Real estate finance law in Turkiye

Yes, security can be granted to a foreign lender. Mortgages may be taken over Turkish real estate to secure loans from foreign lenders, provided they comply with the relevant Turkish legislation.

Yes, lenders can take a mortgage over land and/or buildings on the land.

Land and buildings on the land are referred to as immovable property. No distinction between the two is made under Turkish law. It is possible for a mortgage to be granted over immovable property. Immovable property includes all fixtures permanently attached to it. Accordingly, all buildings constitute immovable property and are subject to the same mortgage as the plot of land on which they are built.

Buildings that are not permanently attached to the land on which they are built are considered movable property.

A mortgage debt certificate (ipotekli borç senedi) is a debt certificate that allows the value of an immovable to be put into circulation under the security of a mortgage. This constitutes a personal monetary claim based on the pledge of immovable property. In order to establish a pledge through a mortgage debt certificate, the land registry appraises the immovable property.

The receivable on a registered or bearer mortgage debt certificate may only be transferred, pledged or subjected to another disposition together with the possession of the mortgage debt certificate.

Although this instrument is regulated under Turkish law, it is not commonly used in practice. Issuance of the mortgage via deed registry records is the best practice.

Yes, a second-ranking pledge over real estate shares can be established under Turkish law. It is created in the same manner as a first-ranking pledge, meaning that the official deed is executed by the land registry and registered with the parties’ clear consent. The priority of the pledge is determined solely by the date of execution of the official pledge deed by the land registry among pledges of the same rank. No additional steps are required to establish its ranking.

Establishment of a mortgage on immovable property does not limit the power of disposition of the owner of the immovable property. Therefore, the lender or the third party on whose immovable property a mortgage has been established may transfer this immovable property to another third party. The consent of the lender is not required for this transfer. Only the land registry shall notify the secured lender of the transfer of the mortgaged immovable to a third party.

The new owner who transfers the immovable shall acquire the ownership together with the mortgage. For this reason, the lender may also assert its rights arising from the mortgage against the mortgagee owner in case of non-payment of the debt. However, as a rule, the new owner does not become personally liable for the debt, and the original lender does not change in case of transfer.

Pursuant to the Enforcement and Insolvency Law, creditors whose receivables are pledged have priority rights over the sale amount. Duties and taxes required to be levied on specific goods and assets by state proposals, such as customs duty and land tax, rank after the pledged receivables.

The order of priority can be listed as follows:

• those whose receivables are pledged
• public debt
• obligations arising within the scope of the employee-employer relationship
• debts arising from private relationships.

No, “all monies” mortgages are not recognised under Turkish law.

In addition to immovables, pledges may also be established on movables, receivables and other rights. In this respect, a pledge can be established on receivable rights such as rent. Although the structure of this pledge is similar to an assignment of receivables arrangement, it is not considered identical in doctrine.

For the pledge of receivables that are or are not subject to a promissory note, the pledge agreement must be concluded in writing. In addition, the promissory note must be delivered for receivables that are subject to a promissory note. The lender or the pledgor may notify the lender of the pledge. In terms of the pledges of other rights, the specific procedures prescribed for the transfer of these rights must be complied with, together with the execution of a written pledge agreement.

Yes, a pledge over the bank accounts of the borrower is possible. It is also both possible and usual for lenders to contractually restrict rights to withdraw funds in accounts (and have the account blocked by the relevant account bank) until the loan is fully repaid.

In terms of perfecting a transfer of land, pursuant to Turkish law, transfer of land requires preparation of a transfer deed (i.e. sale contract) and the registration of the deed with the land registry. Additionally, with the amendment effective from 1 January 2023, public notaries are also authorised to approve a real estate sale contract. However, following the approval or notarisation of a sale contract by the public notaries, the registration process shall be completed before the land registry. 

The execution and registration of security must be completed at the land registry in order for the security to be considered valid.

Under Turkish law, the transfer of ownership of an immovable property is not considered valid unless the relevant transfer deed is properly registered with the Land Registry. Similarly, a mortgage deed does not establish an enforceable security interest unless it is duly registered with the Land Registry.

