TÜRKIYE Law and Practice Contributed by: Serkan Gül, Nazım O Kurt and Türkay Avanaş, Hergüner Bilgen Üçer Attorney Partnership
public for inspection, title insurance is not at all prevalent with virtually no risk to insure against. 2.4 Real Estate Due Diligence When purchasing real estate, buyers gener - ally engage lawyers for due diligence purposes. Lawyers inspect the land registry records and the usage restrictions included in the zoning plans for the particular locality through the rel - evant municipalities. As the land registry records are authoritative, a thorough inspection of these public records generally suffices to provide assurance to purchasers in terms of the property rights of the seller and any encumbrances over the target property. In addition, a review of the municipality files reveals any non-compliance with the zoning plans and the relevant construc - tion and occupancy permits determined by the relevant municipality. Specifically for real estate used for tourism activities, agreements and deeds establishing the relevant investor’s right to enjoy shores and forests are reviewed as well. Additionally, techni - cal consultants are appointed for environmental The types of representations and warranties giv - en in real estate sales differ significantly depend - ing on how the sale is structured. Asset sales typically entail very limited representations and warranties, given that comprehensive and defini - tive information about the encumbrances on land, including granted easements, established security and pre-emptive rights, are all revealed in public records. On the other hand, if the deal is structured as a share sale, with the entity holding the asset changing hands rather than the under - lying asset itself, extensive representations and warranties are generally demanded. and technical due diligence matters. 2.5 Typical Representations and Warranties
Customary buyer’s remedies include compensa - tion or purchase price adjustment, and a letter of guarantee from the seller or retention of a part of the purchase price typically act as security for the enforcement of these remedies. It is cus - tomary for the seller’s representations and war - ranties to expire after two to three years, and in the case of tax obligations, after six years. There is typically a cap on the seller’s liability in the amount of 15–30% of the purchase price. However, for some important representations and warranties, eg, relating to the ownership rights of and encumbrances on the target prop - erty, this cap can increase to up to 100% of the purchase price. Environmental representations and warranties are occasionally demanded but are seldom granted. 2.6 Important Areas of Law for Investors Real estate law sits at the crossroads of consti - tutional law, private law and administrative law. As noted in 1.1 Main Sources of Law , property rights are guaranteed by the constitution and international treaties. At a more local level, the most important area of law for a purchaser to keep in mind is property law, given that it deter - mines the rights and obligations conferred to owners of real property. The Turkish Code of Obligations is also important in that it defines the rules and principles governing contracts related to real property (sale agreements, lease agreements, etc). Next, the Zoning Law should be kept in mind as this determines the uses to which real estate can be put. A purchaser should also be mindful of secondary rules gov - erning the issuance of construction and usage permits. Lastly, land registration laws are also fairly important, given that they determine what information about real property can be gleaned from land registry records.
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