Att. Cemil Şaar, PhD(c) cemilsaar@kstlawfirm.com | +90 535 416 9476 | linkedin.com/in/cemilsaar

Cryptocurrency assets continue to generate divergent judicial rulings regarding their legal status. Below I will share the summary of a recent case which I've litigated where the court ruled in favor of compensation of our damages worth about 800.000 USD at the time of the theft instead of restitution in kind, and my thoughts on the topic as I found the process and its results thought provoking. The views expressed are my own and do not constitute legal advice.

The Law on Service of Documents (hereinafter “Service Law”) and its practical application constitute an extremely troublesome field, not least because enforcement offices possess differing levels of institutional knowledge, among other factors. Below, I will discuss an error I encountered regarding the application of this law to foreign nationals residing in Türkiye, and how it was ultimately corrected.

It should be noted that the issue is so obvious that examining it in such depth could even be regarded as a waste of time. Readers who (rightly) conclude that the matter discussed below does not merit detailed analysis may nonetheless find themselves more concerned by the fact that a chamber of the Court of Cassation (Yargıtay), the highest judicial authority below the Constitutional Court, committed such blatant errors on so elementary a matter; alternatively, they may of course read this piece as a tragicomic anecdote.

The Dispute Underlying the Facts of the Case

S, a foreign national residing in Türkiye, entrusted her jewelry to the home of her friend A, another foreign national, while she was searching for accommodation. Subsequently, when the time came and she requested the return of her belongings, they were not returned, as A alleged that he had handed them over to a third person who had defrauded him. Thereupon, acting on behalf of S, it became necessary to file a lawsuit against A for the return of the items.

The lawsuit was filed on the basis that an oral contract of safekeeping had been established between the parties (within the scope of Articles 561 et seq. of the Turkish Code of Obligations), and it was concluded in favor of my client by relying in particular on Article 568 of the Turkish Code of Obligations. The importance of Article 568 lies in the fact that it provides that the deposited item must not be delivered to anyone other than the depositor, even if a third party asserts a claim of ownership. Within the scope of our dispute, A failed to prove his allegation that he had been defrauded. However, even had he been able to prove this, the judge — accepting that A would still bear a compensation obligation toward S pursuant to Article 568 of the Turkish Code of Obligations — ruled that, if restitution in kind were not possible, compensation equivalent to the value of the jewelry should be paid. (Any discussions that could be made regarding the merits are outside the scope of this article.)

Subsequently, enforcement proceedings based on a judgment were initiated. As service of the payment order could not be effected at the debtor’s MERNİS address (the legally registered service address that every resident of Türkiye must have), a request was submitted to the enforcement office for service pursuant to Article 21/2 of the Service Law. The enforcement office rejected our request, holding that service could not be effected on foreign nationals pursuant to Article 21/2 of the Service Law, stating as follows: “As service cannot be effected on foreign persons pursuant to Article 21/2 of The Law on Service of Documents, it has been decided to reject the request. (Court of Cassation, 12th Civil Chamber, File No: 2021/12389, Decision No: 2022/4736.)”

As this decision was manifestly erroneous, I was compelled to prepare and submit a further, detailed four-page petition to the enforcement office. In this detailed petition, I explained at length why the decision of the Court of Cassation and of the chamber in question were erroneous and requested that the enforcement office comply with our request without causing unnecessary enforcement-law expenses. To its credit, the enforcement office read the petition, and this time accepted my request for service. After consulting colleagues and receiving responses such as “no enforcement office would ever read such a long petition,” the professional satisfaction and happiness I felt upon seeing that the enforcement office had indeed read the petition, understood its error, and correct it by rendering a favorable decision were more gratifying than the financial returns of the case. Indeed, I myself was worried that the office would most likely not read the petition. Below, I will explain why the Court of Cassation decision cited as the justification for rejecting our service request is erroneous. I hope it will be of use.

Explanations Regarding the Erroneous Court Of Cassation Decision (File No. 2021/12389, Decision No. 2022/4736) Relied Upon As the Basis For the Enforcement Office’s Rejection Decision

In its relevant decision, the chamber stated: “The Address-Based Population Registration System applies to citizens of the Republic of Türkiye. It is understood that the complaining debtor is of Bulgarian nationality. Therefore, the provisions relating to the address-based registration system cannot be applied. Consequently, the service effected on the foreign-national debtor pursuant to Article 21/2 of the The Law on Service of Documents is irregular.”

Unfortunately, this decision is manifestly erroneous and unfounded from beginning to end. In its decision, the court demonstrated that it confused three distinct systems, namely the “Address-Based Population Registration System,” the “Central Civil Registration System,” and the “Address Registration System,” and that it did not know what any of them actually meant. Decisions of this kind starkly reveal the fact that courts may at times be incapable of even conducting a basic Google search, and they demonstrate how crucial the legal profession can be when exercised meticulously. Let us examine in detail the error committed by the relevant chamber.

Within the Republic of Türkiye, there are three different systems that may be thought to relate to our subject: the Address-Based Population Registration System (ADNKS), the Central Civil Registration System (MERNİS), and the Address Registration System (AKS). The “Address-Based Population Registration System” referred to in the chamber’s decision is the system abbreviated as ADNKS, which was established by the Turkish Statistical Institute (TÜİK). This system has absolutely no connection with the subject of our request submitted to the enforcement office. Namely, the procedure for service of documents within the territory of the Republic of Türkiye on foreign nationals who have settled in Türkiye by obtaining residence permits.

Not only does the ADNKS system have no connection whatsoever with our rejected request, but it also has no relevance to the request rejected in the Court of Cassation decision itself. In fact, the system relevant to the issue of service on foreign nationals in Türkiye is AKS, the Address Registration System-and the Court of Cassation’s error does not end there. The legislation governing AKS does not impose a different address registration procedure on foreign nationals, nor does it make any distinction between Turkish citizens and foreign nationals. In other words, just as the Court of Cassation chamber confused AKS with ADNKS, it also quite simply invented the claim that AKS does not apply to foreign nationals. Let us examine the relevant systems.

There exist one directive and one regulation governing what the Address Registration System (AKS) is and how it is to be applied. Article 1 of the Address Registration System Regulation, published in the Official Gazette dated 15 December 2006 and numbered 26377, under the heading “Purpose,” reads as follows: “The purpose of this Regulation is to regulate the principles and procedures regarding the recording of the place of residence and other address information of Turkish citizens and foreign nationals who obtain a residence permit issued to foreign nationals for a period of at least six months for any purpose in Türkiye.” As can be seen, the regulation governing this system explicitly states that it applies to both foreign nationals and citizens and makes no distinction between the two groups.