Under Turkish law, the creation of a security over immovable property requires the execution of a formal deed before the land registry, which differs from the concept of a “notarial deed” generally adopted in other jurisdictions. Registration of the security will take place simultaneously with the execution of the deed.

Certain documents may be required based on the legal personality or the capacity of the parties (i.e. signature circular, power of attorney, etc).

The fees that shall be paid for executing a security over an immovable property (as of 2025) are as follows:

• land registry fee: 0.455% of the amount of the debt secured by the mortgage
• stamp tax: 0.948% of the mortgage amount
• circulating capital fee (Döner Sermaye Bedeli): ranges between TRY 1,200–5,000 (approximately EUR 30–130).

Trust is not a recognised concept under Turkish law, and therefore the relevant security (e.g. mortgage) must be established in favour of the actual creditors.

In this respect, the concept of “parallel debt” is commonly used in transactions in Türkiye. A parallel debt relationship is established between the parties by means of an abstract debt acknowledgement entered into between the collateral manager and the borrower. Accordingly, all collateral is collected in a collateral pool and given to the organisation selected as the collateral manager to be managed from a single source.

A parallel debt is a claim whereby the borrower acknowledges that it owes the security trustee an amount equal to the amount of the loan. Since the parallel debt is subordinate in amount to the original loan, the parallel debt will be reduced by any repayment made under the original loan in such a way as to avoid a double payment or, conversely, will be increased by the same amount as the original loan. The parties may agree in advance that the borrower shall be entitled to raise the same defences and objections it may have against the original creditors also against the security trustee within the scope of the parallel debt.

The parallel debt provisions should at least reflect that:

• the borrower undertakes to pay the security agent in its own right, and not as representative of the other finance parties, sums equal to each amount payable by it under the finance documents (the “parallel debt”)
• the security trustee shall have its own independent right to demand and receive payment of the parallel debt
• the parallel debt is owed to the security trustee in its own name on behalf of itself and not as agent or representative of any other person, and that the security documents shall only secure the parallel debt owing to the security trustee.

The loan agreement should further include provisions pursuant to which the other lenders have a contractual claim against the security trustee to ensure that any enforcement proceeds are paid by the security trustee to the underlying lenders.

According to the principle of certainty in Turkish security law, both the amount of the security and the subject of the security must be certain. Under the parallel debt method, the legal transaction from which the secured claim arises must be certain, and the security must secure the claim (parallel debt) arising from a specific legal relationship between the guarantor and the collateral taker. This is also important for eliminating defences based on unjust enrichment defences that would be based on the lack of a legal basis.

If the lenders change, no new security is required provided that the security is created to secure the parallel debt in favour of the security trustee.

Office/industrial lease

Turkish law stipulates that subleasing is, in general, allowed. However, Article 322 of the Turkish Code of Obligations (“TCO”) provides an exception for residential and roofed workplace leases. Accordingly, in residential and roofed workplace leases, the tenant may not sublet the leased property or transfer the right of use to another person without the written consent of the landlord. However, in terms of workplaces, the landlord cannot refrain from granting this permission unless there is a justifiable reason.

The person to whom the lease is transferred with the written consent of the landlord replaces the tenant in the lease, and the transferring tenant is released from their obligations to the landlord. In the case of a workplace lease, the transferor tenant is jointly and severally liable with the mortgagee until the end of the lease and for a maximum period of 2 years.

As a general rule, disputes arising from rights in rem over immovable property, or disputes arising from matters not subject to the will of the parties, are not arbitrable. In order to be resolved by arbitration, a dispute must be arbitrable and there must be a written arbitration agreement between the parties.

Yes, foreign judgements and arbitral awards can be enforced in Türkiye. In the case of judgements, Türkiye adopts the principle of reciprocity with the relevant country in which the judgement has been obtained in terms of enforcement of judgements. This may either be a contractual or de facto reciprocity between the countries.

