The Real Effect of Annotating Real Estate Sales Promise Agreements in the Land Registry and Protection Against Third Parties

Entrance

In Turkish law, the sale and transfer of ownership of immovable property are transactions with considerable legal certainty and a limited duration. Contracts relating to the transfer of immovable property are subject to formal requirements and must be registered with the Land Registry Office (Turkish Civil Code, Article 706). However, instead of immediately completing the sale process, parties may choose to enter into a preliminary contract , a promise to sell immovable property, which includes a commitment to complete the sale at a later date . This contract gains validity only after being drawn up in the presence of a notary public (Turkish Code of Obligations, Article 237).

A contract for the promise to sell immovable property essentially creates a personal right and binds only the parties to the contract. The beneficiary of the contract (the promisee) has the privilege of transferring ownership to the debtor (the promising owner) in the future. However, if the promising owner sells the immovable property to a third party or establishes other real rights on it, the beneficiary's right to penalize the transfer occurs. This is precisely where the institution of registering a clause in the land registry regarding the promise to sell immovable property comes into play. This registration raises the issue of the rules that can be asserted against third-party competitions that have been extended into an expanded personal right , and the issue of real effect, which is debated in academic circles

Legal Nature and Form of Real Estate Sales Promise Agreements

A promise to sell real estate is a preliminary agreement in which one or both parties undertake the obligation to conclude a substantive real estate sales contract in the future. The primary purpose of this agreement is to provide a legal basis for the transfer of rights

A. Formal Requirements

According to Article 237/II of the Turkish Code of Obligations, a contract for the promise to sell immovable property be drawn up in the presence of a notary public . Otherwise, the contract is absolutely void . This formal requirement facilitates the proof of the contract and, by preventing hasty proceedings, ensures legal certainty.

B. Nature of Personal Rights

Unless registered, the right arising from the term of a promise to sell immovable property is a relative right (personal right) that can only be asserted between the parties to the contract. This means that the creditor's (beneficiary's) freedom is limited in the event that the debtor, who did not fulfill the promise, transfers the property to someone else, or if the promise is not fulfilled, there will be no right to assert . In this case, the only option for the beneficiary is to claim compensation from the debtor without breaching the contract.

Mechanism for Annotating in the Land Registry

The annotation of a real estate sales promise agreement in the land registry makes it possible to preserve it in accordance with Article 1009 of the Turkish Civil Code and related legislation. This annotation ensures that the beneficiary of the promise is protected against third parties .

A. The Difference Between Annotation and Registration

Transactions in the land registry are fundamentally divided into three categories: registration, annotation, and declaration . Registration is the necessary process for the creation, transfer, and termination of rights (mostly the registration of the right of freedom). Declaration is used for records that clarify the legal situation as required by law (e.g., building permit date). Annotation is a record that explicitly allows the dissemination of the law, strengthens personal rights (relative rights) by making them effective against third parties, or indicates restrictions on the power of disposition.

B. Requirements for Commentary

The requirements for annotating a real estate sales promise agreement are as follows:

1. The existence of a cash real estate sales promise agreement: This can be properly cleared at the notary public in a regular manner.

2. Requesting an annotation: This request is usually made by the beneficiary of the promise.

3. The registration process in the land registry: The annotation is entered in the "Annotations" column of the land registry.

The annotation process involves recording the type, date, and duration of the annotation in the "Annotations" column of the land registry records.

Legal Consequences of Annotation: The Debate on Real Effect

The primary and most critical legal consequence of annotation is that it makes the personal right arising from the contract enforceable against third parties . This effect is generally referred to in doctrine and judicial decisions as the "additional effect of annotation" or, more commonly, the real effect .

A. The Additional Effect of the Commentary

The sale of immovable property can be asserted against all third parties who acquire similar rights or personal rights over the property after the annotation has been registered . However, the lifespan of the promised beneficiary protects them from interference by third parties acting in reliance on the land registry .

For example, if the owner (promisor) sells the immovable property to someone else after the annotation is made, the beneficiary (creditor) can assert the existence of the sales promise agreement and obtain registration of the ownership in their own name even against this new owner. This effect an enhanced personal right .

