LAW ON THE PURCHASE OF REAL ESTATE BY FOREIGNERS IN TURKEY

LAW on the purchase of real estate by foreigners in Turkey

ON THE ORDER TO MAKE CHANGES IN THE LAW "ON THE RIGHTS OF PROPERTY IN Real Estate"

       № 5782                                                                 Ratification: 03/07/2008

              SITUATION 1 - the seventh and eighth paragraphs of Article 35 - on the legality of "The Rights of ownership of immovable property", in force since December 22, 1934 under the number 2644, to the following:

              "Areas of strategic importance in terms of public safety and public need, such as: areas with irrigation systems and electricity territory accommodation facilities, agricultural areas, mining sites, territories and objects protected state, objects with adjacent areas of cultural and religious significance, security territory with a sensitive ecosystem, populated by rare species of flora and fauna, which can not be disposed of in the context of property rights in favor of individuals with foreign citizenship, as well as foreign commercial organizations with the status of legal persons under the law of his state, determined Orders Council of Ministers, which makes the appropriate decision based on proposals initiated by subordinate government bodies and public organizations in charge of specified territories or objects containing the map borders and territory development plans.

              At the level of regional administrative centers and settlements individuals with foreign citizenship have the right to acquire ownership to ten per cent of the total area of the territories included in the plan of building situational locality, as well as limited property rights on a durable basis. At the same time, taking into account the infrastructure, development of economy, energy security, the environment, agriculture, cultural and ethnic dimensions and significance to national security provided administrative centers or regions, the Council of Ministers is authorized to establish different percentages territories allowed to acquire in ownership by foreign citizens, but they could not be greater than the above ratio.

              Under this provision, within the Ministry, under which are Kadastrovy State Register and Registration Chamber, the Commission is formed, comprising representatives of the administration concerned authorities, which, under the authority of the Council of Ministers tasked to examine relevant proposals coming from lower bodies and voluntary organizations to subsequent introduction to the Council of Ministers. Administration regions, in turn, until the end of January each year are obliged to submit regular reports to the Commission specified above, which will contain information for the previous year on the changing relations distribution territories and areas included in development plans situational administrative centers and settlements on regions. Reports containing information on areas closed to the deployment of military and military-strategic assets with an indication of the changed coordinates deployment in case of relocation, given the Ministry of National Defense, and information on special security zones with their coordinates deployment on the ground and changes in these coordinates, in if any, provided to the Ministry of Internal Affairs with the subsequent transfer to the Ministry under the State which are Kadastrovy Register and Registration The Chamber ".

              SITUATION 2 - 36 - uyu article of law under the number 2644 to take as follows:

              "Article 36. Companies formed in Turkey investors with foreign nationality, or firms with such equity participation with the status of legal person are entitled to purchase real property, its operation as well as relevant limited property rights, if necessary, directly related to the activities of the company specified in its constitution. With the transfer of ownership of acquired property in a way another firm with a foreign charter capital, or in case of changes in the authorized capital of local companies through the transfer of shares to foreign investors and its transition, thus, into companies with foreign capital or statutory equity applicable Legislative grounds specified above will be the situation. In cases where the foreign equity participant with the status of an individual or foreign commercial company wishing to buy real estate, which is liquidating the property of the Turkish charter company with foreign capital, the applicable legal basis is 35 - and articles of this law.

              In accordance with the provisions of the law "On the closed military facilities and military security zones" under the number 2565, in force since December 18, 1981 and Article 28 - about this same law, which defines the strategically important territory, permissive powers regarding the acquisition of the above law firms in real estate territories closed military facilities and military security zones are within the competence of General Staff of the Army or his authorized Command, and permission to purchase real estate in the territory of the special security zones is in the competence of the regional administrative bodies in the location of the relevant property. Alienation in terms of ownership of real property in the jurisdiction of the regional administration, is considered commission composed of representatives of public organizations that are relevant to this area, after which, taking into account the requirements of national security and conformity kin of the company, decides on the possibility of transferring the ownership of the relevant property.

              Real estate, which was acquired on terms of ownership or limited property rights contrary to the law read this article, or exploitation of not complying with the provisions of this article law, is subject to denunciation by its owner within the time specified the Ministry of Finance, as stipulated in the event of default rights would denounce State automatically, after which the property values will be transferred to the cash equivalent, an amount which will be paid to the owner of real estate.

              Applicable grounds and methods for the execution of this article law will be determined in additional instructions that will be taken on the basis of multilateral deliberative negotiations between the State Treasury, the Ministry of Internal Affairs, Ministry Blagoustroystva and Housing and Municipal Services and the Ministry of National Defense ".

              SITUATION 3 - in Act No. 2644 to add a temporary article to read: "Temporary ARTICLE. According to the seventh paragraph of Article 35 - the present law, relevant government bodies and public organizations are obliged within no more than three months from the date of entry into force of this article law, authorized the Commission to provide reports containing information about the area that can not be disposed of in the terms of ownership and limited property rights in favor of individuals with foreign citizenship and foreign commercial organizations with the status of legal persons under the law of his state, as well as information on the total area of the territories included in development plans situational administrative centers and regional settlements.

              Until the definition of administrative centers and regional human settlements volume of real estate, which has the opportunity to exclusion under the conditions of ownership and limited property rights, individuals with foreign nationality may acquire real estate in terms of ownership and limited property rights on the basis of article 35 of this Law ".

              SITUATION 4 - This law comes into effect and receives full legal force from the date of its publication.

              SITUATION 5 - Plenipotentiary of executive authority in connection with this law is the Council of Ministers.