Foreign arbitral awards can also be enforced in Türkiye, provided that the country in which the relevant arbitral award has been obtained is a party to The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) and the requirements set out thereunder are duly met.

Rule

In general, there is no specific provision in Türkiye regarding the monetisation of a pledge without applying to the enforcement office. In principle, the lender shall initiate enforcement proceedings through “the sale of the pledged asset” (rehnin paraya çevrilmesi yolu) via the enforcement office. Within this scope, the enforcement office will conduct the sale through an auction upon the finalisation of the enforcement proceedings. Although the main procedure is an open auction, in some special cases, it may be requested, in accordance with the permission of the enforcement office, to apply exceptional sales procedures.

Extraordinary Sale Methods

Extraordinary sale methods are regulated by the law, which authorises the lender to sell the pledged asset without having finalised the relevant enforcement proceedings.

The lender may request authorisation for the voluntary sale of the seized property within 7 days of the notification of the valuation. Upon completion of the valuation, the bailiff suspends the forced sale procedure and grants the lender a 15-day period. If, within the 15-day period granted to the lender, the buyer who has reached an agreement with the lender pays the determined price for the file, the bailiff shall, after obtaining the necessary information and documents provided that the above-mentioned conditions are met, immediately send the file to the enforcement court for approval of the sale and the decision to carry out the transfer and delivery of the property. After examining the file, the court shall have a final decision on the acceptance or rejection of the application within 10 days at the latest. With the acceptance decision, the ownership of the property is transferred to the buyer, all liens are removed, and the transfer and delivery procedures are carried out.

In addition, the sale of movable property may be carried out by negotiation. For such a process, it is necessary that:

• all the parties involved provide their consent for such sale method
• the market price of that day must be offered for negotiable instruments or other goods that have a price on the stock exchange or market
• gold and silver items that have not found their metal value in the auction must be valued
• in the event of goods whose value decreases rapidly or whose storage is costly, the estimated value of the seized property must not exceed TRY 1 billion.

Assignment or sale of the mortgage to a third party

The lender may sell or assign its mortgage to a third party, provided that an assignment agreement is in place and registered at the land registry to ensure the validity of the assignment against third parties.

Procedure

According to Turkish law, the appointment of receivers or liquidators for the purposes of enforcement of mortgages is not permitted.

Enforcement proceedings are handled by the enforcement office under the supervision of the courts, with the lender’s role being limited to initiating enforcement proceedings and participating in the public auction, rather than directly managing the property.

It is important to note that under Turkish law, enforcement of a mortgage on real estate must involve the courts or the enforcement office. Direct enforcement by the lender or private sales without judicial oversight are not allowed.

Private Sale

The private sale method can be granted to the lender regarding pledges over shares without resorting to enforcement proceedings as there is no explicit prohibition. See the private sale method explained in detail below in Security Over Shares, Q5.

Is the lender responsible for maintenance and insurance of the real estate after default until sale?

In the event of default, the lender is not responsible for the maintenance or insurance of the property. Ownership of the property remains with the borrower until it is sold at auction. However, should the property’s value be at risk due to neglect, the lender may take steps to preserve the property (e.g. seeking court orders), and these costs can typically be added to the debt.

If the creditor has incurred mandatory expenses for the protection of the pledged immovable property, and in particular has paid insurance premiums owed by the owner, the receivables arising therefrom shall be covered by the security, in the same manner as the pledged receivables, without the need for registration.

Is there any method of foreclosure (lender obtaining good title to the real estate in satisfaction of all or part of its debt)? If so, does this require a court order and is it only automatically used when the real estate is not sold at public auction?

Contractual provisions stipulating that the ownership of the pledged immovable property shall pass to the creditor in the case of default or non-payment of the debt are invalid.

N/A. 

The answers below assume that the real estate is held in a Turkish entity (a joint-stock company or a limited liability company) as an alternative to enforcement of the mortgage over real estate.

Yes, a pledge over the shares can be granted to a foreign lender.

Yes, as a rule, second ranking security over shares can be taken.

