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| 9/27/2008 12:00:00 AM | By Gary Lachman

Threat to new real estate law The opposition Republican People's Party (CHP) has recently filed a lawsuit to annul articles 35 and 36 of the Title Deed Law. The amendments to these laws only

Threat to new real estate law

The opposition Republican People's Party (CHP) has recently filed a lawsuit to annul articles 35 and 36 of the Title Deed Law. The amendments to these laws only came into effect this past July and it seems that already the first salvos of political artillery have been fired. Article 36 of the Title Deed Law regulates the acquisition of real property by foreign capital companies incorporated in Turkey or a foreign capital company that acquires the shares of a Turkish company. The Title Deed Law refers to such a company as a “Qualified Company”. A Qualified Company is entitled to acquire real property in Turkey, without the restrictions of Article 35 mentioned in my earlier article on September 13th, provided that it is acquired to carry out their activities described in their articles of association. In order to clarify the implementation of the Title Deed Law, the Ministry of Public Works and Settlement published a circular on July 17, 2008. The circular provided that before acquisition of a real property, a written certification must be provided by a foreigner to the land registry stating that the acquisition is less than 2.5 hectares and acknowledging that any excess amount will be subject to confiscation and liquidation.The Certificate of Authority (obtained from the trade registry where the company is registered) identifies the authorized persons and scope of their authorization to acquire real property on behalf of the company.  According to Article 36 of the Title Deed Law, if the “Certificate of Authority” of a company established in Turkey does not indicate that it is established in accordance with the Direct Foreign Investment Law, the land registry will record a representations declared by that company in the official deed.

Permission required first

If the company acquiring the real property is not subject to the Direct Foreign Investment Law and if found otherwise, the company must acknowledge in the registry that the real property acquired may be subject to confiscation by the government. If there is a notification in the Certificate of Authority indicating that the company is established according to the Direct Foreign Investment Law, then the Qualified Company will require the permission of the Military General Staff before acquiring real property in Turkey. The Military General Staff must confirm that it is not located within the borders of a military zone or security zone. The Governorship of the district in which the property is located must also confirm that the use of the property will be in accordance with the Qualified Company's articles of association and it is not within the borders of a strategic area.Please note that the Circular advises that the Ministry will issue a communiqué in October with respect to the implementation of the procedure for obtaining permission from the Military General Staff and the Governorship. This has yet to be published. Overall, the acquisition of real property by Qualified Companies is not completely clear. Unfortunately, it appears that the requirement to obtain the permission of the Military General Staff and Governorship will cause significant delays and uncertainty in property acquisitions in Turkey. This new lawsuit filed by the CHP will certainly not help matters at all. © 2008 Gary S. Lachman

 

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