Doing Business in Türkiye: Property rights

Acquisition of Title and Ownership Rights

Title to Movable Property

Title to movable property manifests itself through possession (that is, physical and actual control over the property). As a general principle, it is sufficient for the transfer of title that the power of control is given to the new owner and no registrations or formal requirements are sought. However, as an exception, a formal transfer process or registration may be required for certain types of movables. For instance, the transfer of certificated shares in a company requires an endorsement on the back of the certificate and the sale of an automobile requires a deed executed before a notary public and registration with the motor vehicles registry. 

Title to Immovable Property

State-Owned Property

Turkish law mandates that certain immovable property remains state-owned. All other immovable property may be privately-owned. Under Turkish law, there are two classes of state-owned property: 

Non-Transferable State Property

This type of non-transferable property is under the control and at the disposal of the state and may be subject to certain non-ownership rights under exceptional cases regulated by law. Examples of non-transferable state property include: public water supply, land that is not cultivatable such as rocks, hills, mountains and glaciers and resources originating therefrom, coastlines, natural resources, petroleum sources and mines. Non-transferable state property may not be: (i) transferred, sold or acquired, (ii) subject to private-law arrangements that may result in the sale and transfer of title (for example, a mortgage) or (iii) subject to attachment proceedings (that is, the legal process of seizing a debtor’s property for the purpose of satisfying a claim that is due and unpaid). However, various pieces of legislation permit the use, generally for public interest, of such property by individuals and / or private legal entities.

Transferable State Property

This property is privately-owned by the state or by a state-owned enterprise and is freely transferable. Transferable state property includes the immovable properties acquired by the state through acquisition, expropriation, inheritance or donation. The state uses such property in the performance of public services or for commercial purposes to generate income. For example, the state may lease the property or operate the property itself.

Foreign Ownership of Immovable Property

Immovable property may be acquired in the form of (i) land, (ii) independent rights registered with the title deed registry (such as servitude rights) or (iii) independent sections of a real property, such as flats, apartments, offices, shops and depots, subject to condominium rights (kat mülkiyeti). Acquisition of title to real property or a mortgage thereon requires an official transfer deed drawn up by the title deed officer or the notary public and registered with the title deed registry located where the real property is situated. Title deed registry records may be inspected by those persons who can establish a legitimate interest in the relevant property.

Foreign individuals are generally entitled to acquire and own immovable property in Türkiye. Foreign legal entities are entitled to acquire and own immovable property only in exceptional circumstances.

Acquisition by foreign individuals

Real property may be acquired subject to the following limitations:

• Individuals must be citizens of one of the white-list countries. Foreign individuals interested in acquiring real property in Türkiye may request information on these countries from Turkish embassies/consulates, the General Directorate of Land Registry and title deed offices.
• Ownership and servitude rights may not exceed, in aggregate, 30 hectares (74 acres) per individual.
• The total area of the real property acquired by foreign individuals in one district (ilçe) – an administrative sub-division of a province (il) – may not exceed 10 percent of the total area of privately held property in that district.
• Foreign individuals may not acquire real estate in military or security zones, which are designated by the Office of the President upon the General Staff’s recommendation, and which may include a certain perimeter around military establishments.
• Statutory restrictions do not apply to mortgages established in favor of foreign nationals. In case a mortgage is foreclosed, foreign nationals are entitled to the foreclosure proceeds but not the property itself. Please see “Enforcement of Security Interests” in “Banking and Finance” for more information.

Acquisition by foreign legal entities

 Real estate acquisition may only be done for the limited purposes set forth under the Petroleum Law, the Tourism Promotion Law and the Industrial Zones Law. There are no restrictions on the establishment of mortgages in favor of foreign companies. In case a mortgage is foreclosed, foreign companies are entitled to the foreclosure proceeds but not the property itself. Foreign foundations or associations, on the other hand, are not allowed to acquire immovable property in Türkiye.

Acquisition by Turkish legal entities with foreign capital

Turkish companies in which a foreign person or entity holds 50 percent or more of the shares, either directly or indirectly or has the right to appoint or remove the majority of directors may only own real property, mortgage rights or other servitude rights in order to conduct the activities listed in such company’s articles of association. The same restrictions apply if a company with foreign capital becomes a shareholder, directly or indirectly, in another Turkish company and the ultimate shareholding percentage of the foreign investor reaches or exceeds 50 percent. Acquisition or ownership of real property located in military or security zones by these companies is subject to permission.

