Rule of Law

Acquiring Turkish real estate

by Murat Demir & İbrahim Yüce

The legal situation surrounding the acquisition of real estate by foreigners has been discussed intensively in recent months. From a historical perspective, the Ottoman Empire did not permit foreign legal persons to acquire land. However, this right was accorded to foreign real persons (individuals) under the Law on the Acquisition of Real Estate by Foreigners of June 16, 1868. During the Republican period, under the Treaty of Lausanne, the rights of foreigners to obtain property in the country were limited to some extent through the introduction of the principle of “reciprocity by agreement”, to replace the existing system based on citizenship. Moreover, just seven months after the Treaty, with the adoption of the Village Law, the Republic further prohibited foreigners from purchasing land in villages. Additional limitations were introduced through Law No. 1062 on the Adoption of Equivalent Counter-Measures against Citizens in Turkey of States which Sequester the Property of our Citizens within their Borders (1927), the Land Registry Law No. 2644 (1937) and Law No. 2565 on Military Forbidden Areas and Security Zones (1981).

The bans and limitations imposed on the acquisition of land by foreigners undoubtedly stemmed from the need to protect the national unity and integrity of the newly-established state, and particularly from concerns about the possible dangers of opening up to foreign elements regions where state control was not as effective as desired. General legal theory too recognises that the acquisition of real estate in one country by a legal person from another country may contravene the principle of the political unity of the country concerned, causing political disputes. Accordingly, with a few exceptions, the theory does not even enjoin the principle of reciprocity.

Today, all legal systems have espoused as a general principle the view that foreigners should be allowed to enjoy classic rights and freedoms in the same way as citizens. Nevertheless, it is not regarded as undemocratic for some restrictions to be imposed, for the sake of the various interests of the public, on citizens’ use of the rights in question. In the same way, restrictions may be imposed on the use of these rights by foreigners. Indeed, the Universal Declaration of Human Rights openly accords this option to states with foreigners living within their borders. And in practice, states make great use of the scope which the Declaration offers them to impose such restrictions.

Rights and restrictions

The Turkish Constitution grants human rights and liberties to foreigners as well as citizens. At the same time, Article 16 lays down that “Basic rights and freedoms may be restricted for foreigners by law in accordance with international law. The process of restriction-by-law envisaged in Article 16 of the Constitution has been put into effect in a general context through the Land Registry Law and Village Law:

--Article 87 of the Village Law No. 442 has contained the provision that “Real and legal persons who are not of the nationality of the Republic of Turkey are forbidden to purchase land and real estate in villages.”

--Article 35 of the Land Registry Law No. 2644 has stated that foreign real persons may acquire real estate in Turkey, provided that they do not infringe the restrictions set out by law, in accordance with the principle of reciprocity. However, it makes no reference to the acquisition of real estate in Turkey by foreign legal persons.

--Article 36 of the same law has stated that “The possession by foreign real persons of separate farms not linked to a village or of more than 30 hectares of land outside village borders is subject to the permission of the government…” (An exception is made to this last rule in the case of one form of inheritance).

2003 amendment

Under a law of July 3, 2003 (Law No. 4916), Article 35 of the Land Registry Law was amended and Article 87 of the Village Law was repealed.

The amended version of Article 35 of the Land Registry Law accepts that real persons of foreign nationality and commercial companies that are legal persons established in foreign countries may acquire real estate within the borders of the Republic of Turkey, provided that they do not infringe the restrictions set out by law, in accordance with the principle of reciprocity. It takes the principle of reciprocity to mean that the rights which the foreign state accords in the acquisition of real estate to its own citizens or to commercial companies that are legal persons established in foreign countries are also accorded to citizens or commercial companies of the Republic of Turkey. In addition to the general limitation expressed in paragraph 1 of Article 35, the provision limiting the area of the real estate that may be acquired was included as paragraph 3 of Article 35, again making the acquisition of more than 30 hectares subject to the permission of the Council of Ministers, but with a partial exception for inheritance.

In short, it was thus made possible – subject to the principle of reciprocity and to certain legal limitations - for commercial companies that are legal persons established in foreign countries to acquire land in Turkey in the same way as persons of foreign nationality, and for both real and legal persons to acquire land in villages.

Constitutional Court ruling

This amended version of Article 35 of the Land Registry Law was revoked by the Constitutional Court on March 14, 2005 (Decision no. E:2003/70,K:2005/14). On the grounds that it was not in the public interest for the revocation to create a legal vacuum, the Court decided that its decision should come into effect three months after its publication in the Official Gazette. The decision was published in the Official Gazette No. 25797 of April 26, 2005.

By July 25, 2005, the date on which the three-month period determined by the Constitutional Court expired, the Legislature had passed no new law concerning the issue. As a result, a legal vacuum has come into being. There is no legal obstacle to prevent the acquisition of real estate within the boundaries of the Republic of Turkey by foreign real persons or by foreign commercial companies that are legal persons. However, in practice, registration procedures are not actually being carried out at the present time on the grounds that the legal vacuum has not been filled.

(DIPLOMAT  -  September 2005  -  Ankara)