies.

I.C.REAL ESTATE ACQUISITION OF FOREIGN CAPITAL COMPANIES

The expression of "foreign capital companies" is usually confused with the expression of "foreign company".

First of all, it should be stated that "foreign capital companies" are established according to the provisions of the Turkish Trade Law in Turkey and enrolled in Turkish Trade Register. In other words, these countries are subjected to the legal provisions of the Republic of Turkey. Only, the whole or part of their capital belongs to foreign real and legal persons. Availability of foreign shareholders within the company will not include it within the status of foreign legal personality; because nationality of the company and nationality of its shareholders are different matters.

The Law for Encouragement of Foreign Capital numbered 6224 and dated January 18, 1954 was repealed by Foreign Direct Investment Law numbered 4875 and dated June 5, 2003 that entered into effect being published in the Official Gazette numbered 25141 and dated June 17, 2003, new provisions were adopted to encourage and increase foreign direct investments, to protect rights of foreign investors, and to transform permission and ratification system to informative systems in realization of foreign investments.

With regard to the subject, a circular numbered 1363-100/841 and dated August 7, 2003 was announced to all our units through our regional directorates and it was stated that implementation would be carried out within the framework of the following statements.

By the Foreign Direct Investment Law numbered 4875, foreign investors are subjected to equal treatment with domestic investors; permissions and ratifications like investment permissions, company establishment permissions, were removed. Moreover, companies having legal personality that foreign investors participate in or establish, in our country, are allowed to acquire real estate or limited real rights in areas where acquisition of these rights is allowed for Turkish Citizens.

Companies established according to the repealed Law numbered 6224 or that will act according to the Law numbered 4875 which is about the activities of foreign capital companies in our country, are considered as companies of the Republic of Turkey, according to criteria of establishment place or administration center. For this reason, real estate acquisition and other demands concerning land register of foreign capital companies that either obtained activity permission according to the repealed Law for Encouragement of Foreign Capital or will act according to the Foreign Direct Investment Law numbered 4875, are concluded by relevant Land Registry Offices implementing the same methods and rules as for companies established according to the Turkish Trade Law, after examining authorization documents given by the Trade Register Authorities that indicate the competent person and competence for real estate acquisition of the company.

II.TRANSFER

It is free to transfer through banks and private financial institutions, revenue and value of sale earned from real estate and real rights acquired by foreigners with or without exchange of foreign currency.

III.AUTHORITY OF APPLICATIONS

By the article 26 of the Land Registry Law numbered 2644, the duty and authorization to regulate contracts concerning property and real rights excluding property were given to Land Registry Offices.

Foreigners who want to acquire real estate or benefit from real rights apart from property will make their applications to the Land Registry Office where the real estate is located.

Detailed information about the subject can be provided from the General Directorate of Land Registry and Cadastre.

IV. REQUIRED DOCUMENTS FOR APPLICATION
There is no difference between Turkish citizens and foreigners in terms of required documents for application. IV.A. In terms of Real Persons,

a. Title deed of the real estate if available, otherwise a document indicating the city block and parcel of the real estate or verbal statement of the owner.

b. Identity card or passport of foreigner given by his/her own country and two small photographs.

c. If the person applying for demand is representative, a power of attorney of the representative, and identity card with photograph, two small photographs of the representative, and if some of the purchasers are not present during the transaction, identity card with photograph, two small photographs and power of attorney of the representatives that represent the purchasers, are required.

IV.B. In terms of Legal Persons

a. Companies established according to the Foreign Direct Investment Law numbered 4875 will show competence document given by Turkish Trade Registry, a document given to the person assigned basing on this, and signatures certificate.

b. Foreign trading companies established in foreign countries according to their laws are required, in compliance with the legislation of their country, to show a document having the effect of competence document given by relevant authorities.

