Turk Property Law

Rental agreements under Turkish law (December 16, 2009)

Rental agreements under Turkish Law are a very common matter for almost all expats who are either tenants or landlords.

Enacted in 1955, Law No. 6570 on Real Property Leases (the Law) is the main piece of legislation governing landlord-tenant relationships in Turkey. The following series of articles will cover some basics on rental agreements and will hopefully provide a rough guide for expats, who intent to rent a property in Turkey.

The purpose of this series is to cover residential rentals only; commercial rental agreements are a totally different.

How is a rental agreement drawn up?
Rental agreements are, generally speaking, not subject to any form requirement, with some exceptions.

Rent payment time
Landlords usually ask for upfront payment, which means that the payment is done on the first days for the coming month. But payment date depends totally on your agreement with the landlord. For example; you can agree to pay your rent one year in advance or pay each month. Under Turkish law, there is no restriction with regards to the determination of leases and the parties may mutually determine it in Turkish Lira or foreign currency.

Get a receipt upon each payment
Payment through bank transfers are the most recommended way to get a receipt upon each month. If the amount is over TL 500 per month which is paid in cash carries a fine. A communiqué issued on July 29, 2008 says that, beginning from Nov. 1, 2008 it is a statutory obligation to receive rental income through a bank or postal office money order. The purpose of this declaration is to avoid undeclared rental income. Documents printed out from a bank's Web site are also accepted as proof of payment.
If you are still asked to pay in cash, don't pay your rent unless the landlord gives you a bank account. If the receiving party does not agree to accept the money via bank transfer, get a written receipt stating: a) amount of payment; b) date of payment; c) reason for payment; d) full and correct name of receiving party; e) full and correct name of paying party; and f) signature of receiving party.

Deposit payment
Most landlords ask for the deposit payment.

It therefore needs no repair and no paint job, and everything is working properly. The landlord therefore always asks for a deposit that s/he will probably not return at the end of the term. Be prepared to not get it back. I would recommend you take photos of the house on the day you move in -- especially if there are items that need to be repaired. Keep the photos in your files for future use to defend your claims.

Get a separate receipt for the payment of the deposit. The rental agreement may not show that you have actually paid the deposit

Increase in rent rates
Giving certain numbers will not be a good idea in this case the most recommended idea for the increase in rent rates is to go through a professional to find out the rate of rent increases through the Turkish Statistics Institute (Turk Stat).

Language of the agreement
Unless you are proficient in speaking and reading Turkish, you should not sign an agreement that you do not understand as it is not going to be clear what has been agreed with the landlord. You should contact a lawyer, or if you cannot afford it, at least consult your real estate agent about the wording of the agreement you are signing. But Real estate agents are not that careful about translation It is solely up to you whether you trust them or not. Don't forget that you will be signing a valid and binding contract or agreement even though it is in Turkish. You could try to get the agreement in both languages on the same page which may help you in case of a problem

Bills for utilities
"Why it is that the electricity company in Turkey forces the new tenant [or the landlord] to pay the outstanding electric bill of a previous tenant rather than pursuing the actual debtor is one of the problems which are unjust but a fact. It might be a good idea to check if there is any amount due from the former tenant and ask the landlord to clear it before you move into the house. If you want to register the utilities in your name, you must submit a valid residence permit to the utility company.

Notifications
Notifications regarding rental agreements are generally made through a notary public. This is not a general form requirement, but using a notary public is preferred.
In some cases, sending notifications through a notary public is a form requirement regardless of whether the rental agreement is a written agreement or not. In the event a tenant is making rental payments later than the agreed date of payment or if there is no payment, the landlord should notify the tenant through a notary public. The notification should refer to the payment date and proof of the late payment.

Addresses for notification
The addresses in an agreement are always important so the parties to the agreement know each other's addresses. During the term of the rental agreement, the address is the premises. The address of the tenant may be more important since the tenant may be subject to a notice (for instance for not paying for repairs that were made after the premises were vacated) after the agreement is terminated. In such cases, it might be a good idea to write down a second address that one can use after the termination of the agreement. This will help you avoid a large bill from a lawyer several years after the termination of the agreement.

