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December 21, 2023

Binding Nature Of A Written Preliminary Agreement For Real Estate Sale Introduction

I. INTRODUCTION

Article 237 of the Turkish Code of Obligations titled “Form”, Article 706 of the Turkish Civil Code titled “Legal Transaction” and Article 89 of the Notary Public Law titled “Transactions that must be executed in the form of an arrangement” contain provisions regarding the form requirements of the preliminary agreement for real estate sale (“PARES”). According to these provisions, it is a condition of validity that the PARES is executed before a notary public. In cases where the prescribed formal conditions are not met, as a rule, PARES is null and void.

In this article, we discuss the actions that may be brought on the basis of an ordinary written PARES.

II. LAWSUIT OF CANCELLATION AND REGISTRATION OF TITLE DEED

The plaintiff, who is a party to the ordinary written PARES as a buyer, can request the cancellation and registration of the title deed of the real estate subject to the PARES, based on the well-established decisions of the Court of Appeal.

For instance, there are decisions of the Court of Appeal which conclude that in the event that the real estate owned by the landowner is transferred to third parties by the contractor with an ordinary written PARES, PARES is valid as it is in the nature of transfer of claim. However, it is observed that the Court of Appeal does not provide legal protection for the transfer of the real estate owned by the contractor with an ordinary written PARES. In such lawsuits for cancellation and registration of title deeds, in accordance with the decisions of the Court of Appeal, we recommend that you take into account whether the construction is 90% or more completed, whether the remaining works are an obstacle to use and whether the remaining works can be completed by converting them into money.

In the meantime, in lawsuits for cancellation and registration of title deeds based on an ordinary written PARES, it is primarily considered that the buyer has fulfilled its payment obligation and has been able to prove this issue with documents.

III. ACTION FOR COMPENSATION

At the point where it is concluded that the ordinary written PARES cannot be considered valid, a lawsuit for compensation may be filed in order to return the amount of the PARES according to the provisions of unjust enrichment.

With this lawsuit, along with the amount of the payment issued according to PARES; should the legal conditions are met, positive damages may also be demanded. The positive damages may be seen as the fair market value of the real estate.

IV. CONCLUSION 

A lawsuit demanding cancellation – registration of the title deed may be filed as well as a compensation lawsuit based on an ordinary written PARES. It is recommended that the plaintiff evaluates the concrete case within the framework of the current decisions of the Court of Appeal together with available evidence. Since there are various and in some cases contradictory decisions of the Court of Appeal regarding ordinary written PARES, it is important for the course of the case that the relevant and current decision is demonstrated as a legal basis.

Kind regards, 

Kilinc Law & Consulting

Authors

Kılınç Hukuk ve Danışmanlık

Kılınç Hukuk ve Danışmanlık