With regard to charges and taxes required to be paid in the course of transactions, there is no difference between persons of foreign nationality and citizens of the Republic of Turkey. However, when asking the competent military post to determine whether the real estate demanded by real or legal person of foreign nationality is located out of Military Forbidden Zones and Security Zones or not, if any control in the field is needed to mark on map of 1/25000 scale where the real estate is, a kind of service value will be paid according to transaction named “showing the parcel in its place.”

CIRCULARS ABOUT REAL ESTATE ACQUISITION OF FOREIGNERS

Dates: August 13, 2003-October10, 2003
Numbers: 2003/10, 2003/12-1569

By article 35 of the Land Registry Law numbered 2644 and dated December 22, 1934 that was amended by article 19 of the Law numbered 4916 and dated July 3, 2003 that entered into effect being published in the Official Gazette numbered 25173 and dated July 19, 2003, new provisions have been brought about real estate and limited real right acquisition of foreign real persons and trading companies having legal personality and established in foreign countries according to the laws of these countries and by article 38 of the mentioned Law, article 87 of the Village Law numbered 442 and dated March 18, 1924 and article 36 of the Land Registry Law numbered 2644 and dated December 22, 1934 was repealed.

By the new regulation, the right to acquire real estate within the boundaries of Turkey has been given to foreign real persons and trading companies having legal personality and established in foreign countries according to the laws of these countries on conditions of being reciprocal and complying with legal restrictions, and by the removal of article 87 of the Village Law numbered 442 that was among legal restrictions, in villages real estate acquisition of foreign real persons and trading companies having legal personality has become possible. Moreover, article 36 was repealed and its content was added to article 35, but no amendment was made in the Military Forbidden Zones and Security Zones Law.

Furthermore, implementation of reciprocity principle was reevaluated and though it must be practical in implementation, instead of exact equivalence it was taken as a basis that the rights given by a foreign country for real estate acquisition of its own citizens or trading companies having legal personality and established in foreign countries according to the laws of these countries should also be given to citizens and trading companies of the Republic of Turkey.

According to article 35 of the Land Registry Law;

* real estate owned through legal inheritance by citizens of countries that do not have reciprocity with our country, and real estate in areas that are subjected to legal restrictions are converted to value by means of liquidation after their transfer transactions are made,

* real estate acquisition is limited by thirty hectares for foreign real persons, with the exception of legal inheritance, and trading companies established according to the laws of foreign countries. Real estate acquisition more than thirty hectares depends on permission of the Council of Ministers. Real estate acquisition by means of transactions depending on death apart from legal inheritance is also limited by thirty hectares and permission of the Council of Ministers is required to acquire more than thirty hectares. If permission is not given the exceeding part is converted to value by means of liquidation,

* in case of limited real right registration, in our country, in favor of foreign real persons and trading companies established according to the laws of foreign countries, reciprocity will not be stipulated,

* and the Council of Ministers is the authority to determine where this article will not be implemented with regard to public interest and state security.

In compliance with these provisions ;

1- A list of countries that have full reciprocity with our country about real estate acquisition has been annexed(annex-1). The demands of foreign real persons who are citizens of countries indicated in this list will directly be concluded by the Land Registry Offices, after asking the competent military posts whether the demanded real estate is out of military forbidden zones and security zones and receiving a response that it is out of military forbidden zones and security zones.

The demands for real estate acquisition of citizens of countries(Annex-2) that do not have reciprocity with our country will directly be refused by Land Registry Offices without making any correspondence.

The demands for real estate acquisition of citizens of countries that haven't been included in the annexed lists, will be sent to the General Directorate together with required documents and will be concluded in accordance with the given instruction.

Since real estate acquisition of foreign trading companies having legal personality and established in foreign countries according to the laws of these countries depends on conditions

of being reciprocal and complying with legal restrictions, the demands of these countries for real estate acquisition will be sent to the General Directorate and concluded in accordance with the given instruction.