B. The Concept of the Intrinsic Effect of Commentary

In the literature, two main views emerge regarding the scope of protection provided by the commentary:

1. The Real Effect View: According to this view, with the annotation, a personal right is strengthened as if it were a real right, absolute protection . This protection ensures the beneficiary's freedom; once the annotation is registered on the immovable property, it provides superior protection against all subsequent rights.

2. The Enhanced Personal Rights View: This is the dominant view of the Supreme Court and the majority of legal doctrine. According to this view, the right a personal right holder, but the annotation expands the scope of this right, the right to be asserted against third parties (absoluteness) . In other words, the annotation changes the fact that the right is legally regulated (being a personal right holder), only preserving the right of third parties to dispose of it.

In conclusion, the effect of the annotation is as follows: When an annotation exists in the land registry, the third party licensing the property is informed of this annotation and, despite licensing the property, must relinquish the right of the promisee to demand registration of ownership.

Duration and Scope of Protection Against Third Parties

The annotation of a real estate sales promise agreement is permanent for five years . However, during this period, the beneficiary of the promise retains the right to request the registration of ownership in their own name, even if the owner of the real estate changes.

A. Five-Year Statute of Limitations

The five-year period is the duration of the annotation's protective effect in the land registry . This period begins after the annotation is registered. If the beneficiary does not file a registration lawsuit or secure the transfer of ownership within this period, the annotation lapses under the correction regime and is automatically deleted from the registry by the land registry officer. During this period, only the protection against third-party claims is eliminated, not the contract itself. The contract itself may remain valid under general prescription frameworks, but in this case, the beneficiary's right reverts to that of the relative (personal) right holder.

B. What types of savings does it protect against?

As a rule, an annotation provides protection against all real rights established on the immovable property after it is registered, as well as against the personal rights that are annotated . An example of this can be read as follows:

• Subsequent Sales: The sale and transfer of the promising owner's property to a third party.

• Mortgage Establishments: After a lien is placed on the immovable property, a mortgage or rights are acquired.

• Easements: Easements established after a registration of a legal right, such as the right of way or the right of residence.

• Attachment and Provisional Measures: When attachments, provisional measures, and bankruptcies are recorded following the annotation, the beneficiary's right to claim cannot be eliminated.

When the beneficiary registers the property in their own name as a result of the registration process, these rights (sometimes mortgages) established after the annotation are cancelled or removed from the registry by court order .

Problems Encountered in Practice and Their Solutions

The institution of annotating a promise to sell real estate can pave the way for certain important combined legal and financial rights.

A. Relationship with Construction Contracts Based on Land Share

In practice, in land share agreements between landowners and contractors , a sales promise annotation is placed in the land registry for the independent units that the landowner undertakes to transfer to the contractor. In this case, the effect of the annotation is complicated by factors such as the completion status of the construction and whether the contractor has fulfilled their obligation. The Supreme Court accepts that if the contractor has not fulfilled their obligation, the landowner can file a lawsuit for the removal of the annotation.

B. Factors Affecting the Authority of the Commentary

• Cancellation of the Contract: If the underlying contract (a sales promise contract) is cancelled due to a breach of intent (error, fraud, coercion), the legal basis for the annotation is eliminated, and the annotation must be removed.

• Statute of Limitations: If the annotation, the contract for the protection of the legal financial status, and the right to request registration included therein (the general 10-year statute of limitations period in Article 146 of the Turkish Code of Obligations) become time-barred, the annotation becomes meaningless and its cancellation can be requested. However, in its case law on equality, the Supreme Court accepts that the statute of limitations does not run if the beneficiary of the promise has possession (actual control) of the property.

Conclusion

The registration of a promise to sell real estate in the land registry is one of the most important protection mechanisms in Turkish Property Law. This process strengthens the personal right arising from the contract almost like a real right , absolutely protecting the promisee against the bad faith of the promisee or against subsequent rights of a third party . Within the five-year protection period, the promisee can utilize this powerful regime, which becomes an exception to the principle of security in the land registry system, by requesting the registration of the property in their own name.

This annotation institution plays a vital role in providing comprehensive legal protection to buyers, particularly in pre-sales and real estate investments within the construction sector. It ensures that rights arising from title deed transactions benefit from the transparency of the land registry, strengthening trust in real estate transactions. In the legal process, the correct and timely annotation is the most important step to take to prevent the beneficiary of the promise from suffering a loss of rights.