Termination
The parties can terminate the agreement according to the termination clause. This clause is usually in favor of the landlord. However, Turkish law provides a special way for the landlord to ask the tenant to vacate a rented premise.
When you terminate a contract, make sure that you have really terminated it. This means that you should have written proof of termination.

Declaration for vacating
Most landlords will expect the tenant to sign a declaration that the tenant will leave the premises at the end of the term. This declaration is actually not really binding under Turkish law if it is signed only by the parties but without any official authority's participation. Such a declaration is only valid if it is signed before a notary public on a later date, after the rental agreement is signed.
There are various precedents from the Turkish high court stating that such a declaration that is signed at the same time of entering into a rental agreement should not be valid. The reason that this declaration can be invalid is granted by Turkish law on the basis of balancing the parties' power. When signing a rental agreement, the tenant is deemed to be the weaker party. Turkish law automatically protects tenants' rights since the tenant may be under the pressure of the landlord. Usually the tenants are ready to accept various conditions required by the landlord that they would not accept under normal circumstances.
There are several other matters to write about concerning rental agreements such as the power of signature. Make sure that you are signing the contract with the correct person. Finally, what strongly recommended is that you consult a lawyer when signing a rental agreement or any declaration that may contain hidden clauses that could put you in trouble in the future.

Divorce used to be taboo in Turkey…. (14 September, 2009)

Divorce is the case in which marriage comes to an end legally the one not being able to carry out a good marriage and not keep on a bad one is the divorced one but did you know that divorce used to be taboo in Turkey 20 years ago? For both men and women, divorce was considered embarrassing and shameful. This shame also extended to the kids and the families of the spouses. Even relatives of a divorced person would feel embarrassed when anyone would mention divorce as a concept, let alone the specific divorce.

Being taboo, divorce was the last and final resort in a broken marriage. Today, however, cases of divorce have increased dramatically compared to the past. Most people can think that; even as recently as the 1980s, a couple would discuss divorce more seriously, and many marriages were probably salvaged this way. Now, if the couple does not have a child, marriage and divorce are almost as simple as dating and breaking up.
Couples should be aware of that a marriage does not work by itself -- you have to make it work. The institution of marriage is indeed a serious and difficult project.
Divorce is not forbidden in Islam or by Turkish traditions. As in the rest of the civilized world, spouses always have the choice to walk away and start a new life with new people. There is life after divorce.
If one of you is a foreigner and if you are divorced, in order to update the registry, you need to submit the decision of the court to local authorities. Since you have a foreign court decision, local authorities will ask for a Turkish court's decision that recognizes this foreign court decision. Only after this recognition you can submit it to the authorities for enforcement. The recognition and enforcement of one country's court decision in another country has always been a complex and difficult issue. Many countries have enacted rules or are parties to international conventions governing the recognition and enforcement of foreign court decisions or arbitral awards.
The process of recognition of court judgments in Turkey is governed by the Code of Procedural Private International Law (CPPIL) No. 2675, dated May 2, 1982. A party asking for the enforcement of a foreign court decision in Turkey should apply to the competent Turkish court (s. 35/2) asking for a partial or full enforcement of a judicial award.
Some of the points to be checked by the Turkish court shall be if reciprocity exists between Turkey and the country in which the court decision was made, if the court decision is final and absolute according to the law of the country in which it was made, if the merits of the case concern an issue on which Turkish courts would have sole jurisdiction, if the decision violates Turkish public order and if the correct law applies to the merits chosen in accordance with Turkish laws (in cases where there is a conflict of law between the foreign country and Turkey).
As you can see, the recognition procedure for a foreign court decision is sometimes even more complex and lengthy than the judgment itself. The parties may seek advice on different solutions, such as starting a new legal action (i.e., a new case in Turkey) in order to obtain a local court decision.

PROBLEMS IN TRANSFERING TITLE DEED

Although the new law which allows foreigners to acquire property in Turkey was enacted and published in the Official Gazette, the land registry office still refuses to take the necessary steps to transfer title deeds to foreigners.