2- In case of real estate acquisition by means of legal inheritance by citizens of countries that do not have reciprocity with the Republic of Turkey in terms of real estate acquisition, the transfer transactions of the real estate will be done and the related persons will be notified that the real estate in question is subjected to liquidation, and for its liquidation the relevant institutions will be announced, and this will be stated in the ‘explanations section' of page allocated for the real estate.

If the real estate is located within the military forbidden zones and security zones, relevant military posts will be announced for its liquidation by means of expropriation.

3- Since real estate acquisition of foreign real persons and trading companies having legal personality and established in foreign countries according to the laws of these countries has been limited by thirty hectares and permission of the Council of Ministers is required for acquisitions exceeding 30 hectares, such demands will be sent to the General Directorate to be evaluated.

Furthermore, although the limitation about not acquiring more than thirty hectares in the whole country will be controlled through the transactions that will be sent to the General Directorate, during the transactions carried out by Land Registry Offices it is required that foreign real persons and trade companies having legal personality and established according to the laws of foreign countries that demand real estate acquisition to state, in contractual transactions on title deed and in other transactions excluding legal inheritance on document for registration demand, that “Including this one , the total real estate acquired by me or by the company that I represent, within the boundaries of the Republic of Turkey does not exceed thirty hectares. Otherwise I state that I accept the exceeding part to be liquidated and converted to value without any reservation or condition.”

4- Real estate transactions of foreign capital companies, established in our country according to the Foreign Direct Investment Law numbered 4875 or the repealed Law for Encouragement of Foreign Capital numbered 6224, like buying or selling will directly be concluded by Land Registry Offices.

5- In case of registration of limited real rights, included in the Turkish Civil Law numbered 4721, in favor of trading companies established in foreign countries according to the laws of these countries the transactions will be concluded without stipulating reciprocity.

CIRCULAR ABOUT FOREIGN DIRECT INVESTMENT

Date : August 7, 2003

Number : 2003/9-1566

The Law for Encouragement of Foreign Capital numbered 6224 was repealed by the Foreign Direct Investment Law numbered 4875 and dated June 5, 2003 that entered into effect being published in the Official Gazette numbered 25141 and dated June 17, 2003.

By the Foreign Direct Investment Law numbered 4875, foreign investors have been subjected to equal treatment with domestic investors, ratifications and permissions like investment permission, company establishment permission were removed and it has been regulated that it is free for companies having legal personality that foreign investors participate in or establish in Turkey, to acquire real estate property or limited real rights in areas where Turkish citizens can acquire real estate.

Companies established according to the Law numbered 4875 are not foreign companies but Turkish companies having foreign capital that are subjected to the rules of Turkish Commercial Law. Therefore, by the new regulation, domestic and foreign capital companies subjected to the rules of the Turkish Commercial Law are also subjected to the same procedure for real estate acquisition as in other fields.

As a consequence of this regulation, in real estate acquisition of Turkish companies having foreign capital as for other Turkish companies, whether real estate acquisition is within the comprehension of objectives and activities of the company or not, will be decided by checking competence document received from Turkish Trade Registry and the demand will be concluded in the local Land Registry Office.

It must be stated in the competence document received form Turkish Trade Registry that the company is established according to the Law numbered 4875 if it is established according to this law.
 

ANNEX1:

COUNTRIES WHICH HAVE FULL RECIPROCITY WITH TURKEY IN TERMS OF REAL ESTATE ACQUISITION

ANNEX - 2

COUNTRIES WHICH DO NOT HAVE RECIPROCITY WITH TURKEY IN TERMS OF REAL ESTATE ACQUISITION

ANNEX-3

COUNTRIES WHICH HAVE RECIPROCITY WITH TURKEY IN TERMS OF ONLY BUILDING ACQUISITION

ANNEX-4

COUNTRIES THE CITIZENS OF WHICH CAN ACQUIRE REAL ESTATE IN TURKEY WITH PERMISSION OF
MINISTRY OF INTERIOR AND MINISTRY OF FOREIGN AFFAIRS.

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