14.07.2008

LAW ON THE REAL ESTATE ACQUISITION OF FOREIGNERS IN TURKEY

Land Registry Law no:2644- 7 January 2006

1. REAL ESTATE ACQUISITION OF FOREIGN REAL PERSONS IN TURKEY

Real estate acquisition of foreign real and legal persons in Turkey has been regulated in the article 35 of the Land Registry Law numbered 2644 and then with law numbered 5444 and dated 12 December 2005 which was established in the Official Gazette numbered 26046 and dated 7 January 2006. New fundamental principles were regulated with this new law for the real estate acquisition of foreign real persons and trade companies having legal personality and established in foreign countries according to the laws of these countries.

New form of the article 35 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 square meters (6,17 acres). Within the same conditions set out in this paragraph, the Council of Ministers is authorized to increase the area up to 30 hectares (74,13 acres).

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 special laws.

In case of establishing mortgage in Turkey in favor of foreign real persons and trading companies having legal personality established in foreign countries according to the laws of these countries, the conditions and restrictions set out in the first and second paragraphs shall not be applied.

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.

For the real estates acquired through legal inheritance by citizens of a country that have reciprocity with the Republic of Turkey, the conditions and restrictions set out in the first paragraph shall not be applied. For the real estates acquisition by means of transactions depending on death apart from legal inheritance, the conditions and restrictions set out in the above paragraphs shall be applied. Real estates and limited real rights on real estates acquired through legal inheritance by citizens of countries that do not have reciprocity with the Republic of Turkey shall be liquidated after their transfer transactions are performed.

De jure and de facto circumstances shall be taken as basis in determination of reciprocity. In implementation of this principle for the citizens of countries that have not granted land ownership rights, it's stipulated that the rights granted by a foreign country for real estate acquisition to its own citizens should also be granted to the citizens of the Republic of Turkey.

The Council of Ministers is authorized to determine the places where foreign real persons and trading companies having legal personality established in foreign countries according to the laws of these countries can not acquire real estates and limited real rights on real estates within the areas in terms of irrigation, energy, agriculture, mine, and protected areas, and belief and cultural featured areas, and special protection areas and sensible areas due to flora and fauna features, strategic areas due to public interests and national security by means of the proposals of relevant public institutions and organizations with the registry based coordinated maps and plans, and the rate of the areas where foreign real persons can acquire real estates are not more than 5 per thousand according to the provinces and provinces' areas. Proposals of the public institutions and organizations within these scope shall be examined, appreciated and submitted to the Council of Ministers by means of a commission that carries out studies within the authority set out in this paragraph and constitutes of relevant representatives of administration in the structure of the Ministry that General Directorate of Land Registry and Cadastre is related to.

Map and coordinate values concerning the military forbidden zones, military and private security zones and strategic zones that are determined after the enforcement of this law and their alterations shall be given without any delay by the Ministry of National Defense to the Ministry that General Directorate of Land Registry and Cadastre is related to.

The parcels needed to be expropriated or to be annotated on land register due to be in the areas determined in the above paragraphs shall be notified by relevant institutions to relevant Land Registry Offices.

The real estates and limited real rights on real estates acquired contrary to the provisions of this article or determination of misuse according to the purpose of acquisition without legal necessity shall be converted to value and paid to owner of this property, unless the real estate is liquidated by the owner within the period given by Ministry of Finance.

1.A. RECIPROCITY PRINCIPLE

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.

The Council of Ministers expressed what should be understood from the reciprocity principle in its decision dated 29 May 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 requested to be taken as a basis in implementation of reciprocity. Therefore, for the existence of reciprocity between our country and a foreign country regarding 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 that foreign country and this right must be accepted by laws and must be practically applicable.

1.B. 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:

Since heimatlos persons have no state citizenship, there isn't any state to decide about reciprocity. For this reason, heimatlos persons are exempted from reciprocity principle.
According to the article 7/2 of the "Convention on Legal Situation of Refugees" dated 28 July 1951 and ratified by Turkey with the law dated 26 August 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.
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.

1.C. 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:

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.
According to the article 35 of the Land Registry Law numbered 2644, foreign real persons can not acquire real estate more than 2,5 hectares (6,17 acres) in our country. However, for acquisition up to 30 hectares (74,13 acres), decision of the Council of Ministers is required. Legal inheritance is exception of this rule.

1.D. REAL ESTATE ACQUISITION OF FOREIGN TRADE COMPANIES HAVING LEGAL PERSONALITY IN TURKEY

Law for Encouragement of Tourism numbered 2634
Petroleum Law numbered 6326
Industry Regions Law numbered 4737

1.E. 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 Registry. In other words, these companies 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 18 January 1954 was repealed by Foreign Direct Investment Law numbered 4875 and dated 5 June 2003 that entered into effect being published in the Official Gazette numbered 25141 and dated 17 June 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 memo numbered 1363-100/841 and dated 7 August 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 regards the activities of foreign capital companies in our country, are considered as companies of the Republic of Turkey, according to the 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.

2. 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.

3. 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.

4. REQUIRED DOCUMENTS FOR APPLICATION

There is no difference between Turkish citizens and foreigners in terms of required documents for application.

4.A. In terms of Real Persons:

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.
Identity card or passport of foreigner given by his/her own country and two passport-size photographs.
If the person applying for the purchase is a representative, a legal document of attorney of the representative, a photo-ID card, two passport-size photographs of the representative, are required. If some of the purchasers are not present during the transaction, photo-ID card, two passport-size photographs, and a legal document of attorney of the representatives that represent the purchasers, are required.

4.B. In terms of Legal Trade Companies:

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 based on this, and signatures certificate.
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 charge will be paid according to the transaction named "showing the parcel on site".