LEGAL MEMORANDUM

RE: LATEST CIRCULAR OF THE TURKISH MINISTRY OF PUBLIC WORKS AND SETTLEMENT SUSPENDING ACQUISITION OF LAND BY NON-TURKISH NATIONALS AND FOREIGN COMPANIES

The latest Government Circular (Circular no 2007/8) sent to the Land Registries all across Turkey to suspend completions has caused confusion. The Government has asked the Local Tapu offices to suspend completions until further notice if the person or the company acquiring the title is non-Turkish.

This was prompted by the cancellation by the Turkish Constitutional Court of certain provisions of Art 35 of the Title Deed Act which governs property acquisitions by non-Turkish nationals and foreign companies.

The Court cancelled only two of Article 35’s many provisions. The argument was a rather technical one. It was not, by any means, whether foreign nationals should be allowed to acquire Turkish land but whether it should be for Parliament or the Government to relax limitations as to the size of the land foreigners can acquire. It should also be mentioned at this point that the court has upheld only two of the claimants’ twelve arguments.

It needs to be stressed that this is only a temporary measure until the Government concludes the enactment of a new piece of legislation to address the concerns set out in the Court decision. Once the new legislation comes into effect the suspension will be lifted.

It is not possible to say how long it will take the Government to pass the new legislation. However, it would not be wrong to suggest they will act quite promptly upon this matter. It took the government 8 months to re-enact the whole of the Article 35 previously. It can be said that the time taken will be far less than that as they have already started working on the new legislation and the change now concerns only two provisions.

This temporary measure does not affect proprietary rights of foreign nationals who already legally own Turkish properties. They may continue to freely enjoy their ownership.

The Circular clearly states that the suspension will not apply to the property acquisitions of Turkish companies with foreign shareholders. They may continue to acquire land subject to the relevant Turkish laws. Therefore, those who do not wish to wait for the suspension to be lifted might consider setting up a Turkish company after obtaining adequate legal and financial advice.

These hick-ups are quite usual in emerging markets and there is every reason to suggest that the matter will be solved in the very near future.

If you require further information regarding any of the above or wish to discuss the options you have as to your on going purchase, whether resale or off-plan, please do not hesitate to contact us.

 The Turkish Law Department