The other legislative instrument regulating AKS is the Address Registration System Directive. The purpose article of this directive is in the same vein as that of the regulation, and the relevant part reads as follows: “The purpose of this Directive is to regulate the updating of changes in the national address database, with respect to Turkish citizens residing domestically and abroad, and foreign nationals who obtain a residence permit issued to foreign nationals for a period of at least six months for any purpose in Türkiye…” As is evident under this legislation as well, no distinction is made between citizens and foreign nationals, and it is provided that address records will be kept for both groups of natural persons.

Various other provisions of the relevant legislation also regulate how foreign nationals’ records are to be kept and how their forms are to be prepared. All of this clearly demonstrates that AKS is not a system applied solely to citizens of the Republic of Türkiye. It applies to both citizens and foreign nationals. Therefore, at this point, it is clear that even if the 12th Civil Chamber had referred to AKS, it would still have rendered a manifestly erroneous decision. What makes the matter tragicomic is of course, that the chamber based its decision not on AKS but on ADNKS, asserting that it is exclusive to Turkish citizens.

ADNKS is a registration system established by the Turkish Statistical Institute (TÜİK) and is used to compile statistics on matters such as population growth rates, gender ratios within society, and the proportion of the population living in provinces versus districts. That it has absolutely nothing to do with the procedure for service of documents or with the legally registered residence addresses of foreign nationals can easily be understood even from a superficial review of the legislation available on TÜİK’s website. In such circumstances, it is impossible to comprehend how the relevant chamber of the Court of Cassation could have made such a basic error.

Service Of Documents On Foreign Natural Persons Residing In Türkiye Within The Framework Of Article 21/2 Of The Service Law

In a concrete case such as this, where a foreign national has obtained a foreign national identification number in Türkiye, owns immovable property registered in their name, and has resided in Türkiye for a long period, and where there is a record in AKS and an address can be found through a MERNİS inquiry, it is self-evident that there is no obstacle to effecting service pursuant to Article 21/2 of the Service Law. The relevant provision is drafted using the term “addressee,” without making any distinction between citizens and foreign nationals. Accordingly, the relevant provisions of the law demonstrate that this method of service concerns everyone who falls within its scope. Accepting the contrary would amount to subjecting the wording of the law to a restrictive interpretation and limiting its scope.

Although, as a matter of generalization, it may be possible to find counterexamples, in my view it can be stated that unless a statutory provision explicitly specifies who its subject is, it encompasses all persons within the legal system who may fall within its scope and for whom there is no other general or special rule preventing its application. For this reason, the “addressee” in Article 21/2 may be any person, whether a foreign national or a Turkish citizen.

In addition to this general observation, let us examine Article 25/a of the Service Law as a specific piece of evidence supporting our claim: “… if the addressee is a Turkish citizen, service may also be effected through …” As can be seen, where a distinction between Turkish citizens and foreign nationals is intended under Service Law, it is made explicitly. Accordingly, it is easy to ascertain that the drafters of the Service Law were aware of the existence of Turkish and foreign subjects and made different regulations where they deemed it necessary. In such a case, the provisions in which the legislator explicitly makes a distinction also reveal a conscious choice with respect to the provisions in which no distinction is made. (At the very least, this is the most rational conclusion that can be reached through analyzing the text via the method of argumentum e contrario.)

As for the issue of restrictive interpretation, judicial authorities undoubtedly have the ability to interpret laws restrictively or expansively. However, this does not mean that judges may interpret statutory provisions however they wish. Where a restrictive or expansive interpretation is adopted, — and there can be no doubt that interpreting the term “addressee” in the Service Law as “Turkish-citizen addressee” constitutes a restrictive interpretation — there must be a reasonable justification for doing so. No such justification exists in this case. The fact that service of documents can be effected on foreign nationals pursuant to Article 21/2 is not only something mandated by the law, but also a result that addresses a significant problem and serves justice.

Accordingly, whether one adopts a methodological approach based on interest analysis or an approach that regards fidelity to the text as the primary objective, the correct conclusion is that the facility provided under Article 21/2 may also be used against foreign nationals.

To summarize once again, the subject of the dispute is whether service can be effected on foreign nationals present in Türkiye pursuant to Article 21/2 of the Service Law. The Service Law permits this by making no distinction in this regard, and there is likewise no such distinction (or prohibition) in the legislation governing the Address Registration System. The assertion by the 12th Civil Chamber of the Court of Cassation that “the address-based population registration system applies only to Turkish citizens” is, quite frankly, a nonsensical finding.

An Observation Regarding The Practical Consequences Of The Judgment, Independent Of The Text

If the absurd conclusion reached by the 12th Civil Chamber of the Court of Cassation were to be accepted, the result would be that Turkish citizens who fail to keep their AKS and MERNİS records accurate could be served pursuant to the Article 21/2 procedure, whereas foreign nationals residing in Türkiye who fail to keep these records up to date or who make false declarations would be subject to no sanction whatsoever-that is, service could not be effected on them through the neighborhood headman-ultimately leading to the conclusion that foreign nationals would be in a more advantageous position than Turkish citizens with regard to service of documents. This would not only violate the constitutional principle of equality but would also amount to an interpretation that places Turkish citizens in a more disadvantageous position than foreign nationals in respect of service of documents, one of the most crucial matters of procedural law, and would generate a legal asymmetry disturbingly (or comically) akin to the capitulations of the late Ottoman period. Fortunately, the enforcement office read our petition and corrected its error.

Att. Cemil Şaar, PhD(c)

cemilsaar@kstlawfirm.com | +90 535 416 9476 | linkedin.com/in/cemilsaar

This article was originally published at www.cemilsaar.com

Cryptocurrency Asset Litigation: Compensation or Restitution in Kind?

Att. Cemil Şaar, PhD(c)

cemilsaar@kstlawfirm.com | +90 535 416 9476 | linkedin.com/in/cemilsaar

The information in this article is current as of the date of publication; however, this area is subject to frequently changing legislation. It is recommended that current legislation be confirmed and legal counsel be obtained before taking any action. Furthermore, not all information has been covered in this article; after conveying the key points, I have drawn attention to the issues I consider important, and accordingly this article does not constitute legal advice.