Uncertificated shares

Where no share certificate has been issued, it is possible to establish a second ranking security, since pledges over uncertificated shares are registered in the company share ledger.

Bearer share certificates and registered share certificates

It is also possible to establish a second ranking security over bearer share certificates and registered share certificates. However, as the transfer of possession of these is mandatory for the due establishment of the pledge, the establishment of a second-ranking security over such shares is not practically feasible, given that possession of the certificates will remain with the first-ranking pledge holder.

The priority of the security is determined based on the time the relevant pledge agreement over the shares is executed. Consequently, establishing a second-ranking security does not require any additional action by the parties. Furthermore, the ranking of the security can be altered, provided that all other beneficiaries of the involved security interests consent to the change in priority.

The requirements for perfecting a pledge over company shares may vary depending on the type of shares and whether they are dematerialised. 

Uncertificated shares

A written pledge agreement between the parties is required, and the pledge is established upon execution of this agreement without any registration or notification requirement. While not a perfection requirement, it is good practice to also indicate in the share ledger of the company that the relevant shares are pledged.

Bearer share certificates and registered share certificates

Transfer of the possession of bearer share certificates to the pledgee is mandatory to establish the pledge.

For registered share certificates:

• the certificate must be endorsed to the pledgee, or
• possession must be transferred to the pledgee through a written pledge agreement; it is crucial to establish a clear link between the written pledge agreement and the negotiable instrument in the pledge agreement.

Dematerialised shares

Dematerialised shares are subject to the same provisions as uncertificated shares. Therefore, a written pledge agreement is required to successfully create a pledge over such shares. In addition, in such a case, the pledge must be notified to the Central Registry Agency (“MKK”) to ensure its enforceability against third parties, while it still remains enforceable between the parties even in the absence of such notification.

Limited liability company shares

In cases where a pledge is to be established over the shares of a limited liability company, the applicable conditions may vary depending on whether the company’s articles of association require the approval of the general assembly for such a transaction. Firstly, the articles of association may expressly prohibit the establishment of a pledge over the shares. In the absence of such a prohibition, the approval of the general assembly and the execution of a notarial deed will be required to perfect the pledge. The general assembly may refuse to grant its approval for the establishment of a pledge right only if there are legitimate and justified grounds for such refusal.

Under Turkish law, no obligation exists to register the share pledge in any public register. The only requirement for pledges that are established over the dematerialised shares is that the date of notification to the MKK shall be taken as the basis for asserting the rights against third parties.

Bearer share certificates

Transfer of possession of the certificate is sufficient to establish the pledge, therefore there are no associated public costs.

Registered share certificates

The pledge can be perfected either by:

• endorsing the certificate to the pledgee, or
• transferring possession to the pledgee through a written pledge agreement.

As a result, no public costs are incurred.

Uncertificated shares

The only requirement is the execution of a written pledge agreement. Consequently, there are no public costs involved.

Limited liability company shares

The establishment of security over these shares necessitates the execution of a notarial deed if the company’s articles of association require general assembly approval for the pledge of shares. This document is formally executed by the involved parties in the presence of a public notary. Subsequent to the execution of the notarial deed of share pledge, the share ledger of the company may be updated to reflect the pledged status of the shares. Since there is no obligation to register the notarial deed of share pledge, no additional costs are incurred.

No. However, pledges over bearer and registered shares require the transfer of possession of the relevant share certificates.

As mentioned, the lender should initiate enforcement proceedings through “the sale of the pledged asset” via the competent enforcement office. Accordingly, the enforcement office will conduct the sale through an auction upon the finalisation of the enforcement proceedings.

Bearer share certificates and registered share certificates

For enforcement of share pledges, there are additional steps to be taken by the enforcement officer during the attachment process. Accordingly, bearer share certificates and registered share certificates shall be seized by the enforcement officer and kept at the enforcement officer’s office. Additionally, following the seizure of the share certificates, a notice shall be sent to the company, and the seizure shall be recorded in the share ledger.

