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Turkish Civil Code numbered 4721 (the “Civil Code”) is the main piece of legislation that regulates real estate ownership under Turkish Law. The provisions of the Civil Code regulate, among others, (i) which assets are treated as real estate, (ii) how one may acquire or lose the ownership of a real estate, and (iii) what restrictions may be established over a real estate.

In addition to the Civil Code, Turkish Code of Obligations numbered 6098 regulates contractual aspects of sale and purchase and leasing of real estate. Condominium Law numbered 634 regulates the principles which apply to condominium ownership.

There were no significant new laws that were introduced in 2024, which may materially impact real estate investors and lenders. One notable development is that a temporary cap on rent increases introduced in 2022, which prohibited landlords from increasing Turkish Lira denominated rents for residential leases at a rate which exceeds 25% has ended on 2 July 2024. Following the expiry of this temporary cap, residential rent increases for rents denominated in Turkish Lira will revert to being subject to the default statutory cap, which is changes in the twelve months’ average of the Turkish consumer price index.

Real estate ownership is recorded in land registry records kept before the land registry directorate having jurisdiction over the location of the property. Land registry records are presumed to be accurate, complete, and reliable, and these records serve as the primary source for verifying ownership.

Land registry records are available to everyone, and any person who can establish their legitimate interest in inspecting the relevant records may perform an inspection over these records. These persons may request that the relevant page and documents in the land registry be shown to them before the land registry officer or that they be given copies thereof. With that said, following the introduction of the Law on Personal Data Protection, the land registries adopted a stricter approach, and they tend to refuse any information or inspection requests unless a formal application is submitted to the land registry by the owner of the real estate. In other words, although the general principles under the Civil Code state that any person with credible interest may inspect the records, in practical terms, this can only be achieved with the active cooperation of the owner of the real estate. In case of legal proceedings, the claimant or creditor may also review these records – in case of an enforcement proceeding, the records can be accessed electronically and in case of a lawsuit, the court would ask the relevant land registry to provide these records.

As a general principle, the Civil Code does not introduce any restriction on who can own real estate and any person may acquire a real estate in Türkiye. With that said, as per the provisions of the Land Registry Law, real estate in certain areas (such as certain military zones, forest areas, heritage areas, areas that fall under the Law on Coasts numbered 3621, etc.) may not be purchased by any person, regardless of their nationality.

Although foreign individuals can purchase real estate in Türkiye (unless the relevant property is located in an area designated as a “prohibited military zone”, “military security zone”, “designated military zone” (collectively referred to as a “Military Zone”) or a “special security zone”), there are certain limitations with respect to the total area that can be purchased by foreigners in certain districts and if such limitation is reached, it would not be possible for a foreign individual to acquire a real estate in such district. Moreover, foreign legal entities may not directly acquire any property in Türkiye unless a special code or law envisages otherwise (such as the Law on Incentivizing Tourism numbered 2634, Law on Industrial Zones numbered 4562, etc.). Since there is a prohibition applicable to foreign entities on acquiring real estate in Türkiye, foreign investors tend to incorporate a Turkish entity, which is generally formed as a “special purpose vehicle” and acquire real estate through this Turkish entity.

Turkish companies controlled by foreign individuals or entities may acquire property by filing an application with the governorship of the relevant province. The relevant governorship will check whether the property is located in any Military Zone or special security zone. If this is the case, the acquisition of such property is only possible with the consent of the general staff (in case of military zones) or a special commission formed within the relevant governorship (in case of special security zones).

In addition to individual ownership of real estate, the Civil Code also allows for co-ownership, joint ownership and condominium ownership regimes. Certain easements, such as superficies right, can be independently registered with the land registry if such right is of an “independent and perpetual nature”. These rights will be deemed to be of “perpetual” nature in case it is granted for an unlimited time or for a period of at least 30 years.

As a general principle, the owner of a real estate will be the owner of the buildings, plants, and resources on the real estate.

In case a superficies right is established as an independent and perpetual right, such superficies right can be independently registered with the land registry and therefore the ownership of the buildings can be separated from the ownership of real estate.

With that said, a condominium ownership may be established over the independent units of a building that can be used on a stand-alone basis. Although the condominium ownership regime does not automatically remove the link between the ownership of the real estate and the building / independent units, it serves the purpose of separating the ownership of the buildings (or certain portions thereof) on a real estate from each other, where the owners will still continue to be the owners of the real estate and their ownership ratios will be determined, as a principle, in accordance with the values of the independent units.

