I. Introduction
As a general rule, real estate acquisition is not legally possible for foreign legal persons in Turkey, but they can exceptionally acquire real estate if certain conditions are met. Commercial companies with legal personality established in foreign countries according to the laws of their own countries can acquire real estate and limited real rights only within the framework of the provisions of special laws. Companies with foreign capital established according to Turkish Laws will be able to acquire real estate if they pay attention to certain issues.
II. The Concept of Foreign Legal Entity and Real Estate Acquisition
Foreign real and legal persons can appear as partnerships or associations and foundations. While partnerships are legal entities established for the purpose of sharing dividends, associations and foundations do not have a profit motive. In Turkish law, whether a partnership has a foreign qualification is determined in accordance with the provisions of the Turkish Commercial Code. Accordingly, partnerships established according to Turkish laws and headquartered in Turkey are considered Turkish partnerships, while partnerships with headquarters abroad are considered foreign.
The general framework regarding the acquisition of real estate by commercial companies with legal personality established in foreign countries according to the laws of their own countries is regulated by paragraph 2 of Article 36 of the Land Registry Law. According to the Land Registry Law, only foreign partnerships were allowed to acquire real estate in Turkey, while associations and foundations were not allowed to acquire real estate. Pursuant to this regulation; Foreign trade companies will only be able to acquire immovable property and/or limited real rights in Turkey within the framework of special law provisions. Relevant special laws in accordance with the aforementioned law and regulation; Tourism Incentive Law, Industrial Zones Law and Turkish Petroleum Law.
Transactions in the Trade Registry Office, which are required to be carried out regarding the real estate purchase of companies with foreign capital outside the scope of the aforementioned law and regulation (who can acquire real estate on equal terms with Domestic Capital Companies);
- Petition, (If the company is a joint stock company, notarized copies of the relevant pages of the share book showing the shareholding structure of the company should be submitted to the trade registry directorate by the relevant company.)
- By the Trade Registry Directorate; If the applicant company is determined as a foreign-capital company that is not within the scope of Article 36 of the Land Registry Law No. 2644, a partnership status and authorization document containing the representation and binding of the company, the names or titles of the company partners, nationalities and partnership ratios is drawn up.
- If any amendments have been made to the company’s articles of association and the company’s activities, certified copies of the trade registry gazettes pertaining to the change are attached to the partnership status and authorization certificate issued by the Trade Registry Directorate.
- For companies that foreign investors have the authority to appoint or dismiss the majority of the directors, although the partnership ratio is below 50%, only the company’s articles of association and if any amendments have been made to the articles of the management, representation and binding articles of the company, certified copies of the trade registry gazettes pertaining to the amendment are given without issuing a partnership status and authorization document by the Trade Registry Directorate.
- Companies with foreign capital outside the scope of Article 36 of the Land Registry Law No. 2644 will be able to acquire and use immovable property and limited real rights on equal terms with companies with domestic capital, and will be able to make transactions in the land registry.
III. Foreign Capital Companies
The acquisition of immovable property by companies with foreign investor status is in the Land Registry Law; It has been rearranged with the amendment brought by the Law No. 5782 dated 03.07.2008. According to this regulation, companies with legal personality established or participated in Turkey by foreign investors can acquire and use immovable property or limited real rights in order to “carry out the fields of activity specified in their articles of association”. The implementation of this article is regulated in the “Regulation on the Ownership of Immovable and Limited Real Rights Acquisition of Companies with Foreign Capital”. In the regulation, it is foreseen that the process for foreign investor companies to acquire real estate and/or limited real rights in Turkey will be carried out by the Governorships, and the process continues as follows:
- The Governorship, within three working days following the submission of the immovable acquisition application, sends the title deed registration information and coordinated diameter sample of the immovable to the General Staff or the commands it will authorize, and requests to be notified within fifteen days, whether the immovable remains in the military forbidden zone, military security zone or the zone determined within the framework of Article 28 of the Law No. 2565. If no response is given within this period, it is decided that the real estate in question is not within the specified areas and action is taken. The governorship requests the provincial police directorate or the provincial gendarmerie command to notify within fifteen days whether the immovable property remains in the private security zone within three business days following the application. If no response is given within this period, it is decided that the real estate in question is not in the private security zone and action is taken.
- In case it is reported that the immovable is in the military forbidden zone, military security zone or the zone determined within the framework of Article 28 of the Law No. 2565, the Governorship shall send a copy of the other application documents within three working days following the said notification to the General Staff or the commands to be authorized, and will request that it be notified within thirty days whether the property acquisition request is appropriate in terms of national security. If no response is given within this period, the property acquisition request will be judged to be appropriate in terms of national security and action will be taken.
- If the result of the application is positive or deemed positive, written information will be given by the Governorship to the company or subsidiary and the land registry directorate within three working days for the registration process, and the registration request will have to be registered within six months from the notification of the written information to the company or affiliate. If this period is exceeded, the application for real estate acquisition must be renewed.
The Commission will evaluate whether the immovables or limited real rights acquired within the scope of the regulation and notified to the governorship by the General Directorate of Land Registry and Cadastre within the framework of paragraph 4 of Article 11 are used within the scope of the activities specified in the articles of association of the company or subsidiary. If, as a result of the examination, it is evaluated that the immovable or limited real right is used in violation of the provisions of this article, this situation shall be notified in writing to the company or affiliate within three working days. It is obligatory to give a written response to the notification within thirty days. Otherwise, the content of the notification will be deemed accepted. In case of detection of use contrary to the scope of activity specified in the main contract, the Commission may grant a one-time period of six months to adapt the use to the field of activity specified in the main contract. If it is determined that immovable or limited real rights have been acquired or used in violation of the provisions of this Regulation, the liquidation procedures of the acquired immovable or limited real rights may be initiated.
IV. Conclusion
Our legal department carries out all kinds of consultancy services that may be needed in this context, such as the follow-up of the detailed processes outlined above and the legal position of the requesting companies, whether they can acquire real estate or not, and the supply of the necessary documents.
You can always contact us for real estate purchase and other questions…
Best Regards,
Edel Property Team