TÜRKİYE Law and Practice Contributed by: Serkan Gül, Nazım O Kurt and Türkay Avanaş, Hergüner Bilgen Üçer Attorney Partnership
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 acknowledgement of the borrow - er. 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 premiums that were the mort - gagor’s responsibility). Maximum amount mortgages Maximum amount mortgages secure an amount that is higher than the principal amount, incor - porating 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. Final - ly, 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 financial institutions without any restrictions. Repayments to foreign lenders under a security
real property just like domestic concerns where all shareholders are Turkish nationals. The governorship approval procedure involves an investigation of whether the real property is in a military forbidden zone, military security zone, strategic zone, or a private security zone. If it is, then the acquisition is subject to clearance from the military or the provincial police directorate, depending on which of these exercises juris - diction 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 organ - ised industrial zones, technology development zones, and free zones are not subject to the fore - going approval process. Acquisitions of commercial real estate are gen - erally financed by loans and sales revenue gen - erated from the project. Real estate investment funds, lease certificates, and real estate invest - ment companies are capital market instruments used for financing options for acquisitions of large real estate portfolios or companies hold - ing real estate. 3.2 Typical Security Created by Commercial Investors There is no security specifically used by com - mercial real estate investors. Generally, securi - ties such as a mortgage, share pledge, personal guarantee, assignment of receivables, etc, are used for real estate-related funding. 3. Real Estate Finance 3.1 Financing Acquisitions of Commercial Real Estate
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