𝗦𝘂𝗺𝗺𝗮𝗿𝘆 𝗼𝗳 𝘁𝗵𝗲 𝗙𝗮𝗰𝘁𝘀

Cryptocurrency assets (Ethereum, USDT, and USDC) valued at approximately USD 800,000 as of the date of the theft were stolen from my client, a U.S. citizen. In my view, the judgment is noteworthy, as it contains determinations concerning the legal status of cryptocurrency assets, the admissibility of compensation claims denominated in foreign currency, and the issue of reciprocity-which is a matter of significant concern for private international law practitioners. Each of these topics remain contentious both in practice and in doctrine.

The presiding judge conducted the proceedings expeditiously and from what I observed, approached the matter with dilligence. Accordingly, I was also academically curious about the judge’s reasoning and conclusions. Another thought-provoking aspect of the decision is that, despite the case being won, full justice has not truly been achieved. My observations regarding this point appear in the final paragraphs.

𝗜𝗻 𝘁𝗵𝗲 𝗽𝗿𝗼𝗰𝗲𝗲𝗱𝗶𝗻𝗴𝘀 𝗯𝗲𝗳𝗼𝗿𝗲 𝘁𝗵𝗲 𝗕𝗮𝗸ı𝗿𝗸𝗼𝘆 𝟰𝘁𝗵 𝗖𝗶𝘃𝗶𝗹 𝗖𝗼𝘂𝗿𝘁 𝗼𝗳 𝗙𝗶𝗿𝘀𝘁 𝗜𝗻𝘀𝘁𝗮𝗻𝗰𝗲, 𝗶𝗻 𝘄𝗵𝗶𝗰𝗵 𝗜 𝗮𝗰𝘁𝗲𝗱 𝗮𝘀 𝗽𝗹𝗮𝗶𝗻𝘁𝗶𝗳𝗳’𝘀 𝗰𝗼𝘂𝗻𝘀𝗲𝗹, 𝗼𝘂𝗿 𝗰𝗹𝗮𝗶𝗺𝘀-𝘀𝘂𝗯𝗺𝗶𝘁𝘁𝗲𝗱 𝗮𝗹𝘁𝗲𝗿𝗻𝗮𝘁𝗶𝘃𝗲𝗹𝘆-𝘄𝗲𝗿𝗲 𝗮𝘀 𝗳𝗼𝗹𝗹𝗼𝘄𝘀:

1) A determination that cryptocurrency assets constitute movable property and that, accordingly, our restitution in kind claim be upheld, ordering the restitution of the assets in kind, followed by the execution of enforcement procedures under Article 24 of the Turkish Enforcement and Bankruptcy Code (İİK), meaning that no monetary value would be stated in the judgment and that the value of the cryptocurrency assets at the time of enforcement would be taken into account.

2) In the alternative, should the court determine that cryptocurrency assets are not governed by the rules applicable to movable property, compensation should be decided in the amount of the U.S. dollar value of the assets as of the date of the lawsuit.

3) In the further alternative, should all claims be rejected, compensation should be decided in Turkish lira for the loss incurred as a result of the theft of the cryptocurrency assets.

𝗜𝗻 𝗧𝗲𝗿𝗺𝘀 𝗼𝗳 𝗥𝗲𝗰𝗶𝗽𝗿𝗼𝗰𝗶𝘁𝘆:

It is already a well-established fact that U.S. citizens are not required to post security when filing lawsuits in the Republic of Turkey. In private international law, reciprocity may take three forms: Contractual, statutory, and de facto.

The fact that Turkish citizens are not required to post security in the United States is, in itself, sufficient to establish the existence of de facto reciprocity. Thus, in the present case, there is no genuine controversy as to the existence of reciprocity.

However, the academically interesting dimension of this case concerns contractual reciprocity-a matter that (because de facto reciprocity already existed) we did not practically need to rely on but were nevertheless curious about.

We submitted to the court a treaty signed between Turkey and the United States in 1931, which contains a “𝗺𝗼𝘀𝘁-𝗳𝗮𝘃𝗼𝗿𝗲𝗱-𝗻𝗮𝘁𝗶𝗼𝗻 𝘁𝗿𝗲𝗮𝘁𝗺𝗲𝗻𝘁” clause. It should be noted that whether such a clause is sufficient to establish contractual reciprocity is not definitively settled and could be argued either way. In a 2016 judgment, the 19th Civil Chamber of the Court of Cassation (Yargıtay) held that such a clause does indeed indicate the existence of contractual reciprocity.

Accordingly, in our statement of claim, we submitted evidence demonstrating that both contractual and de facto reciprocity exist between the Republic of Turkey and the United States of America. Although our arguments regarding the existence of reciprocity were accepted, and the court did not request the posting of what is commonly referred to in practice as “security for foreign plaintiffs,” neither the court nor the Directorate General for Foreign Relations and the European Union at the Ministry of Justice-responding to the court’s inquiry-made any determination regarding the 1931 treaty specifically. The existence of de facto reciprocity was established, and this was (rightly) deemed sufficient. Therefore, our academic curiosity remained unaddressed as the court proceeded to the merits of the dispute.

𝗧𝗵𝗲 𝗝𝘂𝗱𝗴𝗺𝗲𝗻𝘁:

𝟭) The court held that cryptocurrency assets cannot be considered movable property and therefore cannot be the subject of a restitution in kind claim and consequently rejected our principal claims for recovery in kind and for execution under 𝗔𝗿𝘁𝗶𝗰𝗹𝗲 𝟮𝟰 𝗼𝗳 𝘁𝗵𝗲 𝗘𝗻𝗳𝗼𝗿𝗰𝗲𝗺𝗲𝗻𝘁 𝗮𝗻𝗱 𝗕𝗮𝗻𝗸𝗿𝘂𝗽𝘁𝗰𝘆 𝗖𝗼𝗱𝗲.

𝟮) Although our compensation claim was accepted, the court awarded damages in Turkish lira-despite the plaintiff being a U.S. citizen who conducts his life in U.S. dollars.

The reason I sought recognition of cryptocurrency assets as movable property was, of course, that such a result would be far more favorable for my client. In substantiating this argument, we relied on the expression “natural forces… capable of being acquired” in Article 762 of the Turkish Civil Code and on an expert opinion by a highly esteemed scholar.

Had this argument been accepted and enforcement proceeded under Article 24 of the Enforcement and Bankruptcy Code, the significant appreciation in Ethereum’s value since the commencement of the proceedings would have yielded a substantial gain. (This may yet turn out to be the end result after the higher court proceedings conclude.)

