The Acquisition of Real Estate by Foreigners in Turkey

Author: Att. Uygar Yetkiner, Yetkiner Law Firm

The Land Registry Law No. 2644 (“Law No. 2644”) sets the legal framework regarding the acquisition of real estate by foreigners in Turkey. Foreigners may possess land, residences, and workplaces provided that they fall in line with the legal boundaries set forth by Law No. 2644.

Pursuant to Law No. 2644, the said legal boundaries pertaining to foreign natural persons (“Natural Person”) are as follows:

• The total area of real estate acquired by a Natural Person may not exceed ten percent of the district area subject to private property.
• The countrywide real estate acquired by a Natural Person may not exceed thirty hectares per Natural Person.
• In the event of acquisition of an unbuilt real estate (i.e., plain land), Natural Persons are required to submit the prospective building project to the relevant Ministry for approval within two years of acquisition.
• The purchase of real estate situated within military forbidden zones and military security zones by Natural Persons is prohibited.

Similar to Natural Persons, pursuant to Law No. 2644, commercial companies with an element of foreignness are subject to the following legal boundaries regarding the acquisition of real estate within Turkey:

• Foreign commercial companies, who possess a legal entity and established abroad in accordance with the relevant foreign country’s laws (“Foreign Commercial Company”), are entitled to acquire real estate solely within the framework of special laws (i.e., the Law on Encouragement of Tourism, the Law on Industrial Districts, and the Turkish Petroleum Law).
• In the event of acquisition of an unbuilt real estate (i.e., plain land), Foreign Commercial Companies are required to submit the prospective building project to the relevant Ministry for approval within two years of acquisition.
• Regarding commercial companies who possess a legal entity and established in Turkey, pursuant to the provisions of the Turkish Commercial Code (“Domestic Legal Entities”), in the event that a Foreign Natural Person, Foreign Commercial Company, and/or an international organization (all together “Foreign Investors”) holds fifty percent or more of the shares of a Domestic Legal Entity or has the authority to appoint or to dismiss the majority of the persons holding the right to govern the Domestic Legal Entity (“Foreign Invested Domestic Legal Entity”), the said Foreign Invested Domestic Legal Entity may acquire real estate in order to carry out its activities stipulated within its articles of association.
• In the event that a Domestic Legal Entity who possesses real estate is merged with or acquired by a Foreign Invested Domestic Legal Entity, the surviving legal entity shall be subject to the same restrictions stipulated within the aforementioned paragraph (i.e., the surviving legal entity may acquire real estate in order to carry out its activities stipulated within its articles of association), provided that fifty percent or more shares of the surviving legal entity are held by Foreign Investors as a result of the merger or acquisition.
• The purchase of real estate situated within military forbidden zones and military security zones by Foreign Invested Domestic Legal Entities is subject to approval by the relevant authorities.

In addition to the abovementioned legal boundaries, the following aspects bear grave importance during the acquisition of real estate in Turkey:

• No mortgage should be present on the relevant real estate
• Buyers should refrain from purchasing seized real estates
• The zoning status of the desired real estate should be thoroughly examined
• Whether the seller has the power of disposition regarding the desired real estate should be verified
• Legal transactions regarding the sale and purchase of real estate are required to be conducted at the relevant directorate of land registry
• Contingent upon nonadherence with the abovementioned legal boundaries, the Ministry of Finance shall set a term to liquidate the relevant real estate

All in all, the acquisition of real estate by foreigners within Turkey is possible as long as abidance with the abovementioned restrictions are adhered to. It is highly recommended that a qualified attorney is contacted prior to the conclusion of any legal transactions regarding the acquisition of real estate in Turkey.

Article Contact: Att. Uygar Yetkiner

E-mail: uygar@yetkiner.av.tr