In the case of securities traded on the stock exchange, it is sufficient to send a notice of seizure to the MKK, the relevant bank or the intermediary institution to complete the attachment step.

Uncertificated shares

The enforcement officer will notify the company in respect of seizure of the shares, and the seizure must be recorded in the company’s share ledger. An additional notification to the Trade Registry will be required to register the seizure. After the relevant notification to the company, any transfer of the seized shares is null and void to the extent that it infringes upon the creditor’s rights regardless of whether the seizure is recorded in the company’s share ledger.

As for the sale of seized company shares, the enforcement office will conduct the sale through an auction, subject to the limitations set forth in the company’s articles of association and applicable law.

Regarding sale by negotiation, the parties may agree on a sale price during the enforcement proceedings, subject to the conditions outlined above in Mortgages, Q6. 

Private Sale

Under Turkish law, there is no provision explicitly prohibiting the granting of a right to private sale to the lender regarding pledges over shares without resorting to enforcement proceedings. However, it is important to note that, where such a right is granted to the lender, the relevant provision will be subject to the general terms and conditions requirements (genel işlem koşulları) specified under Turkish law. Consequently, the sale methods must ensure equitable pricing of the pledged shares. Auctions are not the only method to ensure equitable pricing, and in practice, shares are generally sold to those who offer fair value, which is determined by experts.

Based on that, the right to private sale granted to the lender will be evaluated by the courts and subjected to a review of the principle of good faith. If the court determines that the right to private sale or sale method unfairly imposes terms on the counterparty or worsens its position, the provision will be deemed invalid. In such a case, enforcement through the enforcement offices, which is explained in detail in Mortgages Q6, will remain the only legally permissible option.

Under Turkish corporate and insolvency law, there are no mandatory provisions for subordinating or restricting the repayment of shareholder loans, including secured shareholder loans. Shareholder loans are treated similarly to other loans, with no special provisions, except in cases involving misconduct by board members or affiliated companies. In insolvency, if a shareholder loan is secured, shareholders can enforce their security interests just like other secured creditors. If unsecured, shareholder loans rank equally with other junior creditors. Subordination of shareholder loans or restrictions on payment and security interests can be implemented through contractual agreements with creditors, structural subordination within a corporate group, or voluntary subordination under Article 376(3) of the Turkish Commercial Code. 

Lease agreements are governed by the TCO. Three different types of lease agreements are regulated by the TCO:

• residential and roofed workplace
• ordinary
• product.

A lease agreement may be concluded for a definite or an indefinite period. A definite-term lease agreement means that the lease will expire without any notice upon the expiration of the agreed term, whereas indefinite-term lease agreements do not have expiration periods that would lead to automatic termination.

In practice, residential and roofed workplace leases are usually concluded for a period of 1 year, and at the end of this period, the agreement is automatically renewed if there is no notice from any of the parties to the contrary. Long-term lease agreements are also common, especially in roofed workplace leases, and such agreements can be made for 5 or 10 years or longer.

See above. No maximum length.

If an explicit or implicit term is determined, the lease agreement shall automatically terminate at the end of this term. In this case, if the parties continue the lease relationship without an explicit agreement, the lease agreement becomes an indefinite-term lease agreement.

In indefinite-term lease agreements, each party may terminate the agreement by complying with the legal termination periods and termination notice periods, unless a longer termination notice period, or another termination period, has been agreed. In the calculation of the termination periods, the starting date of the lease agreement is taken as the basis.

If the termination period or notice period specified in the agreement or the law is not complied with, the notice shall be valid for the next termination period.

Either party may terminate a lease agreement relating to an immovable property or movable structure at the end of the lease term determined by local custom or, in the absence of such custom, at the end of a 6-month lease term by giving 3 months’ notice of termination.

Either party may terminate the lease at any time by complying with the legal termination notice period in the presence of significant reasons that make the continuation of the lease relationship unbearable for itself.