The new Law no. 5782 that regulates and amends the Article 35/7 which is related to foreign real person and foreign companies of the Land Registry Law, the Article 36 which is related to Turkish company owned by foreign investors and temporary Article 3 of the respective law which were revoked by the Constitutional Court; has been enacted by Parliament on July 3 to regulate property acquisition by foreigners. Briefly the limitations brought by the new Law are as follows;

The first limitation is; the country of a foreign real person and a foreign company (the country in which the commercial seat is located) must have a reciprocal agreement with Turkey as regards to purchasing property. However, reciprocity itself may not be enough; there must be de facto application in that country.

The second limitation is on the amount of property that can be acquired by a foreign person in Turkey; this amount is still limited to 2.5 acres per person. New legislation has changed the limitation on the maximum area of land which can be sold to foreigners to 10 percent of the total area of the district in which their property will be located.

The third limitation is based on the objectives of a company formed in Turkey by foreign investors. Article 36 (as amended) stipulates that a Turkish company owned by a foreign investor is allowed to acquire property as long as the acquisition falls within the scope of the company's objectives, as cited in its articles of association. It's clearly seen that drafting the articles of association for foreign investors; is much more important now.

Despite the fact that these are the limitations in the enacted Law no. 5782, there is another temporary law, Article 3, which regulates the application of this new legislation. Article 3 clearly states that related institutions must declare to the governorship how much land can not be acquired by foreigners and total square meters of available land in the district within three months. For a foreign real person, it is possible to acquire a property within this waiting period. In this case, the land registry office can not deny the purchase. As to say briefly, following steps should be taken by a foreign real person;

* One should submit a petition to the land registry office requesting the transfer of the property title. If a written petition stating that ''it is not legally possible'' is received as a respond, this illegal action should be carried to the administrative court of this illegal action.

* Also the officers' refusal to take action at all, is a kind of crime which can only be committed by official staff. Ignoring an official application or not taking any action when action should be taken is punishable by law. If this is the case, please obtain evidence and apply to a prosecutor's office with the details of your situation. Informing the land registry officer that the matter will be reported to the prosecutor, might be very helpful as well.

However in case of an application submitted by a foreigner, the land registry office must send a letter to the provincial military authorities for confirmation that the property is not located within a forbidden military zone or a security zone and this process takes about two months. So we recommend you to be sure that the officers did really refuse to sign & to take an action before starting the legal procedure on the following days of your petition's date.

NEW REAL ESTATE LEGISLATION

Purchasing property in Turkey has become more popular with holiday home owners and investors around the globe. Several factors have contributed to the popularity and the trend displayed by foreign purchases and have had important repercussions within Turkey. The issue is especially notable given Turkey's potential EU membership and the related economic integration processes.

In 2003, property purchases were opened up to foreign nationals with restrictions on the provinces by a by-law (Law Nr. 4916) dated 3 July 2003. This law was predicated on a reciprocity clause; that is to say, citizens of countries whose governments allow Turkish nationals to purchase real estate in their country, were to be allowed to purchase real estate in Turkey.

However, following steps taken by Turkey's main opposition party CHP, the modifications brought by the 2003 by-law were declared as void by theTurkish Constitutional Court on 26 April 2005, in a decision to enter into effect as of 27 July 2005 and the purchase of real estate by foreign nationals was suspended until a modified law dated 7 January 2006 was brought into effect. This law, Law Nr. 5444, enacted, instead of being a by-law modifying various paragraphs of the Law Nr.2644, Property Act(1934), is a fully stated legal text an is retrospective in its application to 26 July 2005 and is largely the same as the law of 3 July 2003, with the following notable amendments, especially with regards to size limitations

1. A foreign national cannot purchase more than 25,000m² (6 acres) of land (constructed or not) in Turkey without special consent from the Turkish Council of Ministers. The council of Ministers is authorised to increase this limit up to 300,000m2 per person.

