What is a Preliminary Real Estate Sale Agreement?

A Preliminary Real Estate Sale Agreement is a bilateral contract in which both parties agree to transfer ownership of a property at a future date under specified conditions. In other words, it is a binding commitment to execute an official real estate sale agreement before a title deed officer at a later time.

Through this agreement, the promisor (the party making the promise) commits to selling a specific property, and the promisee (the party receiving the promise) agrees to buy it. Both parties thus assume mutual obligations. The rights arising from this contract are relative rights, meaning they can only be enforced by and against the parties involved.

Can a Preliminary Sale Agreement Be Made for Property Not Owned by the Promisor?

Yes. Since preliminary sale agreements are considered promissory in nature, a party may promise to sell a property that they do not yet legally own. The agreement commits the promisor to transfer ownership of the property at a future date. Even if the promisor is not the legal owner at the time the contract is signed, they are obligated to transfer the property to the promisee when the time comes.

If they fail to do so, they may be liable to pay compensation under the provisions of the Turkish Code of Obligations (TCO).

Validity Conditions of a Preliminary Real Estate Sale Agreement

According to Article 706 of the Turkish Civil Code, any agreement intending to transfer real estate ownership must be made in official form.

• If not made in this official form, the agreement is invalid and has no legal effect between the parties.
• A preliminary real estate sale agreement is a pre-contract committing to a future transfer of ownership.
• Such agreements must be prepared and signed in the form of a notarized official deed by both parties (TCO Article 29; Notary Law Articles 60/3 and 89).
• If the agreement is merely approved by a notary instead of being drawn up, it will be considered invalid.
• The price to be paid by the buyer must be clearly stated in the agreement, along with the payment terms (installments or lump sum).
• According to zoning regulations, co-owned parcels for development purposes cannot be subject to preliminary sale agreements.

Obligations of the Parties in a Preliminary Sale Agreement

• The promisor (seller) is obligated to transfer the property to the buyer on the agreed date. At the time of transfer, they must be the legal owner.
  • If they are not and cannot fulfill their obligation, they are liable to pay compensation.
• The promisee (buyer) must pay the agreed amount in the agreed manner.
  • They have the right to request the formal transfer of the property at the land registry.

Termination of the Preliminary Real Estate Sale Agreement

A preliminary sale agreement may be terminated in the following cases:

• Fulfillment of the contract (i.e., the transfer is completed)
• Expiry of the statute of limitations for performance
• Mutual termination by both parties

Statute of Limitations for Preliminary Sale Agreements

• There is no special statute of limitations for these agreements. According to TCO Article 146, a 10-year general limitation period applies.
• This period starts from the date the performance becomes possible.
• If there is a legal obstacle preventing the transfer of the property at the land registry, the statute of limitations does not begin until the obstacle is removed.

Annotation (Registration) of the Preliminary Sale Agreement in the Land Registry

In order for a preliminary real estate sale agreement to be enforceable against third parties, it must be annotated in the land registry (Civil Code Article 1009).

• The annotation does not prevent the property from being sold to another party, but any new owner will be bound by the terms of the agreement.
• If the property is not transferred within 5 years from the date of annotation, the effect of the annotation expires.