If the tenant becomes insolvent after the delivery of the leased property, the landlord may demand security for the due and punctual payment of the upcoming rents. The landlord shall give the tenant and the bankruptcy administration an appropriate period of time in writing for the provision of security. If no security is provided within this period, the landlord may terminate the contract immediately without being subject to any notice period.

See above.

In residential and roofed workplace leases, if the agreement imposes an obligation on the tenant to provide security, the secured amount under such security cannot exceed 3 months’ rent. If it is agreed to provide money or negotiable instruments as security, the tenant shall deposit the money in a time deposit account and deposit the negotiable instruments in a bank in order prevent their withdraw without the consent of the landlord. The bank may return the security deposits only with the consent of both parties or upon the finalisation of the enforcement proceedings or on the basis of a final court decision. If the landlord has not notified the bank in writing within 3 months following the termination of the lease agreement that they have filed a lawsuit against the tenant related to the lease agreement, or have initiated proceedings through execution or bankruptcy, the bank is obliged to return the security upon the request of the tenant.

The tenant is obliged to pay the rent and, if necessary, the ancillary expenses at the end of each month, and at the latest, at the end of the lease term, unless otherwise stipulated in the agreement or local custom.

The parties are free to agree on the rate of increase of the rental price to be applied in the renewed lease periods, provided that it does not exceed the rate of “change according to the last 12-month averages in the consumer price index (“CPI”)”. This rule also applies to lease agreements with a term longer than 1 year.

In the absence of an agreement between the parties, the rent shall be determined by the competent court based on fairness, considering the condition of the leased property, provided that it does not exceed the rate of “change according to the last 12-month averages in the CPI”.

Regardless of whether the parties have reached an agreement on this matter, for lease agreements with a term exceeding 5 years and those renewed after 5 years, and at the end of each subsequent 5-year period, the rent for the new lease year shall be determined by the judge based on fair market value.

This determination will not consider the “change according to the last 12-month averages in the CPI,” provided that the parties have either signed a new lease agreement or reached a settlement before a mediator in a dispute initiated to determine the rental fee based on fair market value following the fifth lease year.

A lawsuit regarding the determination of the rental price can be filed at any time following the fifth lease year. Please note that once the judge determines the rental fee based on fair market value following the fifth lease year, it will not be possible to initiate a subsequent lawsuit for the determination of the rental fee within the next 5 years.

See above.

The rent increase is considered valid up to the CPI rate, and the exceeding part of the increase (if any) is deemed null and void.

The exception to the obligation to determine the rental price according to the CPI is that the landlord has the right to request the adaptation of the rental price if 5 years have passed since the conclusion of the lease agreement.

The tenant is responsible for paying the cleaning and maintenance costs, as well as the costs for heating, lighting and water, necessary for the ordinary use of the leased premises.

The landlord is responsible for any costs in connection with the construction of the building and major repairs of the leased premises (e.g. leaking roof, exterior painting). However, the parties may agree that the tenant shall pay such expenses.

Under Turkish law, the landlord shall be responsible for any structural changes to the leased premises, unless the parties agree otherwise.

The landlord is responsible for any mandatory insurances, including mandatory earthquake insurance, unless otherwise agreed. However, in the case of non-mandatory insurance, the party who arranged the insurance shall be responsible.

The landlord shall bear the payment of VAT in the case of residential leases, while the tenant shall bear the obligation to pay withholding tax in commercial leases.

In addition to the rent, additional service charges may be borne by the tenant for the supplies and services provided to the tenant, if and to the extent agreed in the lease.

Any additional outgoings arising from the use of the rental property, such as dues, shall be borne by the landlord. However, in practice, the parties often agree under the lease agreement that such charges shall be borne by the tenant.

In order to charge any costs to the tenant, the lease agreement must precisely state each type of costs.

Yes, unless the contract contains provisions in breach of the mandatory rules of the applicable Turkish legislation.

No.

Yes, an environmental consultant may be appointed to undertake a range of different investigations and reports.

Since Turkish insolvency law does not permit the lender to step in and take ownership of the property, the lender cannot be held liable for any environmental violations as a secured creditor.