Mainly due to practical and tax-related concerns, the ownership of commercial real estate is generally held through legal entities. Investors often opt for establishment of a “special purpose vehicle” and holding the ownership through these legal entities. Establishment of a legal entity allows the investor to organize the ownership and operations relating to the real estate under a single entity (such as agreements concerning the management and operation of the real estate, employment of the staff etc.). This allows the investor to refrain from being directly liable for these agreements since the relevant legal entity will be primarily liable for these agreements. Moreover, in case the investor wishes to dispose of the investment, the investor may simply transfer the shares of the legal entity and the ownership of the real estate would be indirectly transferred to the new owner, together with the contracts, as a business.

In some cases, it may also be preferable to establish two legal entities, namely an “operating company” and a “property company”, where the property company would hold the ownership of the real estate and the operating company would enter into operational agreements concerning the real estate. This would allow the investor to differentiate the liability, and the creditors of the operating company cannot come after the property company (in other words, the real estate) for the operating company’s liabilities (and vice versa).

Real estate investment trusts and real estate investment funds may also be deemed as preferred options for holding real estate ownership, depending on the specifics of the deal. These alternative models allow (i) securitization of the real estate, (ii) providing liquidity to major real estate investments and financing these investments through funds/partnerships, and (iii) investors to liquidate their participation interests (either fund participation shares or share certificate).

Land registry records reflect any encumbrances which may exist over a real estate. In order to determine whether there are any legal restrictions, mortgages, pledges, legal proceedings, any options to purchase the relevant real estate (such as a promise to sell, purchase right, buy-back right, right of first refusal) or any other issues that may affect the ownership or the use of the real estate, the potential acquirer should check the land registry records of the real estate in question and request an up-to-date encumbrance list from the owner. These encumbrances should be double checked immediately prior to the title conveyance, to avoid the risk that may arise from any new registrations made following the review of the encumbrance list.

In addition to the above, since the new owner of a real estate will automatically and by operation of law become a party to a lease agreement concerning the relevant real estate (please refer to question #13 below), the investor may also prefer to review the lease agreement(s), if any.

We recommend that investors engage a technical expert to review the building and its occupation permits. Failure to hold the relevant permits may lead to administrative fines and/or the suspension of operations, or even demolishment of the relevant building. Moreover, if there are no buildings on a real estate, the investors may prefer to engage a technical expert to review the zoning plans and zoning status document. If a construction is under progress over a real estate, the investors may also prefer to review (or have reviewed) the building permit.

If it is determined during a legal due diligence process that certain technical zoning and environmental issues exist, the investor may prefer to engage a technical zoning and environmental expert, which would work in co-operation with the legal team to assess the risk.

The ownership of a real estate is conveyed to the purchaser (and therefore the risk passes to the purchaser) when the sale / transfer is registered with the land registry records of the real estate, which takes place after the seller and the purchaser execute the relevant purchase agreement before the land registry officials (or, alternatively, before the notaries public), in the official form.

Land registries generally adopt a strict approach with respect to the purchase agreements to be executed in the official form. More specifically, on most of the occasions, the purchase agreement is prepared by the land registry officials based on their own template, and it is very unlikely for the land registry officials to accept any revisions to their template form. This template regulates basic transfer obligations and lacks details that may be related to the deal.

Since the template purchase agreement generally lacks the specifics and details of the deal, the parties may also prefer to execute a “promise to sell agreement” (generally preferred in commercial transactions), which defines the terms and conditions of the sale in greater detail and shows the parties’ intention to complete a real estate transaction at the price shown on the contract. These agreements, as bare minimum, generally regulate the payment terms and the liability regime. It should be noted that promise to sell agreements must be executed before a notary public or a land registry official, in any case in the official form, for them to be valid.

Upon reaching an agreement on sale and purchase of a real estate, the parties file an online application with the relevant land registry, to finalize the title conveyance procedures. With that said, the parties cannot reserve a time slot with the land registry for the consummation of the procedures and the land registry calls the parties to execution, once they complete their internal review and prepare the relevant documentation. Upon land registry’s call, the transacting parties and the land registry officials attend the procedures at an “execution room” and complete the title conveyance procedures there.

Since it is very difficult to simultaneously transfer the purchase price and execute the purchase agreement (as the title conveyance procedures are performed in the “execution room”), the purchase price of the real estate is usually transferred to seller right before proceeding to the execution phase (through electronic transfer of funds). Alternatively, with a view to secure simultaneous transfer, the transacting parties may prefer to use other secure systems (such as a blocked cheque or the official escrow (TapuTakas) established by the General Directorate of Land Registry and Cadastre, whereby the purchaser deposits the purchase price to the escrow accounts and the funds will be released to the seller immediately following the registration of the purchaser as the new owner of the real estate).

