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When it comes to buying real estate in Turkey, making sure you fully grasp the property sales contract is essential.
Indeed, not fully understanding the document you will sign can lead to financial losses, including the forfeiture of deposits, payment of penalties, unexpected costs, legal expenses, and potential poor investment decisions.
We've heard countless stories of people making costly mistakes when signing their property agreement in Turkey. We want to help you avoid the same experience.
We'll give here a very brief overview regarding the property sales contract in Turkey ; if you want a full checklist, please check our property pack for Turkey.
What is the Gayrimenkul Satış Vaadi Sözleşmesi in Turkey?
In Turkey, the property purchase agreement is a crucial document in real estate transactions, known locally as "Gayrimenkul Satış Vaadi Sözleşmesi."
This agreement outlines the terms and conditions of the sale, including price, payment schedule, and property details.
It's a legally binding contract, ensuring both the buyer's and seller's rights and obligations are clearly defined and protected.
The agreement typically includes the property's description, the agreed-upon price, payment terms, and any other specific conditions agreed upon by the parties. It's signed during the initial stages of the purchasing process, often after the buyer has decided on a property and negotiated the price with the seller.
For international buyers or non-residents, there are additional considerations. Turkey has specific regulations governing foreign ownership of property, including certain restrictions in rural areas and near military zones.
A key feature of the property purchase agreement in Turkey is the requirement of a deposit.
This deposit, usually a percentage of the purchase price, serves as a commitment from the buyer and a form of security for the seller. The exact amount can vary, but it's typically around 10-25% of the total purchase price.
Compared to other countries, the Turkish real estate transaction process has some unique aspects.
For instance, all property transactions must be registered with the local Land Registry Office (Tapu ve Kadastro Genel Müdürlüğü), and the transfer of property ownership can only occur with an official deed transfer, conducted in the presence of a land registry officer.
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What should be included in the property purchase agreement in Turkey?
In Turkey, the property purchase agreement is governed by the Turkish Civil Code and the Land Registry Law.
These laws lay out the requirements and legal framework for real estate transactions. The agreement itself is a detailed document that should contain several key elements to ensure its validity and to protect the interests of both parties.
Firstly, the agreement must include the full details of the buyer and seller, including their names, identification details, and addresses. This is crucial for establishing the identities of the parties involved in the transaction.
Secondly, a comprehensive description of the property is mandatory. This includes the property's exact location, size, type (e.g., residential, commercial), and any unique features or attributes. It should also have the property's registration details as they appear in the land registry.
Regarding the mandatory clauses, the agreement must state the sale price, payment terms (including any deposit paid and the balance payment schedule), and the transfer of ownership conditions.
It should clearly outline the responsibilities of each party, such as who will pay for the associated taxes and fees, and the expected timeline for completing the transaction.
Additional clauses might include conditions related to the property's physical condition, clauses about the property being free from encumbrances and liens, and any warranties or guarantees provided by the seller.
Contingencies are also an important aspect of the agreement. These can include conditions like the buyer securing a mortgage, the property passing certain inspections, or the sale being contingent on the buyer selling their current property.
In Turkey, the final sale agreement must be authenticated and registered with the Land Registry Office to be legally binding.
This process typically involves a notary, who ensures that the document is legitimate and that both parties understand their obligations.
Real estate agents in Turkey often facilitate the process of drafting and negotiating the property purchase agreement.
While they don't usually have legal implications in the agreement itself, their expertise can be invaluable in ensuring that the agreement is fair, comprehensive, and compliant with Turkish laws.
What's the signing process like?
In Turkey, the signing process of a property purchase agreement is a structured and formal procedure, ensuring the legal transfer of property ownership.
Here's an overview of how this process typically unfolds.
The property purchase agreement is a bilateral contract, meaning it must be signed by both the buyer and the seller.
It's possible for there to be multiple buyers or sellers. For example, if a property is owned by a family, all members who hold a share in the property must sign the agreement.
Similarly, if a couple or a group of individuals are purchasing the property, they all need to sign.
Both parties need to provide certain documents and information.
For the seller, this includes proof of ownership, property details, and personal identification documents. For the buyer, personal identification and, in cases involving financing, proof of funds or mortgage approval are necessary.
Here is the signing process and timeline:
| Signing Process | Description |
|---|---|
Drafting the Agreement |
Initially, a draft of the purchase agreement is prepared, usually by a real estate agent or a lawyer. This draft outlines all the terms of the sale. |
Review and Negotiation |
Both parties review the agreement and negotiate any terms if necessary. This can take a few days to a couple of weeks, depending on the complexity of the transaction and the responsiveness of the parties. |
Finalization and Signing |
Once both parties agree on the terms, the final version of the agreement is prepared for signing. This is typically done in person, though some aspects of the process can be handled remotely, especially for international buyers. However, the final transfer of the deed must be done in person at the Land Registry Office in Turkey. |
Notarization |
In some cases, the agreement may be notarized for added legal validation, although this is not always a requirement. |
While much of the initial process can be done remotely, the actual transfer of property in Turkey requires the physical presence of both parties or their legal representatives at the Land Registry Office.
This is to ensure the legitimacy of the transaction and to allow for immediate registration of the property transfer.
The property purchase agreement doesn't usually have a strict deadline for signing; it's more about when both parties are ready to proceed.
Once signed, the contract remains valid until the conditions within are fulfilled, typically the transfer of the property and payment.