In the event that our initial restitution in kind claim was rejected, we provided numerous grounds supporting our claim for compensation in U.S. dollars, submitting to the court the judgment of the 𝗚𝗲𝗻𝗲𝗿𝗮𝗹 𝗔𝘀𝘀𝗲𝗺𝗯𝗹𝘆 𝗼𝗳 𝘁𝗵𝗲 𝗖𝗶𝘃𝗶𝗹 𝗖𝗵𝗮𝗺𝗯𝗲𝗿𝘀 𝗼𝗳 𝘁𝗵𝗲 𝗖𝗼𝘂𝗿𝘁 𝗼𝗳 𝗖𝗮𝘀𝘀𝗮𝘁𝗶𝗼𝗻 (𝗬𝗮𝗿𝗴ı𝘁𝗮𝘆 𝗛𝗚𝗞) 𝗱𝗮𝘁𝗲𝗱 𝟭𝟭.𝟭𝟭.𝟮𝟬𝟬𝟵, 𝗻𝘂𝗺𝗯𝗲𝗿𝗲𝗱 𝗘. 𝟮𝟬𝟬𝟵/𝟰-𝟮𝟯𝟴, 𝗞. 𝟮𝟬𝟬𝟵/𝟰𝟵𝟯, along with several other favorable chamber decisions. Nevertheless, our claim at this stage was also rejected by the court of first instance, which awarded compensation exclusively in Turkish lira.

Consequently, at the first-instance stage, although we prevailed in the lawsuit, the client was able to recover only a portion of the loss-valued at approximately USD 800,000-as the amount corresponded to roughly TRY 18,000,000 at the time of the theft and the subsequent depreciation of the Turkish lira significantly diminished the effective recovery. Naturally, the case will proceed to appellate stages such as the regional court review and potential enforcement/execution proceedings, and it is both possible and likely that the amount ultimately compensated will increase.

However, the result as it currently stands indicates that, in the Republic of Turkey between 2022 and 2025, individuals asserting claims arising from losses incurred in relation to foreign currency, gold or silver and other precious metals, or cryptocurrency assets-regardless of the reasons for such losses-face severe difficulty in recovering their full damages even if they are substantively correct, pursue their cases diligently, and ultimately win.

At a time when our country is experiencing an extraordinary economic crisis, it is of course not surprising that the outcome should be as such. It is likewise unrealistic to expect the law to fully anticipate situations of this kind. Yet acknowledging these realities does not preclude one from recognizing that the outcome, so far, has failed to deliver full justice.

Att. Cemil Şaar, PhD(c)

cemilsaar@kstlawfirm.com | +90 535 416 9476 | linkedin.com/in/cemilsaar

This article was originally published at www.cemilsaar.com

Short-Term Residential Rentals Made Under Law No. 7464 and Certain Observations Regarding Its Implementation

Att. Cemil Şaar, PhD(c)
cemilsaar@kstlawfirm.com | +90 535 416 9476 | linkedin.com/in/cemilsaar

The information in this article is current as of the date of publication; however, this area is subject to frequently changing legislation. It is recommended that current legislation be confirmed and legal counsel be obtained before taking any action. Furthermore, not all information has been covered in this article; after conveying the key points, I have drawn attention to the issues I consider important, and accordingly this article does not constitute legal advice.

INTRODUCTION

The comprehensive legal framework for short-term residential rentals was established by Law No. 7464, published in Official Gazette No. 32357 dated 2 November 2023, and the Regulation prepared pursuant thereto and published in Official Gazette No. 32413 dated 28 December 2023. Until that time, this rapidly growing sector, conducted primarily through platforms such as Airbnb, Booking and Expedia, had operated in a regulatory vacuum, without a coherent licensing regime or a dedicated tax framework.

The fundamental and purported aim of the Law is to create a new source of tax revenue from this activity and to make it safer.

First, the concepts of “dwelling” and “lessor” will be explained in the context of the relevant legislation, followed by the exploration of the basic legal framework addressed in a Q&A format. After providing the foundational information, the serious problems I have encountered in practice regarding law enforcement conduct toward foreign nationals will be examined through a case study.

“Dwelling” means an independent unit registered as residential in the title deed or holding condominium/construction servitude title for residential purposes. Properties registered solely as “land” in the title deed do not fall directly within this definition; however, it could be possible to obtain a permit provided that the term “dwelling” appears in the building registration certificate.

“Lessor” means a natural or legal person holding title, usufruct, or surface rights over the dwelling. Persons who do not hold one of these rights, including tenants, are not entitled to apply for a permit under the current legal framework. “Short-term rental” refers to the rental of a dwelling to the same tenant for a period not exceeding one hundred days.

KEY CONCEPTS

1 – What is the legal basis and purpose of the legislation?

Law No. 7464 and the Regulation issued thereunder establish the legal framework for short-term residential rental. The competent authority is the Ministry of Culture and Tourism. The primary objectives of the regulation are to enhance security through a permit mechanism, to preserve neighbourly peace, and to ensure tax compliance.

2 – Is a permit required for short-term rentals?

Yes, it is mandatory. Application procedures are carried out through e-Government (e-Devlet). Following the issuance of the permit, obligations under Law No. 1774 on Identity Disclosure - including guest identity registration, terminal registration, and other requirements - also become operative.

3 – What was the provisional permit arrangement?

A provisional permit mechanism was introduced for natural or legal persons who commenced operations before 1 January 2024; applications under this scheme were required to be submitted by 1 February 2024. Provisional permits issued under this mechanism became automatically invalid as of 31 December 2024. The administrative sanctions regime has commenced with respect to those who failed to complete the transition process.

4 – How does the 25% quota and the residence-style exemption operate?

In buildings with more than three independent units, the number of permits that may be issued to the same lessor is limited to twenty-five percent of the total number of independent units. Where more than five applications are submitted, a workplace permit also becomes mandatory. Hotel-style properties offering services such as reception, security, and cleaning are exempt from this limitation; for such properties, the permit may be issued directly in the name of the operating company. The precise scope of this exemption remains an area that has yet to be fully clarified in administrative practice.

5 – In what circumstances is condominium owners’ approval required?

In apartment buildings, a notarized unanimous resolution of the condominium owners must be appended to the application; this requirement is non-waivable. For standalone buildings and single-owner buildings, approval is not required. In practice, this step is typically the most time-consuming and operationally challenging in large residential complexes.

6 – What documents are required for an application?

Identity and signature documents (for legal entities: tax identification number, MERSİS [Central Registry Recording System] number, and signature circular); current title deed; where required, a building registration certificate bearing the term “dwelling”; in cases of shared ownership, an owner’s consent deed; unanimous condominium owners’ resolution; where required, a workplace permit; and a UETS (National Electronic Notification System) address.