It is common for real estate transfers to be affected by way of share transfer, especially when it comes to properties such as hotels and shopping malls. For instance, in cases of hotels and shopping malls, the owner of the real estate may prefer to establish a legal entity with a view to manage the operations of the property through the company, where such legal entity would execute agreements concerning the operations, staff, service procurement and other related aspects, and obtain relevant licences required to operate the business – the transfer of the shares of the legal entity would ultimately result in the indirect transfer of the operations / business altogether, together with the ownership of the real estate.

Moreover, depending on the tax implications, if a share transfer is more preferable when compared to an asset transfer, the legal entity may undergo a spin-off and the shares of the surviving entity that would hold the title of the real estate may be transferred to the potential investor / purchaser. It is advisable to check the tax implications of a share transfer and an asset transfer with tax consultants.

Any lease agreement that is related to utilization of a real property will automatically and by operation of law be transferred to the purchaser of the real estate, simultaneously with the transfer of the ownership of the real estate. In other words, upon consummation of the real estate transaction, the new owner automatically becomes a party to the lease agreement and be bound with it. Therefore, the benefits and income derived from the letting will also be automatically transferred to the new owner.

With that said, the new owner may initiate a lawsuit to terminate the lease relationship in case the owner can demonstrate that he/she needs the premises. On the other hand, under Turkish law, lease agreements may be annotated with the land registry and in such case, the new owner would be prevented from exercising such termination right, on the basis that he / she has acquired the premises with the knowledge that the premises are leased out to a third party.

Easements, usufruct rights, real estate burden and other personal servitudes may be created. Construction rights and rights of way are the commonly used rights.

Similar to ownership rights, these rights become effective against third parties upon registration in the land registry. Therefore, these rights are protected against third parties through the land registry records.

Turkish law does not acknowledge the beneficial ownership concept – as such, trust structures are generally formed as contractual obligations and therefore, in accordance with the principle of privacy of contracts, these obligations will not be enforceable against third parties. In other words, although the owner of a real estate can exercise this ownership right against any third party, the beneficial owner may only have claims against the legal owner who holds the ownership of the real estate. For instance, the trust relationship would not legally prevent the legal owner from disposing of the real estate – in such case, the beneficial owner may only claim damages from the legal owner, on the basis of breach of contractual obligations.

No, there is no such requirement. The land registry records will only show the owner of the property.

With that said, in case Turkish companies controlled by foreign individuals or entities acquire any property, they need to file an application with the governorship of the relevant province, where the applicant would be required to submit extracts from the share ledger of the company, showing the shareholders of the relevant entity.

Real estate owners are required to pay “real estate tax” on an annual basis, which is calculated on the basis of the real estate’s value as recorded in the records of the relevant municipality (which generally does not reflect (and fall short of) the actual value of the real estate). In addition to the real estate tax, real estate owners are also required to pay an annual “environmental cleaning tax” – in case of leases, it is common for the tenant to pay this tax.

Once an application is made with the land registry for the transfer of a real estate, the applicants disclose the purchase price of the real estate to the land registry. This declared price is used as the basis of calculating the “real estate transfer fee”, which is calculated at the rate of 4% of the purchase price. This fee, together with other insignificant administrative fees, must be paid before proceeding with the title conveyance. Although both the seller and the purchaser need to bear the burden in equal portions (i.e. 2% per each party), in practice, whole transfer fee is often paid by the purchasers as per the parties’ commercial agreement.

The seller may be subjected to other income taxes (in case of individuals), and corporate income taxes (in case of legal entities), depending on the specifics of the deal. Moreover, value added tax should also be taken into consideration.

The Turkish Code of Obligations (the “TCO”) regulates lease relationships and generally speaking, the provisions of the TCO may be deemed to be tenant-friendly, especially when it comes to residential leases and commercial leases (which is defined as a “roofed workplace lease” under the TCO) that has a term of not less than 6 months. The TCO introduces many mandatory provisions, where the parties cannot opt out or regulate a different regime – few important examples of these provisions can be listed as follows:

1. limitations to rent increases (in case of Turkish Lira rent, the increase rate cannot exceed twelve months’ moving average of the Turkish consumer price index and in case of foreign currency rent, the rent cannot be increased before the expiry of a five-year period);
2. the landlord’s prohibition to terminate the lease agreement on the basis of the expiry of the term, unless the term is extended for a period of at least 11 years on top of the initial term (where the tenant can terminate the agreement by serving a written notice at least 15 days prior to the renewal date (such termination becoming effective on the renewal date), the landlord can only terminate the lease agreement by serving a written notice at least 3 months’ before the renewal term (such termination becoming effective on the renewal date), on the condition that the landlord can only serve this notice once the initial term is extended for 10 years (in other words, during the eleventh extension year, at the earliest);
3. prohibition to introduce any payment obligations against the tenant, save for the payment of rent and common expenses (as known as prohibition of penal clauses).

