TAPU's (Title Deeds)

Lately there has been much rumour and conjecture about the situation surrounding the recent amendment to Law 634 (Condominium Law).

Firstly, Law 634 has been in existence for years. It is not a new law. It is not an attempt to extract more money from foreign buyers. It applies equally to the Turkish owners.

So what has changed? Law 634 was designed to enable tapus to be issued when a site was incomplete. Ie some apartments on a development could be sold and occupied, whilst other apartments or villas were still being constructed. So, tapus were issued on the basis of the Kat Irtifaki (land) box being ticked.

It was always a requirement for the tick box to be changed at a later date to the Kat Mulkiyeti (building) box. To effect this change, the builder has to apply for an Iskan (Habitation Certificate). This certificate confirms that the site is complete, that the buildings have been inspected and comply with the relevant standards, and that the properties on the site are suitable for habitation.

The problem was, that there was no compunction or time scale to have this done. So no-one bothered, and no-one bothered telling buyers about it. The government got fed up with it not being done, and amended Law 634 to impose time scales and penalties.

In attempting to determine the procedure required to get the amendments done, the real time bomb emerged.

ALL owners have to be present at the same time to sign the papers. For foreign owners this is virtually impossible other than them appointing a power of attorney. Rumours abounded that only 60% were required, then 80%, but the fact is that it is 100%.

There is no one, fix-all solution. The circumstances vary from complex to complex. Some apartments have never been occupied by the buyer, and no-one knows how to contact them; some apartments remain unsold from new and ownership has been passed around from builder, developer, landowner etc.

There were no official statements made to the foreign community, and it was only in April 2009 that Voices Newspaper managed to get an official statement about the amendment to Law 634. When the "Tapu Timebomb" article hit the voices newspaper, immediate panic ensued, and the Belediya and Tapu offices were inundated with foreign owners trying to change their tapu's, ignorant of what to do.

Some say that unnecessary panic was caused, but it focused the attention of foreign owners to the issue. It blasted out of the water the stories and excuses being put out by some builders and emlaks that "you don't need to bother about it"- we do.

It has made owners realise that they need to have contact with each other, and ultimately this will be of benefit if there are general issues on the site. Law 634 (Condominium Law) stipulates that each site must have a management committee, another difficult task with diverse ownership, unless a bona-fide management company is employed.

The law also states the responsibilities of owners, what they can do and can't do. Eg. you can't paint your apartment a different colour to everyone elses. (see Voices article references below).

It focused the attention of the authorities, and gave them a taste of what was to come as foreign owners arrive for their holidays and try to process their tapus. There are indications that they are beginning to recognise the impossibility of some owners being able to comply fully with the amended law. Allegedly, it may now be possible to lodge an incomplete file for a site. Those with all their documentation will apparently be registered as having applied and no longer liable for penalties. This would be a huge step forward if true, and alleviate some of the current panic.

Owners are urged to bring with them, their tapu original, passport copies, 2 passport photos for each person on the tapu, their Dask (compulsory government earthquake insurance), and their Turkish tax numbers.

The most important document to have is a certified copy of the Iskan (habitation certificate). These are available from the Belediya if you take your tapu in. The charge for this was 5 lira, but recently people have been charged 15 lira. Without the Iskan, nothing can be done to process the tapu change.

***** STOP PRESS *****

25th.May 2009.

Voices Newspaper ran an article, updating the situation.

The furore over the changes seems to have led to a realisation by the authorities that the requirements (particularly for foreign owners) is extremely difficult. Proposals are being discussed in Ankara, including the following:

• The local Council has access to data to show which properties ahve Iskans (habitation certificates) issued.
• They can then investigate the reasons why sites have not had Iskans issued.
• To postpone the 28th.November 2009 deadline by 2 years.
• To clarify whether the 1,000 lira fine is a one-off or annual charge.

A decision from Ankara is expected "within a few weeks" (bear in mind that the government summer recess is nearing - 6 weeks is being given as a possible time scale, but by then the 2 month recess would have started - we'll see what happens!)

It is stated that if the Contractor (builder/developer) is still active in business, it is their responsibility to carry out the changes, and that the house owner need do nothing, and all charges should be paid by the Contractor. There is no indication to date as to the action owners can take if the Contractor refuses to comply.

If and Iskan has been issued, but the Contractor is no longer available a procedure has been proposed in the Voices article. The minimum cost per owner is expected to be a minimum of 350 lira.

The article states that an estimates 70% of properties do not have Iskans. These are the owners who will have the greatest difficulty.