7 – What are the obligations of intermediary platforms?

Following official notification from the Ministry of Culture and Tourism, failure to remove unpermitted property listings within twenty-four hours may result in an administrative fine of TRY 100,000 per property and an access blocking sanction.

8 – What are the tax obligations?

The principal tax obligations are as follows:

- Income Tax: Continuous short-term rental activity is treated as commercial income and must be declared accordingly.

- VAT: The standard rate of 20% applies.

- Accommodation Tax: Applied at a rate of 2%, calculated separately from VAT. Declaration is mandatory by the 26th of the following month.

- Tourism Share: Monthly declaration is required at a rate of five per thousand (0.5%) on gross revenue.

- e-Invoice: Mandatory for those providing accommodation services as of 1 July 2024.

The question of at what stage a rental becomes a “continuous” commercial activity must be assessed separately on a case-by-case basis.

9 – Can a permit be obtained for a property registered as “land” in the title deed?

Potentially yes; however, it is mandatory for the building registration certificate to bear the term “dwelling”.

10 – Can a permit be obtained for a tiny house or a trailer?

Trailers are classified as towed vehicles under Turkish law and therefore cannot be permitted under this framework. For fixed-foundation prefabricated structures, it may be possible to apply provided the title deed is properly registered.

11 – Can only a single room in a dwelling be rented?

Officially, no. The permit is issued for an entire independent unit; room-by-room rental cannot be permitted under this Law. Those wishing to provide room-based accommodation must obtain a guesthouse or hotel permit.

12 – May additional fees be levied by municipalities?

Yes. Some municipalities apply the Environmental Cleaning Tax differently or introduce additional obligations such as accommodation waste fees. The applicable local regulations must be investigated separately for each property.

13 – Is insurance mandatory?

Insurance is not a legal requirement under Law No. 7464. Nevertheless, in light of the fact that the property will be used by temporary guests, obtaining adequate insurance coverage is strongly recommended.

14 – What is the penalty for failure to make an identity disclosure?

Failure to fulfil the notification obligations under Law No. 1774 on Identity Disclosure is subject to various administrative fines; these amounts are subject to annual revaluation. Announcements regarding current fine amounts are published by the General Directorate of Security.

15 – In what circumstances may a permit be revoked?

Violations such as failure to display the rental sign, exceeding capacity, using misleading advertisements, deficiencies in identity disclosures, and failure to meet physical inspection standards may result in the imposition of an administrative fine and, ultimately, in the revocation of the permit.

16 – My application was rejected; what can I do?

Following notification of the decision rejecting the application, it is possible to apply to the Ministry of Culture and Tourism and, should that application also be rejected, to bring an annulment action against the decision. However, given that this procedure may take approximately two years depending on the province in which it is conducted, it is advisable to attempt to resolve the matter through administrative procedures with the assistance of an expert before resorting to legal action.

CERTAIN PROBLEMS ARISING FROM ERRONEOUS LAW ENFORCEMENT CONDUCT: A CASE STUDY

The framework discussed thus far relates primarily to the licensing, tax, and administrative compliance obligations of the lessor. However, there is another dimension of this Law’s implementation that I believe has not been adequately addressed: the treatment of foreign nationals staying as guests at short-term rental properties during law enforcement inspections, and the legal consequences of such treatment.

I will recount below an incident I personally encountered, as I believe it draws attention to an issue that is both legally significant and insufficiently examined in the literature.

CASE STUDY

In a case I recently encountered, foreign guest A, while staying at a property belonging to my client, was subject to a law enforcement inspection of said property. Although the foreign national staying at the property actually intended to rent it on a long-term basis (8–12 months), no written contract had yet been signed between the parties. Accordingly, there was no legal violation in the incident in question.

In the proper course of an inspection, the foreign national must be provided with an interpreter, informed of their right to access legal counsel and their right to remain silent (Miranda rights), and the use of methods such as threatening or intimidating the person being questioned are unlawful.

The police officers who arrived at the scene began questioning the person without informing them of their rights, asking questions in a language the person did not understand, and then stated that a report prepared in a language the person again did not understand needed to be signed. All communication between the parties was conducted using a rudimentary translation tool such as Google Translate, which rendered the entire process extremely unprofessional.

When the person, understandably not grasping what was happening, panicked and contacted me, they had already signed the report under threats along the lines of “if you do not sign, we will take you to the police station and process you; you will not be released for a long time.” When I read the report, I found that the person - who did not speak Turkish, had no lawyer or interpreter present, and had been subjected to such threats - had signed a document which, in summary, stated: “I rented this property after seeing it on the Airbnb website.”

We naturally filed the necessary objections and commenced legal proceedings promptly against the fines issued on the basis of said report. However, as I find this event deeply concerning, I wished to share it in order to draw attention to this issue for both legal practitioners and potential victims. Such situations unfortunately occur frequently across virtually all areas subject to administrative inspection; in some cases, reaching a lawyer after certain documents have already been signed may make it impossible for the lawyer to have any effect whatsoever. For this reason, no document prepared by law enforcement should be signed without obtaining legal assistance, and one must never forget that law enforcement is always “the other side.”

In summary, anyone wishing to conduct short-term rentals in Turkey must work with a lawyer to take the necessary precautions, both for their clients and for themselves. We endeavor to prevent such unlawful incidents by informing all foreign guests staying at properties where our clients lawfully conduct short- or long-term rentals about their rights. However, the remedy we apply is purely symptomatic. A genuine solution will only materialize on the day that legislators understand that when enacting new legislation, they must also subject those who will implement that legislation to specialized training and instruction. Creating new laws and bringing grey areas under regulatory oversight is of course important and necessary. However, as long as sufficient training is not provided to those who will enforce the new laws - or, perhaps, as long as specialized units in this field are not established - the laws enacted will continue to create as many new problems as they resolve.

The final point I wish to draw attention to on this topic is as follows: Such regulations - which appear to have been enacted more reflexively than with a far-sighted vision of governance - make conducting business in Turkey, which is already extremely difficult, even more so. At this point, a reader might say: “We should not make it easier for rent-seeking commercial activities either.” However, what I am trying to highlight here is that this “lack of a long-term and broad-thinking superior rationality” manifests itself in a great many areas that go far beyond the scope of this article. The outdatedness of our tax legislation, the problems in work permit legislation, law enforcement practices, problems with the integration of powers of attorney issued abroad, and many others are just some examples. All of these issues significantly increase the importance of working with a lawyer who possesses accurate legal knowledge - especially for foreign investors - and may cause investors who do not have proper and effective support to encounter a wide variety of problems.