Non-ownership rights to property

Under Turkish law, non-ownership rights are classified as either in rem rights enforceable against all persons (for example, servitude rights, pledges or impositions) or in personam rights enforceable against a contract counterparty (for example, a lease).

In rem rights

Rights in rem are property rights which may be asserted against third parties. Rights in rem over immovable property must be registered with the title deed registry. Provided that the rules of the foreign jurisdiction governing the acquisition of the in rem right are not against public policy in Türkiye, in rem rights created in accordance with the rules of any foreign jurisdiction over any movable property situated outside Türkiye are recognized by Turkish law when such movable property is brought into Türkiye. In addition, where Turkish law stipulates special conditions for validity in respect of the creation of such in rem rights, such as registration with a public registry, those conditions should be fulfilled in order preserve the effectiveness of the in rem right within Türkiye.

Under Turkish law, partial ownership, whether by individuals or legal entities, may exist in two different forms: (i) ownership in common (paylı mülkiyet) where each owner has a distinct and proportionate interest in the whole property and (ii) joint ownership (elbirliği mülkiyeti) where each owner has an undivided interest in the whole property. Joint ownership exists only in a limited number of circumstances prescribed by law (for example, partners in a partnership). If the property is subject to ownership in common, then each owner has the right to dispose its share of the property. If the property is subject to joint ownership, any disposition, including creation of a security interest, requires the unanimous consent of all joint-owners. Furthermore, property subject to joint ownership may only be mortgaged or pledged in its entirety and by all joint-owners at the same time.

Servitude rights

A servitude right (irtifak hakkı) is a right of use, in a specific manner, over the property of another person. It may be claimed against the owner of the property and all third persons.

The Civil Code permits the following servitude rights: (i) a servitude right in favor of immovable property (taşınmaz lehine irtifak), (ii) an easement (üst hakkı), (iii) a right to habitation (oturma hakkı), (iv) a usufruct right (intifa hakkı), (v) a right to spring water (kaynak hakkı) and (vi) other servitude rights as defined under the Civil Code as rights granted to serve a specific purpose (for example, right to transit). If a servitude right is independent and continuous, it may be registered with the land title registry as immovable property. The beneficiary of an independent and continuous servitude right may grant security interests over the servitude right in favor of third persons. For a servitude right to qualify as “independent and continuous” the right must be: (i) valid, (ii) independent (that is, transferable by its beneficiary to a third person without consent of the owner of the underlying immovable property), (iii) continuous (that is, established for an unlimited term or for a term of at least 30 years) and (iv) registered in the land title registry as an immovable property upon request by the holder of such right.

Construction servitude (üst hakkı) covers all “integral parts and accessories” on the land over which the easement right is granted. The beneficiary of an easement right has the power and authority to: (i) construct upon or under another person’s land, (ii) own, possess and use the constructions it has built and (iii) possess and use the constructions already located on the land of another person.

Pledges

A pledge (rehin) is the right to benefit from the value of the property. A mortgage (ipotek) is a pledge of immovable property. Please see “Security and Collateral” under section “Banking and Finance” for further details on pledges and mortgages.

Imposition rights

An imposition over immovable property (taşınmaz yükü) grants the beneficiary the right to receive performance or delivery that is linked to the economic use of the collateral (for example, the delivery to the beneficiary of cotton cultivated on the land over which the imposition is established). The immovable property constitutes security for such obligation.

In personam rights

Rights in personam are created by agreement and may only be enforced against the counterparty’s property and not against third parties. To the extent allowed by the Civil Code, these rights may be registered with title registries. In personam rights include rights created by lease agreements, construction agreements, contractual pre-emption, purchase or re-purchase rights and rights to continue joint-ownership in shared immovable properties. Among these, the most commonly used in personam right in Türkiye is the lease agreement.

Lease agreements

The lease of state-owned immovable property is subject to specific regulation.

With respect to privately-owned real property, as long as a lease is not annotated in the land title registry, it is an “ordinary” in personam right. When annotated, the lease becomes a “strengthened” in personam right assertable against third parties. A strengthened in personam right entitles the beneficiary to impose the terms of the lease against future owners of the leased property. 

Leases may be in a simple written form and do not need to be notarized or otherwise certified. Leases of residential premises and workplaces are subject to different sets of regulations.

