Turkiye: How to Pay for Property Purchases or Receive Payment for Property Sales?

The Turkish legal framework has cost effective payment solutions that enable Turks and Turkish speaking people to buy and sell safely. These methods are common standard practice and MyTapu Associates provides Transaction Services to explain these, specify the documents required, and manage the procedures.

The exchange should be for more than a verbal promise from a seller, agent. constructor, etc …!!! First, before making payment, it is important to check: what have has been received in return for making this payment ? 

Making unsecured inter-bank or swift transfers, or crypto-currency payments, to the seller are generally not recommended, and open potential for future problems.  Preparations are required, increasing costs and expenses, beyond what is typically expected. For example, absolutely essential is having a notarised contract stating the payment terms and stating payment instructions corresponding to the payment a buyer is preparing. Anything less is inviting problems, and added legal costs, potentially leading to litigation for other related reasons. 

However, if the transactional procedures and documentation are prepared appropriately, the risks are manageable, and acceptable. The problems arise when the precautions and preparations are replaced by short-cuts and omissions, and the latter usually occur when the transferring party is attempting to save on costs and expenses- very unwise.

Cash payment transactions are essentially no longer an option for a multitude of reasons, the most obvious being risks, and expenses, for example, counting cash and obtaining notarized attestations etc The sheer volume of paper cash Turkish Lira  required makes it nearly impossible. The sales price must be in Turkish Lira. Foreign currency payments incur additional scrutiny and work-arounds; payment in precious metals (coin or bullion) is easily accessible and viable everywhere in Turkiye, but also incur similar risks and expenses. Contact us and ask for more information about these insights.

There are ways of organsing the payments in settlement of a transaction that do not require digital payments, contracts, precious metals, nor cash. A preferred method, in conjunction with other documentation, to eliminate risks, and ensure immediate liquid funds transfer, is a type of bank draft which has funds blocked and frozen for the purpose of the real estate transaction by the issuing buyer's bank, payable only to the name designated on the cheque, being that of the property seller. For the recipient named on the cheque this way, this form of documentary payment is essentially a cash equivalent. This is a traditional documentary payment technique in common widespread practice.

As Turkiye’s Land Registry Administration implements a multi-decade modernization and standardization program, vastly improved digital systems are coming into service that make the entire payment settlement process faster, cheaper, and eliminate risks to vanishing point.

These services are provided by Turkiye’s state sponsored & controlled capital markets settlement bank, that provides a near equivalent escrow service for buyers and sellers, administered in conjunction with the Land Registries digital services, and providing bank-to-bank transfer advice confirming the sending bank's transfer tracking reference codes and transfer execution and the receiving banks transfer tracking reference codes and receipt of funds, which serves as the confirmation of funds transfer fulfillment between banks within the electronic banking payments system utilized. This is the clearing bank for administering bank transfer payments between real estate buyers and sellers for transactions utilizing the Turkish land registries digital payments infrastructure. The IT infrastructure systems of this bank are near flawless as can be – every business day it settles payments worth hundreds of millions of Dollars for Turkish government bonds and Istanbul Stock Exchange shares for foreign institutional and local Turkish fund managers and investors generally. The credit ranking of this bank is not in doubt. 

Despite all these advantages, this payment alternative, like that for documentary payment technique mentioned above, is rarely if ever mentioned on the websites or by that personnel of the real estate agents that specialize in serving foreign real estate buyers. The reasons are clear- in addition to pure ignorance, there is no mention because using these payment alternatives eliminates the agents’ ability to capture profits on the transaction that they hide from the buyer the and seller. Check an agent’s website to see if these alternatives are mentioned. If there is no mention, they are likely intending to capture a large portion of the buyer's and seller's transaction price.