Att. Cemil Şaar, PhD(c)

cemilsaar@kstlawfirm.com | +90 535 416 9476 | linkedin.com/in/cemilsaar

This article was originally published at www.cemilsaar.com

An Analysis of Article 13/i of the Value Added Tax Law No. 3065

Att. Cemil Şaar, PhD(c)

The information in this article is current as of the date of publication; however, legislation is constantly evolving and changing. It is important to verify current legislation and obtain legal advice before taking any action. In addition, not all topics are covered in this article; after providing basic information, attention has been drawn to matters that I personally consider important for personal or professional reasons, and the article in this form does not constitute legal advice.

I. INTRODUCTION

Tax legislation in Turkey offers a significant financial benefit in the acquisition of residential and commercial properties in Turkey for foreign nationals and Turkish citizens who live abroad and meet certain other conditions. Subparagraph (i), added to paragraph 1 of Article 13 of the Value Added Tax Law No. 3065 (“VATL”) by Article 7 of Law No. 6824, provides a value added tax exemption on the first delivery of buildings constructed as residential or commercial premises. This regulation, which entered into force on 1 April 2017, has two main purposes: Increasing foreign currency inflows into the country and supporting the construction sector.

The application principles of the exemption were established by the Communiqué Amending the General VAT Application Communiqué Serial No. 12 (“Communiqué No. 12”), published in Official Gazette No. 30057, dated 5 May 2017. The relevant provision of Law No. 7394, which entered into force on 1 May 2022, and the subsequently published Communiqué Amending the General VAT Application Communiqué Serial No. 42 extended the mandatory holding period for immovable properties within the scope of the exemption from one year to three years. This article discusses the legal framework, application conditions, and main problems encountered in practice regarding this exemption.

II. SCOPE OF THE EXEMPTION

A. Eligible Properties

The exemption under VATL Art. 13/i applies only to immovable properties constructed as residential or commercial premises, having a building permit, and actually delivered in a state ready for use by the buyer. In projects where floor easement can be established, it is also required that the floor easement has been established. The concept of residence is interpreted broadly and also covers structures such as timeshare units, residences, and apart-hotel units. For commercial premises, Article 156 of the Tax Procedure Law serves as a reference; stores, offices, warehouses, workshops, and similar commercial or industrial activity spaces are considered within this definition. Properties such as fields, vineyards, gardens, and land plots fall outside the scope of the exemption.

B. The “First Delivery” Condition and Its Problematic Interpretation

The exemption applies only to the first sale made by the taxpayer who has constructed said immovable property; it does not apply to subsequent transfers. VATL Art. 13/i, by using the phrase “…in the first delivery thereof…”, actually creates a provision open to interpretation. Therefore, through a teleological interpretation aligned with the purpose, one could argue that “first delivery” actually should mean the first delivery for the party wishing to benefit from the exemption. In my opinion, this would have been the appropriate regulatory approach. However, the Revenue Administration, by issuing an insufficiently considered ruling, brought all deliveries within the scope of “first delivery.” This causes serious problems in practice due to the lack of sufficient nuance in the relevant ruling and is particularly easily abused by large construction companies. Detailed observations on this point are provided in the final section of this article, where I present a real case converted into a practical exercise, after the necessary preliminary information has been conveyed in this section.

As stated in the ruling of the Revenue Administration dated 10.09.2018 and numbered 10360: “In the event that a residence or commercial premises is purchased from those who constructed it and then sold to another party, the delivery cannot be considered as the first delivery.” The area where this interpretation becomes particularly problematic is intra-group / holding structures. Property title transfers between different affiliated companies of the same holding are also considered “deliveries”; therefore, following a transfer from the company that carried out the construction to another company within the holding, a sale to the buyer wishing to obtain the first delivery loses its character as “first delivery.” This application practice is, in my view, erroneous. Because the purpose of VATL Art. 13/i is to encourage foreign currency inflows into the country and to support the construction sector through the first sale. The fact that transfers that have not previously been subject to VAT exemption cause the loss of “first delivery” character does not serve this purpose and also causes additional negative externalities to be discussed below.

In a scenario where the relevant Revenue Administration ruling did not exist or its scope was narrowed, the immovable property would still be changing hands for the first time for the buyer wishing to obtain the first delivery under such conditions and the buyer would still be receiving the immovable property for the first time. The seller party would also be benefiting from the VAT exemption for the first time with respect to that property and would therefore not cause any tax loss in its other transfers. Under these circumstances, the fact that the term “first delivery” under the relevant legislation is interpreted in this way does not serve any purpose and creates an opportunity for abuse, particularly for large-scale construction companies with affiliated companies, and also creates very significant unpredictability and risk for buyers who have signed a preliminary real estate sale agreement without proper legal support.

In short, in my opinion, it is necessary to change the interpretation of the concept of “first delivery” or to add to the legislation that certain deliveries shall not be counted as first delivery. Otherwise, the problems I will describe at the end of this article will continue to occur.

III. ELIGIBLE BUYERS

A. Foreign Natural Persons

The first group of buyers within the scope of VATL Art. 13/i consists of foreign natural persons that are not resident in Turkey. The concept of “foreign national” refers, within the framework of Article 3/1-d of Turkish Citizenship Law No. 5901, to a person who does not have a citizenship bond with the Republic of Turkey. This definition is the basis for the application of this law.

The criterion of “not being resident in Turkey” is determined based on Articles 4 and 5 of Income Tax Law No. 193 (“ITL”). Pursuant to ITL Art. 4, those whose domicile is in Turkey and those who stay continuously in Turkey for more than six months in a calendar year (temporary absences do not interrupt this period) are considered to be residents of Turkey. However, ITL Art. 5 provides an important exception: experts, civil servants, press members, those coming for education, treatment, or rest, and those detained in Turkey for reasons beyond their control such as arrest and imprisonment, who come to Turkey for a specific and temporary duty or work, are not considered residents even if they stay for more than six months.

In practice, tax offices determine this matter by examining the entry-exit records held by law enforcement for the relevant calendar year; in the absence of any specific finding that the buyer is residing in Turkey, they issue a “Letter Confirming Non-Residency in Turkey.”

B. Turkish Citizens Living Abroad

The second group consists of Turkish citizens who have been living abroad for more than six months with a work or residence permit. Turkish citizens who are employed by official departments and institutions or by organizations and enterprises headquartered in Turkey and reside abroad due to their work have been excluded from the scope of this group (pursuant to the joint reading of ITL Art. 3/1-2 and VATL Art. 13/i provisions). Due to this distinction, a Turkish citizen assigned abroad by a state institution cannot benefit from this exemption; while those who have settled abroad with a work permit on their own initiative can benefit.