The terms of leases for privately-owned, immovable properties may generally be freely determined by the parties. Leases may be executed for a definite or indefinite term. A lease with a definite term may be extended definitely or indefinitely by the parties. Unless the tenant gives notice of termination by the statutory deadline, a definite term lease is automatically renewed for one year with the same terms and conditions (other than any increased rent). Save for some temporary exceptions related to residential leases, the rent increase amount agreed between the parties cannot exceed the previous lease year’s 12-month average of the rate of change in the consumer price index. Save for certain exempt cases, leases are required to be denominated in Turkish Lira. The tenant in an indefinite-term contract has the right to terminate for convenience, whereas the lessor must comply with certain notice periods.

Security deposits given by tenants of residential premises and workplaces cannot exceed three months’ rental fee.

The acquirer of a real property automatically becomes party to any pre-existing lease agreement and is bound by its terms as a lessor. The lessor has the right to terminate the lease if it needs the property as a personal residence or workplace or for use by the owner’s spouse or child. However, if the lease is registered with the title deed registry, the new owner may not exercise this right.

Unless otherwise stipulated in the lease, property taxes, mandatory insurance premium payments (such as earthquake insurance) and similar charges are generally borne by the lessor. Tenants are generally responsible for payment of taxes and charges, such as the environment cleaning tax, attributable to the use of the property.

Intellectual property

The ownership rights of intellectual or artistic works of science, literature, music, fine arts or cinema are protected as intellectual property. When such rights are infringed, the owner may have claims relating to non-pecuniary rights or financial rights.

Non-pecuniary rights are rights of an intellectual property owner to exclusively decide if, how and when the intellectual property may be shared with the public. Financial rights, which are listed in the legislation as the (i) right of adaptation, (ii) right of reproduction, (iii) right of distribution, (iv) right of performance and (v) right to communicate a work to the public by devices enabling the transmission of signs, sounds and/or images, relate to the owner’s rights to gain the financial benefit of the intellectual property. Accordingly, copyright infringement may give rise to the following claims:

• Cessation of Infringement: A lawsuit may be filed against those who copy and/or distribute intellectual property without the owner’s permission. Claims may include payment of financial rights deprived to the owner.
• Prevention of Potential Infringement: Upon sufficient evidence, a lawsuit may be filed relating to the risk of future infringement.
• Compensation: A lawsuit may be filed in the event of infringement of a non-pecuniary right or if the owner’s financial rights have been directly infringed.

The Industrial Property Law repealed the multiple decrees with the force of law on trademarks, patents, designs and geographic indications and unified the rules under one single piece of legislation.

The Industrial Property Law provides the following categories of intellectual property that may be registered:

• Trademarks: A trademark is the sign or symbol or word (including human names), shapes, colors, letters, numbers, voices or shape of the goods or packages) associated with a good or service provided by any person or enterprise which identifies that good or service as distinct from similar goods or services provided by other enterprises.
• Patents or Utility Models: A patent is a protection provided for inventions which are, in comparison to an artistic work product, technically complex and industrially applicable. A utility model is a weaker protection provided for inventions which are not complex enough to be registered as patents. Discoveries, scientific theories, methods of business conduct and literary, artistic and scientific works or studies do not qualify as inventions and therefore do not benefit from patent or utility model protection.
• Designs: A design is a protection provided for original designs with unique characteristics created to technically complement a product in terms of its shape, size, color, style, configuration, material or any other specification or feature.
• Geographical Indications: These are signs or designations indicating a specific quality, reputation or other characteristic attributable to the place, area, region or country of origin of a product. 

All individuals and legal entities who are domiciled, reside in or have industrial or commercial establishments within the territory of Türkiye may request registration of intellectual property rights. Registration provides the ultimate protection of intellectual property for the protection term granted to the owner. Unregistered trademarks, designs, utility models or patents are only protected based on competition rules regulated by the Commercial Code. Foreign nationals may, under multinational agreements to which both Türkiye and the origin country are parties or based on reciprocity grounds, request the Turkish Patent and Trademark Authority to register intellectual property rights registered abroad.

Real persons, authorized persons of legal persons and trademark-patent agents are authorized to petition the Turkish Patent and Trademark Authority. Real or legal persons domiciled abroad must be represented by a trademark-patent agent.

Trademarks and utility models are registered for 10 years, designs are registered for 5 years and patents may be registered for 10 or 20 years. Geographical indications are registered without a specific term. Trademark registrations can be renewed for a successive 10-year period provided that the renewal charges have been deposited six months prior to the end of the protection period. The protection period of a registered design is renewable for periods of five years each, up to a total term of 25 years. Utility models and patents cannot be renewed. Registered trademarks, designs, utility models and patents may be: (i) assigned to third parties, (ii) licensed, (iii) used as security, (iv) seized or (v) passed on by inheritance.