Within the boundaries of this legal framework, the parties to a commercial lease generally prefer to regulate the below issues in greater detail:

1. the term of the agreement, including a “renewal” mechanisms;
2. rent and common expenses;
3. rent increase rate;
4. security deposit;
5. the modifications, alterations and fit-out works to be performed by the tenant;
6. repair and maintenance works;
7. right to sub-lease (especially to group companies of the tenant);
8. termination;
9. insurance; and
10. right to register the agreement with the land registry.

In case of tenant’s breach of the lease agreement, the landlord will be entitled to serve a notice to the tenant regarding the breach, where the landlord would be required to grant 30 days’ remedy period to the tenant in the case of residential leases and commercial leases. In any case, if the breach is not remedied within this remedy period, the landlord may terminate the lease agreement, by initiating a lawsuit against the tenant.

If the tenant’s breach is related to the payment of rent and other ancillary costs, in addition to the landlord’s right to terminate the agreement due to breaches not remedied within 30 days’ remedy period, the landlord may also terminate the lease agreement in case the tenant causes the landlord to serve two notices (on the condition that these two notices are not related to one rent payable) within an agreement year.

Zoning Law is the primary legislation that regulates the use, planning and zoning restrictions on real estate. Moreover, Zoning Regulation on Planned Areas and Zoning Regulation on Unplanned Areas are also regulating the use, planning and zoning restrictions.

Environmental Law of Türkiye introduces the “polluter pays” principle. More specifically, expenses incurred for the prevention, limitation and remediation of pollution and degradation and for the improvement of the environment shall be borne by the polluter or the person causing the pollution or degradation.

Energy Identification Document, which is a document that should contain information on the energy requirement and energy consumption classification of the building, insulation properties and efficiency of heating and / or cooling systems, should be obtained for all buildings (with few exemptions). In case such document is not obtained for a building which is required to have the document, no occupancy permit will be issued for the relevant building (new buildings to be constructed needs to satisfy minimum energy and carbon emission level requirements as set out under the relevant legislation).

Despite the fact that the Turkish Constitution generally guarantees that a person will not be deprived of his ownership rights, in specific circumstances the administration may expropriate property owned by a private party if the public interest is best served in doing so. Expropriation is subject to the payment of compensation determined based on the market value of the property.

It is possible to create mortgages over real estate and under Turkish practice, mortgage is one of the most preferred security mechanisms (especially if the debt / loan was provided in relation to the acquisition of the real estate). Similar to other encumbrances, mortgages are also established before land registry, through execution of a mortgage agreement in the official form; therefore, these rights are protected against third parties through the land registry records.

In case the debtor fails to pay its debts, the mortgagee may enforce the mortgage through the enforcement / execution offices where the real estate may be sold at a public auction and the receivables of the mortgagee would be paid from the proceeds of the sale.

Costs of mortgage is comprising of the mortgage fee (currently levied at 0.455% of the secured amount), the stamp duty (currently levied at 0.948% of the secured amount) and other administrative costs which are negligible. With that said, if the mortgage is to be established as a security of a loan utilized from banks, foreign credit institutions and international institutions, then no stamp duty will arise from the mortgage agreement, as these agreements are currently exempted from stamp duty. A similar exemption is also applicable for mortgage fee, in case the mortgage is established as a security of the loans utilized from banks, finance companies, foreign credit institutions and international institutions.

As discussed under item #15 above, Turkish law does not acknowledge beneficial ownership concept and trust structures are formed as contractual obligations. Although the debtor and creditor may agree to a security structure where the ownership of the real estate will be passed to the creditor (in a manner where such real estate will serve the purpose of granting a security to the creditor), considering the aim of mortgage securities and the value the parties try to protect through a mortgage mechanism and the potential costs, these structures are not used quite often (for instance, the debtor would prefer to hold the title to the property and the parties would prefer to refrain from paying real estate transfer taxes and income / corporate income taxes that may arise from these transfers).