What risks do foreign investors face when buying shares in a Turkish company that owns real estate? Learn about hidden debts, mortgages, tax liabilities, foreign ownership rules, shareholder disputes and due diligence in Turkey.

Foreign investors sometimes acquire Turkish real estate indirectly by purchasing shares in a Turkish company that already owns the property rather than buying the property itself. This can be commercially attractive because the registered owner of the property does not change: the company continues to own the real estate while control of the company passes to the buyer.

However, a share acquisition can create significantly broader risks than a direct property purchase. The buyer is not acquiring an isolated building, hotel, factory, warehouse or development site. The buyer is acquiring an interest in a legal entity with its existing assets, contracts, debts, tax history, employees, disputes and potential liabilities.

For foreign investors acquiring property-owning companies in Ankara, Istanbul, Izmir, Mersin, Bursa and throughout Turkey, both corporate due diligence and real-estate due diligence should therefore be completed before signing or closing.

What Does the Foreign Investor Actually Buy?

In a share acquisition, the foreign investor purchases shares in the company.

The real estate remains registered in the company’s name.

This is fundamentally different from an asset transaction in which title to the property itself is transferred from the seller to the foreign investor or another purchasing entity.

For example, assume a Turkish company owns a commercial building worth USD 5 million. A foreign investor purchases 100% of the company’s shares.

After closing, the company still owns the building. The investor owns the company.

This distinction is critical because the company’s liabilities remain inside the company after the share transfer.

What Is the Biggest Risk of Buying the Company Instead of the Property?

The principal risk is inherited corporate exposure.

A direct purchaser can focus primarily on the property and liabilities attached to it. A share purchaser must investigate the entire company.

Turkish joint-stock and limited liability companies are separate legal entities, and company assets belong to the company itself. Official Ministry of Trade guidance confirms that joint-stock and limited liability companies are capital companies and that the company itself is responsible for its corporate debts within the applicable legal framework.

Therefore, changing shareholders does not normally erase obligations already incurred by the company.

A company that appears to own a valuable property may also have substantial undisclosed liabilities.

Can the Company Have Hidden Debts?

Yes.

The company may have bank loans, supplier debts, unpaid contractual obligations, employee claims, tax exposures, administrative penalties, litigation, guarantees, related-party debts or other liabilities.

These obligations do not disappear merely because the company’s shares are sold.

This is why the purchase price should not be negotiated simply by looking at the market value of the real estate.

If a company owns a property worth USD 10 million but has USD 4 million of debt, the economic value of the shares is obviously different from the gross property value.

A professional acquisition therefore requires an analysis of both assets and liabilities.

Can There Be a Mortgage on the Property?

Yes.

One of the first checks should be whether the company’s property is subject to mortgages, attachments, easements, restrictions or other registered rights.

Current official investment guidance specifically recommends examining mortgages, liens and similar restrictions before proceeding with a real-estate transaction.

This remains equally important in a share acquisition.

A foreign buyer may purchase all shares in the company only to discover that the company’s most valuable property secures a substantial bank loan.

The share purchase itself does not automatically remove that mortgage.

Can the Property Be Subject to Attachment?

Potentially.

A property-owning company may be involved in enforcement proceedings arising from unpaid debts. Its real estate may therefore be exposed to existing or future enforcement measures.

A title search should identify registered attachments, but legal due diligence should go further and investigate pending proceedings capable of affecting the property after closing.

The buyer should not assume that a clean-looking building means a clean company.

What If the Company Has Given Guarantees for Another Company?

This is a particularly important acquisition risk.

A company may have provided guarantees, security or other commitments in favor of a shareholder, affiliate or group company.

The liability may have no obvious relationship with the real estate itself.

For example, a property-owning company may have guaranteed financing obtained by another company controlled by the seller. If that financing later defaults, the acquired company can potentially face significant financial exposure.

Due diligence should therefore investigate contingent liabilities, not merely amounts appearing as ordinary unpaid invoices.

Can Tax Liabilities Remain After the Share Sale?

Yes.

The company continues to exist after the shareholders change.

Consequently, historical corporate tax, value-added tax, withholding, payroll, property-related and other tax exposures can remain relevant after closing.

A foreign investor purchasing shares should therefore investigate previous tax filings, tax audits, outstanding assessments, disputes and potentially aggressive historical transactions.

