TÜRKIYE Law and Practice Contributed by: Serkan Gül, Nazım Kurt and Türkay Avanaş, Hergüner Bilgen Üçer Attorney Partnership
tary forbidden zone, military security zone, strategic zone or private security zone. If it is, then the acquisi - tion is subject to clearance from the military or the pro - vincial police directorate, depending on which of these exercises jurisdiction over the relevant sensitive area. If not, approval for the acquisition is routinely granted. The process is completed within approximately one month. The establishment of mortgages in favour of foreign capital companies, leases of real property by foreign capital companies, and the acquisition of real property in OIZs, technology development zones and free zones are not subject to the foregoing approval process. 3. Real Estate Finance 3.1 Financing Acquisitions of Commercial Real Estate Acquisitions of commercial real estate are generally financed by loans and sales revenue generated from the project. REICs, REIFs and lease certificates are capital market instruments used for financing options for acquisitions of large real estate portfolios or com - panies holding real estate. 3.2 Typical Security Created by Commercial Investors There is no security specifically used by commer - cial real estate investors. Generally, securities such as mortgages, share pledges, personal guarantees, assignments of receivables, etc, are used for real estate-related funding. Mortgages Two types of mortgage are recognised under Turkish law: the principal amount mortgage and the maximum amount mortgage. Principal amount mortgages Principal amount mortgages are established to secure amounts that have already been lent to borrowers and contain the unconditional and absolute debt acknowl - edgement of the borrower. Although the amount of the mortgage only shows the principal amount of the loan lent, the lender may request: • the principal amount;
• foreclosure expenses and default interest; • accrued contractual interest; and • expenses incurred by the mortgagee(s) that were mandatory to preserve the value of the mortgaged property (including disbursement of insurance pre - miums that were the mortgagor’s responsibility). Maximum amount mortgages Maximum amount mortgages secure an amount that is higher than the principal amount, incorporating in advance various expenses that may be incurred by the mortgagee, and do not permit the collection of any amounts above the ceiling amount. Other Structures Available Sale and leaseback structures can also be used for acquisitions of commercial real estate. Finally, Islamic finance-designed instruments such as sukuk may also be utilised. 3.3 Restrictions on Granting Security Over Real Estate to Foreign Lenders Securities are granted over real estate to foreign finan - cial institutions without any restrictions. Repayments to foreign lenders under a security document or loan agreement are made without any restriction unless repayment constitutes a criminal act (eg, money laun - dering). 3.4 Taxes or Fees Relating to the Granting and Enforcement of Security Stamp tax (0.948% of the amount subject to mort - gage) and a mortgage fee (0.455% of the amount sub - ject to mortgage) are paid for the establishment of a mortgage. Foreign financial institutions are exempt from taxes and fees arising out of securities granted over real estate. The fee for enforcement proceed - ings is approximately 0.5% of the amount subject to mortgage. In accordance with a recent change in the legislation, there is now an exemption for half of the mortgage fee (0.227%) for mortgages established between companies. 3.5 Legal Requirements Before an Entity Can Give Valid Security Under Turkish law, target companies are prohibited from providing funds, loans, securities or guarantees to a buyer to facilitate the acquisition of their own
649 CHAMBERS.COM
Powered by FlippingBook