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

Payment’s for Citizenship Investments:

• ·An investor must not simply transfer foreign currency to the seller.
• ·Payments must conform to a protocol where-by a local Turkish Bank sells the foreign currency to the Turkish Central Bank- a procedure for the purpose of establishing an accounting record of the inflow of funds to Turkiye.
• ·The protocol also ensures compliance with regulations requiring the purchase price and value be paid in Turkish Lira, thereby fulfilling a policy initiative intended to reduce the depreciation rate of the Lira.
• ·An investor must comply with this procedure, otherwise the Citizenship Investment procedure can not be fulfilled.
• ·The protocol is named DAB (Döviz Alım Belgesi /Currency Purchase Certificate), and the bank issues this certificate to accompany the CIP/CBI application.  
• ·Without the DAB references the Land Registry will not process the real estate purchase transaction.

• ·Investors must comply, and the work is done by the investor’s local Turkish Bank (so selecting the right bank is important-  request our advice) but otherwise investor’s should not be unduly concerned because there are practical work-around solutions for dealing with the issues arisng such as price etc. More details about this are available on request.

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 or adviser’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. Whether or not payment methods are mentioned, in any case a buyer should:

• Never make more than one payment for the purchase of the property;
• Never make payments directly to a constructor, seller, agent, or attorney.
• The problems and warnings about making ‘reservation deposits' are well known for years now and should never be agreed.
• In cases where installment payments are being made for properties under construction, these are high risk with investment profile entirely different from a construction completed property, carrying multiple additional risks that require specific contract due diligence on terms and considerations (not simple) and are more costly to execute safely, and potentially far more costly to rectify a plethora of ensuing problematic issues.