Three conditions must be met simultaneously to benefit from the exemption: Having a valid foreign work or residence permit at the date of delivery; having obtained said permit at least six months before the date of delivery; and having actually been abroad for at least six months between the date of obtaining the permit and the date of delivery. The seller must obtain the official document proving the existence of these conditions, obtained from the embassy or consulate in Turkey, before the delivery.

C. Blue Card Holders

Real persons who have been issued a blue card pursuant to Article 28 of Turkish Citizenship Law No. 5901 and who are not resident in Turkey are also accepted as being able to benefit from the exemption under VATL Art. 13/i. The blue card is an official document evidencing that those who have renounced Turkish citizenship with permission to leave have the same rights as Turkish citizens with certain exceptions. A copy of the blue card is submitted instead of a passport copy; and the same conditions regarding non-residency in Turkey must be met.

D. Foreign Legal Entities

The third group consists of foreign legal entities whose registered and business headquarters are not in Turkey, and which do not earn income in Turkey through a business establishment or permanent representative. Pursuant to Article 3 of Corporate Tax Law No. 5520 (“CTL”), the registered headquarters is the place indicated in the incorporation documents, while the business headquarters is the place where the transactions are actually concentrated and managed. In multinational structures, determining the business headquarters may be challenging; for this reason, it is recommended to file for an advance tax ruling in practice.

IV. APPLICATION CONDITIONS

A. The Sale Consideration Must be Brought Into Turkey as Foreign Currency

One of the fundamental conditions for the exemption is that the sale consideration is brought to Turkey in foreign currency. Accordingly, at least 50% of the consideration must be paid by the buyer in foreign currency to Turkey before the date of the invoice related to the delivery; the remaining amount must be brought to Turkey in foreign currency and paid to the seller within one year at the latest. Foreign currency transfer can be made by international wire transfer to a bank in Turkey; if brought physically to Turkey, the documents obtained from the customs administration may serve as proof. It is also possible to pay the amount brought from abroad in foreign currency to the seller in Turkish lira; however, in this case, bank receipts documenting the exchange rate and conversion must be kept. Since the practices of banks operating in Turkey vary, especially citizens of countries subject to financial sanctions under SWIFT must obtain proper legal support before making any transfer. Otherwise, their assets may be blocked, or the transfer they made may not meet the conditions under the law, and they may need to make the transfer again (in the correct manner).

B. Foreign Exchange Purchase Certificate (FEC)

The Foreign Exchange Purchase Certificate (FEC) is an official document issued by Turkish banks evidencing that foreign currency has been converted into Turkish lira or that a transfer has been made from abroad for the purpose of a title deed transfer. Land registry offices request this document before the transaction in practice. The seller is obligated to record the collection with bank receipts and the FEC. In the event that foreign currency is brought physically to Turkey, the customs declaration takes the place of the FEC. The VAT refund can be made after the entire sale consideration has been documented as being brought to Turkey and paid to the seller.

C. Letter Confirming Non-Residency in Turkey

For foreign natural person buyers to benefit from the exemption, it is mandatory to obtain a “Letter Confirming Non-Residency in Turkey” from the Tax Office Directorate where the residential or commercial property is located, and to submit this document to the seller before the delivery. The document is prepared by local tax offices within the Revenue Administration and is issued with the signature of the Tax Office Director. The authenticity of the letter issued with a secure electronic signature can be verified at https://ivdb.gib.gov.tr.

The documents required for the application are as follows: A notarized translation of the buyer’s passport copy, a document obtained from their own country showing that the buyer resides abroad and its Turkish translation, the title deed or real estate sale agreement, and a document from the Police Directorate showing Turkey entry-exit records for the last one year. If the process is to be carried out by proxy on behalf of the buyer, it is unfortunately necessary that the power of attorney explicitly lists the authority to represent before tax offices, police directorates, immigration offices, and land registry offices, and that all specific matters such as the foreign exchange purchase certificate and entry-exit queries to be made are specifically included in the power of attorney.

It is essential that powers of attorney are carefully prepared by an attorney experienced in this matter, due to the strange, unpredictable, and unique demands of institutions, and otherwise may create an additional burden of additional power of attorney later. Since most institutions create arbitrary practices without legal basis in line with the perspective of their internal managers, and may request various, actually unnecessary, matters to be added to powers of attorney, it is necessary to consult an experienced person regarding the content of the power of attorney if there has been no prior experience dealing with these institutions.

Upon completion of the application, the tax office compares the submitted documents with its own records; in the absence of any finding that the buyer is resident in Turkey in the relevant calendar year, it issues the letter. It should be taken into account that the process can sometimes take a few days and sometimes a few weeks due to the arbitrary practices of officials or the workload of the relevant institution, and therefore the document procurement/preparation processes should be initiated at least 6 months before the planned delivery date.

D. Obligations of the Seller

The seller faces three main obligations: Document collection, notification, and declaration. Under the documentation obligation, a passport copy and the residency document obtained from the tax office must be obtained for foreign national buyers before delivery. Under the notification obligation, the Land Registry Office must be notified that the delivery is made exempt from VAT under VATL Art. 13/i; and the annotation of the three-year holding period must be placed in the declarations column of the title deed register. Regarding the declaration obligation, the sale within the scope of the exemption must be declared in the “Transactions Within Full Exemption Scope” table of the VAT return in the row “Residential or Commercial Property Deliveries” with code number 328, with the VAT-exclusive consideration and the loaded VAT amounts.

V. SANCTIONS AND VAT REFUND

A. Three-Year Holding Obligation

With Law No. 7394 and the Communiqué Amending the General VAT Application Communiqué Serial No. 42, effective 1 May 2022, the mandatory holding period for immovable properties acquired within the scope of the exemption has been extended from one year to three years. Land registry offices place an annotation in the declarations column of the title deed register of the relevant property stating, “in the event of disposal within three years, the tax that could not be collected on time will be paid with the accrued interest within the scope of Article 48 of Law No. 6183.” In order to have this annotation removed and complete the title deed transfer, it is mandatory that this tax be paid by the disposing party before the title deed transaction.

