August 2008
REAL ESTATE SALE TO FOREIGN CITIZENS RE-REGULATED
Paragraphs 7 and 8 of the article 35 of the Deed Law on acquisition of real estated by foreign citizens which was partially annulled by Constitutional Court on 11.4.2007 and article 36 which had been abrogated by the article 38 of the Law nr. 4916 on 19.07.2003 have been re-regulated..
By the first arrticle of the Law nr. 5782 on “Amendments in the Deed Law” [Law 5782] published on the Official Gazette nr. 26937 on the 15.7.2008, areas where foreign citizens and foreign investors cannot acqiure real estate have been defined more precisely and Council of Ministers is empowered to determine these areas.
Regarding foreign real persons, it is expressly stated that “… can acquire real estate and independent and permanent real right”, and thus they are not allowed to acquire real rignhts depending on real estate or untransferable real rights. For instance, foreign real persons will not be able to acquire right of usufruct, right of residence or superficies depending on real estate or untransferable superficies.
It is also stated that the amount of real estates which can be acquired by foreign real persons cannot exceed ten percent of the areas in applied zoning plan and piecemeal plan in cities and towns. In the cancelled provision of this article it used to be stated that the Council on Ministers was allowed to increase this amount. In the new regulation it is obseerved that the power of Council of Ministers is limited by decreasing this amount. The law states that “…foreign real persons can acquire real estate and independent and permanent real right up to ten percent of the areas in applied zoning plan and piecemeal plan in cities and towns. The Coulcil of Ministers can decide on another amount not exceeding this amount.” However, as this provision is set forth regarding real persons only, there is no limitation for legal persons. There is no special regulation regarding this issue.
The second article of the law nr. 5782 re-regulated the article 36 of the Deed Law. This article regulates the right to acquire real estate and limited real rights by companies established or participated by foreign investors in Turkey. In the article, the expression “companies which have a legal personality” results that simple companies which do not have legal personalities, such as consortiums cannot benefit from this right. The fact that the right to acquire real estate by companies depends on the condition that “they conduct their business activitied set forth in the articles of association” also attires attentions.
According to the new article 36, real estates acquired in this way can be transferred to other foreign companies in Turkey and real estated owned by Turkish companies can also be transferred by acquisition of shares of the companies by a foreign company.
According to the amended article 36, in case of liquidation of the foreign company in Turkey, acquisition of real estates of the company by foreign real or legal person shareholders is subject to the conditions set forth in the article 35.
Again according to the same article, acquisition of real estates in strategic areas is subject to permission of presidency of general staff or empowered commanders, and in special security zones, it is subject to the permission of local governors.
According to the contemporary provision three of the Deed Law brought by the article three of the Law nr. 5782, until the completion of the works for determination the amount of real estates and limited real rights which can be acquired by foreign citizen real persons in cities and towns, they can acquire real estate and limited real rights under the article 35 of the Deed Law.
This new law aimed at promoting the situation of foreign persons who could not use their right to acquire real estate since the annulment decision of the Constitutional Court. Although this law regulated the right to acquire real estate by foreign persons more precisely, it cannot be said that it is satisfactory because of limitations it brings.
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