2. Foreign national ownership of real estate cannot exceed 10% of land in any designated town.

3. The property also has to be within a designated or zoned area in a municipality. Foreigners can not buy in villages.

As we look upon Turkish real estate law concerning foreign persons; we see the regulations made on real estate acquisition by foreign persons are based on two different pieces of legislation:

a)The Foreign Direct Investment Law, that allows foreign-owned companies to acquire real property as if they were a locally owned Turkish company.

b)The Land Registry Law, that allows both real persons and legal persons to acquire real estate in Turkey.

Since the Land Registry Law imposes some limitations on foreigners despite the Foreign Direct Investment Law that grants an absolute freedom to companies; the sub-article of Law Nr. 5444, that allowed foreign companies to acquire property was revoked by the Constitutional Court upon the request of the Turkish main opposition party(CHP) The said decision came into force on 17 Oct. 2008, after six months following the publication of the court decision and so that the companies formed under the Foreign Direct Investment Law were able to acquire property until this date.

Land Registry Law Article 35, Sub-clause 7, was revoked on Jan. 16. Since no legislation was made in the period of three months that was granted as a grace by The court; the Ministry of Public Works and Housing published a decree on April 14 and froze all pending applications by foreign persons for property acquisition.

The mentioned Law has been subject to revokation of the Turkish Constitutional Court, 4 times. The new law, Nr. 5782 regulates Article 35/7 of the Land Registry Law, which was revoked by the Constitutional Court and regulates the pending Article 36, which was revoked earlier; was enacted by Parliament on 3 July 2008 and introduced some limitations on foreigners acquiring real estate suh as follows:

1. The country of a foreign real person and a foreign company (the country in which the commercial seat is located) must have a reciprocal agreement with Turkey as regards to purchasing property. However, reciprocity itself may not be enough; there must be de facto application in that country.

2. The second limitation is to the extent of the property which can be acquired by a foreign person. In fact no new regulations have been made to the revoked Article 35/1, which authorizes the Cabinet to increase the maximum volume of 2.5 acres of property to 30 acres which means that the extent of the property that a foreign person can acquire is still limited to 2.5 acres. The limitation per person has been kept untouched.

3. The third limitation is to the surface area of the land which can be acquired by a foreign real person. In revoked regulation, the maximum area of land which could be sold to foreigners was limited to 0.5 percent of the total surface area of the city the property is in. The new legislation has changed this limitation to: a) the central counties and other counties b) 10 percent of the applicable and planned zoning plan of the central county or other counties.

It is important to note that the new rules will not affect the majority of people buying in Turkey who can still purchase standard Turkish properties and real estate through the normal channels. However, the change in the law does make it doubly important to make sure an independent lawyer checks the title deeds to the prospective property before the purchaser goes ahead with the sale - this is to make sure that the property is zoned in the correct area.

4. The fourth limitation is based on the limitation of the objectives of a company formed in Turkey by foreign investors. Article 36 (as amended) stipulates that a Turkish company owned by a foreign investor is allowed to acquire property as long as the acquisition falls within the scope of the company's objectives cited in its articles of association. It's clearly seen that drafting the articles of association for foreign investors; is much more important now. This limitation shall also apply to a Turkish company which owns property and is changed into a Turkish company operated by foreign investors through a company merger or acquisition (M&A). If the foreign investor Turkish company is dissolved and if the foreign shareholders intend to acquire the company's properties after the dissolution, the real estate shall again be subject to Article 35.

As seen clearly, the regulation does not really fix the revoked sections of the Foreign Direct Investment Law; the companies formed under the Foreign Direct Investment Law were treated as Turkish companies and could acquire real estate property freely. Under the new law, authorities shall have the jurisdiction to inspect if the real estate investment of a foreign investor Turkish company is in compliance with the objectives of the company.

Despite the fact that these are the limitations in the enacted Law no. 5782, regulations on how the amended articles will be applied, are not been released yet by the Authorities. So we're looking forward to see a better real estate investment environment in the future.

Still we can say that it is not expected that the new law will have a significant impact on the Turkish property market - Turkey is pushing to attract more tourists to the country therefore rental yields and property prices are expected to rise and the impact of the new rules is likely to have little or no effect on the overall Turkish property market.