B. Joint and Several Liability

In the event it is determined that the exemption was applied despite the fact that the conditions stipulated by VATL Art. 13/i are not met, the seller and the buyer are jointly and severally liable for the tax that could not be collected on time, the tax loss penalty, and the late payment interest. Joint and several liability is a legal mechanism that creates chain-like responsibility by allowing the tax administration to apply to any of the debtors and demand the entire debt. The practical consequence of this provision is extremely significant: the seller, if it transacts with false or incomplete documents, incurs tax liability together with the buyer; and the buyer, if it benefits from the exemption despite not meeting its own conditions, shares the same legal risk as the seller. For this reason, document verification is a necessity for both the seller and the buyer.

C. VAT Refund Process

After the delivery within the scope of the exemption is declared in the VAT return, the seller may request a refund of the loaded VAT. The refund request must be submitted to the tax office by writing the loaded VAT amount in the returns for the relevant period by the end of the second calendar year following the delivery period. Taxpayers requesting offset or cash refund must submit the standard refund petition and supporting documents to the tax office. As a prerequisite for the refund, it is required to document that the entire sale consideration has been brought to Turkey and paid to the seller; partial refund requests made before full payment is received are not accepted.

VI. CASE STUDY: THE HOLDING STRUCTURE, THE “FIRST DELIVERY” TRAP, AND THE IMPORTANCE OF LEGAL COUNSEL

A case I managed recently concretely illustrates how the narrowly interpreted “first delivery” condition can corner foreign buyers and how the absence of competent legal advice before contracting can produce lasting consequences.

The client wanted to purchase a residence from a large construction group containing multiple affiliated companies. Within the group structure, there was a main holding company named S and companies A and T, which are subsidiaries of this holding. Before I became involved in the process, the client had met with the construction group’s representatives and, as a result of these meetings, signed a financial leasing and real estate sale promise agreement indicating that the property would be delivered by company A. Although company A was designated as the delivering party in the agreement, it was also stipulated that A could transfer its contractual obligations.

Since the client actually intended to purchase the relevant property by benefiting from the VAT exemption, this should have been guaranteed in the relevant agreement. This could have been achieved in many ways before signing the agreement, for instance by confirming that the property was actually registered in A’s name and adding a provision prohibiting A from transferring the property to anyone other than the client, or through various compensation provisions.

However, as the process progressed to the transfer stage, the construction group announced that the title deed registration of the property belonged not to company A but to company T within the holding. The group therefore argued that the transfer could only be made through T, and that if the client insisted on receiving the transfer from A, the client would have to pay VAT. The client, who had not obtained legal assistance at the outset, was thus left with no leverage at this stage: while a title deed transfer through T could qualify as the “first delivery” under VATL Art. 13/i, a prior transfer from T to A would not count as first delivery in terms of tax law, and a subsequent sale to the client would therefore be unable to benefit from the exemption.

The construction group attempted to resolve this impasse by having the client sign a dual set of documents. The client was told to first sign a release from the agreement signed with company A, and then to enter into a new sales agreement directly with company T. While doing so, the client was told to sign the agreement to be entered into with T with a backdated date. In theory, this structure created the appearance that T was delivering the property to the client for the first time directly. However, this solution was shaped not at the client’s initiative but entirely by the internal organizational preferences of the seller group; and the client learned that it had actually left its fate entirely to the initiative of the seller holding structure in the agreement it had signed at the outset.

This situation reveals a serious vulnerability in the current practice. The tax administration and courts determine the concept of “first delivery” according to the legal entities on the seller side; and they count each intra-group transfer as an independent delivery regardless of whether the property is being offered to the market for the first time in the real sense, or whether the exemption has been benefited from for that property. Yet in the specific case, the property was genuinely changing hands for the first time for the foreign buyer, and there had been no prior benefit from VAT exemption for that property. The interpretation that serves the purpose of the regulation and one that will not cause negative externalities is the one that would include cases like this within the scope of first delivery. However, this was not the case, and the client, having signed all documents without consulting anyone and only reaching out to me after problems began, experienced a lengthy ordeal.

The most important lesson from this dispute goes beyond mere tax law: For buyers who are foreign nationals or who, while not foreign, do not possess the necessary knowledge about tax legislation, obtaining legal counsel before signing an agreement is not a choice but a necessity. Identifying which legal entity holds the title deed of the relevant property, understanding the corporate structure of the seller group, and each company’s relationship to the exemption under VATL Art. 13/i are matters that must be clarified before a preliminary agreement is signed before a notary. In this case, it was possible to reach a result; however, the fact that the client had to sign a release and enter into a new agreement, and the extensive prolongation of the process due to the bad faith conduct of the relevant holding, along with the additional moral and financial costs these generated, made the client pay the price for deferring legal counsel to a point after the contracting stage.

VII. CONCLUSION

VATL Art. 13/i offers foreign buyers wishing to acquire real estate in Turkey a significant financial advantage ranging from ten to twenty percent of the sale price depending on the size of the property. However, the application of the exemption depends on the simultaneous fulfillment of conditions that are interlinked and each of which requires separate attention: the mandatory first-hand purchase from the constructor, the foreign currency transfer and its documentation requirement, the residency letter to be obtained from the tax office before delivery, and the three-year holding obligation.

The narrow interpretation of the “first delivery” condition in current practice constitutes a separate problem. The fact that an immovable property with an intra-group transfer history is deprived of the exemption despite being offered to the market for the first time in a genuine sense does not align with the purpose of the regulation to encourage foreign currency inflow and the construction sector and causes such unpredictable negative externalities. For this reason, the concept of “first delivery” should be applied with an interpretation focused on whether the VAT exemption has been previously benefited from, as stated above, or should be regulated to provide an exception for cases such as the one in the specific case.

The client entered this process relying solely on the construction firm being “large”; as a result of this process, the client learned the hard way that, on the contrary, large firms should not be trusted and learned the consequences of proceeding without legal support at a serious financial cost. I hope that other buyers will benefit from this experience so as not to learn these lessons through the same painful prescription. The corporate structure of the seller, which legal entity holds the title deed registration, and the foreign currency transfer processes are matters that must be clarified before a notarial agreement or any preliminary commitment document; a mistake or omission at these stages can produce consequences that are extremely difficult and sometimes impossible to remedy.

I hope that the first delivery regulation will be recognized as causing many harms and negative externalities beyond the benefits it aims to provide, and that it will be amended; and I hope that those who read this article will make the necessary preparations at the beginning rather than the end of any transaction, thus avoiding potential damages.

Att. Cemil Şaar, PhD(c)

This article was originally published on cemilsaar.com

cemilsaar@kstlawfirm.com | +90 535 416 9476 | linkedin.com/in/cemilsaar