In cases where the Contractor no longer operates, the proposal is that the Council processes all of the documentation that the Contractor should have done. Unfortunately, if this process unearths unpaid charges by the Contractor the house owners will have to pay these. The process will take months (one assumes that with a potential large percentage in this category, there will be a total log-jam at the Council offices) and the estimate is quoted as being in the region of 5,000 lira per owner.

If the Iskan can not be issued for any reason (building non-compliant with the plans submitted, earthquake standards etc) it is proposed that the house owner pay a one-off fine of 1,000 lira, but there would still be no Iskan.

An amnesty is proposed for these properties, which hopefully will enable them to move to the procedure proposed in the previous paragraph.

***** End of Stop Press *****

***** STOP, STOP Press *****

On Saturday 2nd.May, Voices Newspaper posted an article indicating that the government was now considering not only scrapping the deadline for applications, but that owners could now be able to apply individually. This would be a huge relief to all owners (Turkish and foreign).

It is hoped that the changes will be ratified by 1st.July when the Summer recess in Parliament begins.

The normal procedure is for parliament to pass a new law which must then be ratified by the President and then the law will be posted on the Statute Book, at which point it becomes law. (Hopefully by 1st.July!)

***** end of STOP, STOP Press *****

27th.June 2009. "Tap-U-Turn!"

The General Assembly of the Turkish Grand National Assembly has amended the requirements for Law 634 with regard to changing the Tapu tick box.

The 1,000 lira fine has been cancelled.

The November 2009 deadline has been removed.

This comes as a huge relief to all owners.

The requirement for ALL owners to apply for the change at the same time has been removed. Owners will be able to apply individually BUT only when a simple majority of over half the owners have initially applied en-block; ie: If a block has 10 apartments, a minimum of 6 must apply en-block, and then the remaining owners can apply individually.

For sites where a habitation certificate (Iskan) exists, the amendments indicate that the local council will notify the Title Deeds (Tapu) office accordingly, and the owners can then go straight to the Tapu office to complete the transfer.

The amendment also states that the "deposits and other costs will no longer be paid".

SO, it now appears that common sense has prevailed, and that the process will be less onerous, and less expensive.

Owners should now ensure that they co-ordinate on their site to get the relevant information together to enable the majority stated above to make an initial application. Until such times as a trial run has been successfully completed, it is advised that owners have available: Copy passports (for each person named on the tapu), copy and original tapu; copy Dask certificate (earthquake insurance), local Turkish tax numbers (for each person), 2 passport photos of each person."

TAPU VALUES

Amongst the confusion surrounding changes to tapus, the question of values declared on the tapus have become another major issue.

In most cases the declared value (which is in lira) is well below the actual price paid for the property. This has great implications with regard to insurances, re-selling and Capital Gains Tax.

Currently, if a property is sold within 5 years of the date of issue of the tapu, Capital Gains Tax is payable. The amount of tax payable is calculated from the difference between what you bought the property for, and what you sold it for (who's to say the 5 years won't be extended to 10 years somewhere down the line).

An example:

If you paid £40,000 for your property and signed a sale contract for £40,000 you would have made no profit, and therefore not liable to capital gains tax. WRONG. Now lets assume your tapu shows 40,000 lira instead of the £'s you paid, you have sold the property for around 92,000 lira, and made 52,000 lira profit and therefore are liable to Capital Gains Tax.

Now apply this to the matter of insurance claims. We all tend to insure our properties (the building, and the earthquake insurances) to the actual value we paid. Presentation of a copy of your tapu is a requirement for taking out a policy, so the insurer has documentation proving the value paid for the property.

In the event of a claim, the insurer will pay out based on the value on the tapu. So basically many of us are underinsured.

There is a means of rectifying this. Your will need copies of you purchase contract (Preferably in Turkish), payment plan, bank transactions, anything that can prove what you paid. Take them along with your tapu to the tax office and make an official declaration of the true value paid. In the majority of cases, the buyer gave power of attorney to someone locally, and was not present when the tapus were issued, therefore had no opportunity to contest the under declared value. In many other cases the lira value declared is close to the sterling price paid and buyers assumed the figures to be in sterling.

As ever, it is advisable to take someone Turkish speaking with you when dealing with the government offices.

Clarification is still needed on some issues:

• Does each apartment need a certified copy of the Iskan? It looks likely
• What is going to happen on sites where the documents for every owner can not be obtained. Are the complying owners going to be left in some kind of Tapu limbo?

We are putting documentation together to hold a trial run once the amendments to the law have been completed. Hopefully we will then have a template to follow for other sites.

This site will be updated regularly with any further developments. Please feel free to email us with any specific queries, and we will do our best to answer them.

Voices newspaper has various related articles which can be viewed at:www.voicesnewspaper.com

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