Deposits, Earnest Money and the Promise-of-Sale Agreement

Once a home is found, the parties usually make an advance payment to seal the deal. In everyday language this payment is called a kapora (deposit). But its legal nature depends on how it is given and what is put in writing; a deposit given without anything in writing is one of the most common sources of disputes.

Earnest money and forfeit money

Under the Turkish Code of Obligations, money given when a contract is formed is, unless agreed otherwise, treated as earnest money (bağlanma parası) and credited against the underlying debt. If the parties instead agree the money is forfeit money (cayma parası), the party who paid it may withdraw from the contract by forfeiting it, and the party who received it may withdraw by repaying double the amount. This is why it matters to put the purpose of the payment in writing.

When giving a deposit

• First view the current title deed record; confirm the seller is actually the owner.
• Make the payment to the seller's own registered bank account, with the property's block/parcel noted in the description.
• Sign a short written document stating the amount, the intended title deed date, the total price and the conditions under which the deposit will be refunded.
• If paying through an agent, check the agent's authorization certificate and the authority the seller has given them.

Promise-of-sale agreement

For a contract for the sale of real estate to be valid, it must follow an official form. This is why a promise-of-sale agreement drawn up at a notary (satış vaadi sözleşmesi) is used for a sale that will be finalized at a later date. If the agreement is annotated on the title deed record, the promisee's right can be asserted against a new owner even if the seller transfers the property to someone else. The annotation is valid for a set period.