Real estate sales after introduction of new legislation possible again - President Gül signs law

Now, finally, after long period of waiting and according to big losses in the area of the real estate and property sales for all brokers and construction companies the long hard haul is overcome. With the 3rd of July 2008 the Turkish parliament has dismissed the new law of the acquisition of real estate by foreigners or foreign companies. After the law was signed now by President Gül, the last hurdle is overcome.

One of the two essential changes intend that in future up to 10% of the developed surface of a municipality or a district may be sold to foreigner or foreign companies. Every municipality or every town district has to publish its total area in square meters and next to it the developed surface information of this area.

These figures are published by a commission in the Chamber of Industry and Commerce of the respective town or municipality and are administered by them. From this developed area at maximum 10% may be sold to foreigner or foreign companies. In each case up to January of the following year these figures have to be updated by the responsible governors and make available to the chamber.

With these changes it is possible for future buyers or investors to find out whether sale of property area or already existing buildings can be sold to foreigners or foreign companies at the Chambers of Industry and Commerce.

The second change is valid primarily for companies founded in Turkey. To be able to work on the activities which have been fixed in the foundation contract of the company, the foreign company may also acquire properties. Indeed, the foreign companies who want to sell their possession to another foreign company may do this only if the buying company corresponds to the same activity field.

As a second step, the Turkish Parliament has now forwarded the newly worded paragraph 35 to the President of Turkey for his signature. He has got a period of nine days to decide whether to give his permission or not. At the same time, the text has been published on the internet and the original version can be read at:
www.tkgm.gov.tr
 

 The acquisition of real estate by legal foreigners is now regulated by article 35 of the Land Registry Law (numbered 2644, together with the law numbered 5444 dated December 12, 2005) which was recorded in the Official Gazette, numbered 26046 and dated January 7, 2006.  The fundamental principle of this new law was to regulate the acquisition of real estate in Turkey by foreign persons and companies having legal status and established in foreign countries according to the laws of these countries. 

The new wording of article 35 of the Land Registry Law is as follows:

?With the reservation of reciprocity and compliance with legal restrictions, foreign persons can acquire real estate for the purposes of residence or business in Turkey provided they are registered for these purposes in the development plans submitted or in local development plans. The same conditions shall be stipulated in the establishment of limited rights on real estate. The total area of the real estate and the limited rights on real estate that a person of foreign nationality can acquire all over the country cannot exceed 25000 m2. Within the conditions set out in this paragraph, the Council of Ministers is authorized to increase the area up to 30 hectares.      
Companies having legal status established in foreign countries according to the laws of these countries can acquire real estate and limited rights on real estate in Turkey according to the provisions of special laws.
 

In case of the granting of a mortgage in Turkey in favour of foreign persons and trading companies having legal status 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 persons and trading companies having legal status established in foreign countries according to the laws of these countries, no one can acquire real estate and limited rights on real estate in Turkey.
 For real estate 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 acquisition of real estate by means of transactions due to death apart from legal inheritance, the conditions and restrictions set out in the above paragraphs shall be applied.

Real estate and limited rights on real estate 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 completed.   
De jure and de facto circumstances shall be taken as the 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 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 status established in foreign countries according to the laws of these countries can not acquire real estate and limited rights on real estate within areas in terms of  irrigation, energy, agriculture, mining and protected areas,  special cultural and religious areas, specially protected areas and sensitive areas due to flora and fauna features, strategic areas on the basis of public interest and national security, by means of the proposals of relevant public institutions and organizations with registry based coordinated maps and plans, and the rate of the areas where foreign real persons can acquire real estate shall be not more than 5 per thousand according to the provinces and provinces? areas. Proposals of the public institutions and organizations within this range shall be examined, endorsed 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 constituent to the relevant representatives of administration in the structure of the ministry that the 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 Defence to the ministry that the General Directorate of Land Registry and Cadastre is related to.

The parcels of land which need to be expropriated or listed in the land register as being in the areas determined in the above paragraphs shall be notified by relevant institutions to the relevant Land Registry Offices.
 

The real estate and limited rights on real estate 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 a value paid to the owner of the real estate unless liquidated by the owner within the period given by the Ministry of Finance.?      
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