Following the signing, the contract needs to be registered with the Land Registry Office. This is a crucial step as it legally transfers ownership and records the buyer as the new owner of the property.
Any amendments to the contract after it has been signed are rare and would require agreement from both parties. Any such changes would typically need to be documented in a formal amendment to the contract and may require additional legal processes.
The total time for completing all necessary paperwork and approvals can vary.
Once the contract is signed and payment is made, the registration process with the Land Registry Office can be completed within a few days to a week, assuming there are no complications or additional verifications needed.
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How is the payment handled when signing a property purchase contract in Turkey?
In Turkey, understanding the financial aspects of a property purchase agreement is crucial for a smooth transaction.
Here's a breakdown of the key financial elements involved.
When you sign the sales agreement for a property in Turkey, you're usually required to pay a deposit. This acts as a commitment to the purchase and secures the property.
The down payment is typically around 10-25% of the property's total purchase price. This rate can vary depending on the agreement between the buyer and the seller.
In addition to the down payment, there might be other upfront fees or costs. These can include notary fees, real estate agent commissions, and possibly legal fees if you're hiring an attorney to assist with the transaction.
Payments are often made directly to the seller.
However, in some cases, especially in transactions involving foreign buyers or larger real estate developments, payments may be made to an escrow account to safeguard the transaction.
The exact due date for the payment is typically outlined in the sales agreement. The initial down payment is usually due upon signing the agreement, with the remaining balance due either in installments or as a lump sum at a later specified date.
In Turkey, property purchases are subject to certain taxes, including a property transfer tax, which is usually around 4% of the assessed value of the property. This tax is typically split evenly between the buyer and the seller, but this can be negotiated differently.
The amount of the down payment can sometimes be negotiated with the seller. This depends on the seller's flexibility and the market conditions.
If the sale falls through, the conditions for refunding the down payment depend on the terms outlined in the sales agreement.
Typically, if the buyer pulls out of the deal without a valid contingency reason (like a failed inspection or financing issue), the down payment may not be refundable.
However, if the sale falls through due to factors like the property failing an inspection or the buyer's inability to secure financing (assuming these were stipulated as contingencies), the down payment may be refundable.
Whether you can use a mortgage loan for the down payment depends on your financial arrangements and the terms of your mortgage.
In some cases, buyers use personal funds for the down payment and secure a mortgage for the remaining balance.
An attorney or real estate agent can play a significant role in handling the payment process. They ensure that all financial transactions are conducted in accordance with Turkish law, and the terms of the agreement are met.
They can also provide valuable guidance on the proper handling and transfer of funds.
Always request a receipt or confirmation when making any payment. This serves as proof of the transaction and is important for your financial records.
Besides the property transfer tax, other tax implications may include annual property taxes for the buyer and capital gains tax for the seller, depending on the profit made from the sale.
What are the potentials risks and pitfalls?
You might be interested in reading our article about the common risks and pitfalls surrounding a property transaction in Turkey.
In Turkey, as in any real estate transaction, there are certain risks and pitfalls associated with the property purchase agreement.
Understanding these is crucial for both buyers and sellers.
Both buyers and sellers can potentially withdraw from the agreement, but the circumstances and consequences vary based on the terms outlined in the contract.
Typically, if a party wants to withdraw without a legally valid reason, they may face penalties.
Unlike some countries, Turkey does not typically have a formal cooling-off period in real estate transactions. Once the agreement is signed and the down payment is made, the parties are generally considered committed to the transaction.
If the buyer or seller withdraws from the agreement, they usually need to have a valid motive as defined in the contract.
For buyers, one common valid motive is the inability to secure financing. If this is listed as a contingency in the contract and the buyer can't get a mortgage, they might be able to withdraw without penalty.
If one party fails to fulfill their obligations as outlined in the contract, they could face legal action or financial penalties. For instance, if the seller fails to transfer the property as agreed, they could be sued for breach of contract.
If the buyer fails to make payments as scheduled, they could lose their down payment and potentially face further legal action.
In case of a breach of contract, the handling of money paid depends on the terms of the contract. If a buyer has made a down payment and then legally withdraws from the contract (e.g., due to an unmet financing contingency), they may be entitled to a refund.
However, if they withdraw without a valid reason, they may forfeit the down payment.
The process in Turkey differs from other countries in various aspects. For example, in some countries, there is a legally mandated cooling-off period, allowing buyers to reconsider their decision without penalty.
Also, in some jurisdictions, escrow accounts are more commonly used to manage payments, adding an extra layer of security to the transaction.
Buyers should be wary of issues like unclear property titles, disputes over property boundaries, and unapproved construction work. Sellers need to be cautious about buyers who are not financially secure or who may be unable to secure financing.
Both parties should ensure that the property does not have any legal encumbrances that could affect the sale.
Disputes are not uncommon and can arise over issues like undisclosed property defects, delays in payment, or failure to vacate the property.
In Turkey, such disputes are typically resolved through negotiation, mediation, or, as a last resort, legal action. Real-life examples often involve negotiations facilitated by real estate agents or lawyers to reach a mutual agreement.
If disputes arise, the first step is usually negotiation between the parties, often with the help of their respective legal representatives.
If this fails, mediation or arbitration can be sought. As a last resort, parties can take the dispute to court.
If defects or issues are discovered after signing, the buyer might have legal recourse if these defects were not disclosed beforehand or if they were deliberately hidden. This depends on the specifics of the contract and the nature of the defects.
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.