The risk is particularly significant where the company has been operating for many years rather than existing solely as a passive property-holding vehicle.

Can Historical Transactions Become a Problem Later?

Yes.

An apparently healthy company can carry risks arising from transactions completed before the foreign buyer became a shareholder.

Examples can include questionable related-party payments, undervalued asset transfers, undisclosed loans to shareholders, unusual cash withdrawals, guarantees, non-arm’s-length contracts or transactions challenged by creditors or tax authorities.

The buyer should therefore review an appropriate historical period rather than examining only the company’s most recent balance sheet.

Can There Be Problems With the Company’s Title to the Property?

Yes.

The fact that the company appears as registered owner does not eliminate all property risks.

The acquisition history should be reviewed to determine how the company obtained the property and whether there are pending ownership disputes, cancellation claims, inheritance disputes, contractual claims or other litigation affecting title.

Official guidance emphasizes that ownership is established through registration with the Land Registry Directorate and that property restrictions should be investigated before a transaction.

A share purchaser should conduct the same investigation even though the registered owner will not change at closing.

Should Zoning and Construction Documents Be Checked?

Absolutely.

A company can legally own a building that nevertheless has serious planning, construction or use problems.

Due diligence may need to examine zoning status, construction authorization, approved architectural plans, occupancy authorization, unauthorized extensions, subdivision issues, permitted use and administrative enforcement measures.

This is especially important when purchasing a company that owns a hotel, factory, warehouse, shopping facility or development project.

The economic value of the company may depend almost entirely on whether the property can lawfully be used for the buyer’s intended business.

Can Tenants Create Problems?

Yes.

The company may have existing tenants whose agreements continue after the share acquisition because the property owner—the company—has not changed.

The investor should therefore review all leases carefully.

Important issues include lease duration, renewal rights, rent adjustment provisions, deposits, termination rights, subleases, options, preferential rights and disputes with tenants.

A buyer acquiring a company because it owns an attractive commercial property may discover after closing that the property is subject to a long-term lease on commercially unfavorable terms.

Are There Special Risks for Foreign Share Buyers?

Yes.

The foreign investor must consider Article 36 of Land Registry Law No. 2644.

The law applies special rules where qualifying foreign investors directly or indirectly own at least 50% of a Turkish property-owning company or possess the relevant power to appoint or dismiss the majority of persons with management rights.

Importantly, Article 36 does not concern only companies that were already foreign-owned when they acquired the property.

It also addresses situations where foreign investors acquire 50% or more of the shares of a domestically capitalized company that already owns real estate, as well as transactions in which foreign ownership of an existing foreign-capital property owner reaches 50% or more following a share transfer.

This makes the rule directly relevant to foreign share acquisitions.

Why Is the 50% Threshold Critical?

Consider a Turkish company that owns a valuable warehouse and currently has only domestic shareholders.

A foreign investor proposes to acquire 60% of the company.

The property itself is not being sold. Nevertheless, Article 36 specifically addresses the acquisition by foreign investors of 50% or more of a property-owning domestically capitalized company’s shares, directly or indirectly.

The investor therefore cannot assume that purchasing shares completely avoids foreign-property regulation.

The company’s post-closing ownership and control structure must be analyzed before the share transfer.

Does Indirect Foreign Ownership Matter?

Yes.

Article 36 expressly addresses direct and indirect ownership and looks at the foreign investor’s ultimate ownership percentage in relevant structures.

For example, using one Turkish company to purchase shares in another Turkish property-owning company does not necessarily remove the transaction from the foreign-capital framework.

The complete corporate ownership chain should therefore be mapped before closing.

Are Management Rights Relevant Even Below 50%?

They can be.

Official investment guidance states that the foreign-capital property regime applies where foreign investors hold at least 50% of the shares or have the right to appoint and dismiss the majority of the board of directors.

Therefore, reviewing the nominal share percentage alone can be misleading.

Shareholder agreements, privileged shares, board appointment rights and governance arrangements should also be examined.

Can the Company’s Property Location Create a Problem?

Yes.

Foreign-capital property ownership can be affected by restrictions concerning military prohibited zones, military security zones and private security zones. Official guidance confirms that location-specific permissions can apply to companies falling within the foreign-capital framework.

A foreign buyer should therefore identify every property owned by the target company and check whether its location creates a regulatory issue following the change in foreign ownership.

This is particularly important where the company owns multiple parcels rather than a single building.

Could the Company Be Required to Dispose of Property?

Potentially, if property is held contrary to the applicable Article 36 requirements and the violation is not remedied.

Official Land Registry guidance states that real estate and limited property rights acquired contrary to Article 36 may be required to be disposed of within the period granted by the competent authority, with further statutory consequences if disposal does not occur.

Accordingly, Article 36 compliance is not a minor formality.

It can affect the continued ownership of the underlying asset.

What If the Company Owns Several Properties?

Every material property should be reviewed separately.

A company may own a clean office in Ankara, development land with planning problems in Istanbul, a warehouse with a mortgage in Mersin, an industrial facility in Bursa and another property affected by litigation in Izmir.

Purchasing shares means obtaining exposure to the company containing all of these assets and their associated risks.

A portfolio-level due diligence schedule is therefore essential.

Can Shareholder Disputes Affect the Real Estate?

Yes.

If the foreign investor acquires less than 100%, corporate governance becomes particularly important.

Disputes can arise concerning sale of the property, refinancing, mortgages, distributions, capital increases, appointment of directors, related-party transactions and use of the real estate.

A 50/50 structure can create deadlock where neither shareholder can make important decisions without the other.

The share purchase agreement and shareholders’ agreement should therefore address governance, reserved matters, deadlock, exit rights and restrictions on transferring or encumbering the company’s major property.

Can the Seller Take Money or Assets Out Before Closing?

Potentially, unless the transaction documents prevent it.

Between signing and closing, a seller controlling the company could theoretically cause the company to distribute cash, repay shareholder loans, enter new contracts, grant security, incur debt or dispose of assets.

The share purchase agreement should therefore include appropriate pre-closing conduct restrictions.

For larger acquisitions, the buyer may also require specific protections against value leakage.

Is a Warranty From the Seller Enough?

No.

Representations and warranties are important, but they do not replace due diligence.

A seller may warrant that the property is free of undisclosed encumbrances, that taxes have been paid and that there is no material litigation. But if the seller later cannot satisfy an indemnity claim, contractual protection may have limited practical value.

The buyer should therefore verify important matters independently wherever possible.

What Protections Should Be Included in the Share Purchase Agreement?

The agreement should be tailored to the target company and property.

Important protections may concern title to shares, title to real estate, mortgages and attachments, corporate authority, financial statements, debt, taxes, litigation, employment liabilities, leases, planning and construction compliance, environmental issues, insurance, related-party transactions and undisclosed guarantees.

Material identified risks may require specific indemnities rather than reliance only on general warranties.

Depending on the transaction, part of the purchase price may also be retained, deferred or placed in an agreed security arrangement.

Should the Buyer Review the Company’s Books?

Yes.

Real-estate due diligence alone is insufficient in a share transaction.

The buyer should review financial statements, accounting records, bank debts, material contracts, shareholder accounts, tax information, related-party transactions and contingent liabilities.

A building worth millions can be owned by a company with a deeply problematic balance sheet.

The buyer is purchasing the company containing that balance sheet.

Should Corporate Registry Records Be Reviewed?

Yes.

The investor should verify the company’s incorporation, current shareholders, capital, authorized representatives, management structure and registered corporate documents.

Official Ministry of Trade guidance confirms that Turkish commercial companies are regulated under the Turkish Commercial Code and identifies joint-stock and limited liability companies as the principal capital-company structures.

Historical registry records can also reveal previous capital changes, mergers, management changes and other events requiring further investigation.

Is Buying Shares Better Than Buying the Property Directly?

Neither structure is automatically better.

A share acquisition may preserve existing contracts, licenses, financing and operational arrangements. It may also be commercially useful where the real estate forms part of an operating business.

A direct asset acquisition, however, can provide greater separation from historical company liabilities.

The correct structure depends on the property, company, financing, tax consequences, regulatory requirements and buyer’s commercial objective.

The decision should therefore be made before signing, not after the buyer has already committed to a transaction structure.

Practical Example: Hidden Bank Loan

A foreign investor purchases all shares of a Turkish company owning an office building in Ankara.

After closing, the investor discovers that the company guaranteed a large bank facility obtained by an affiliated business.

Although the office itself was accurately valued, the investor purchased a company containing an undisclosed contingent liability.

A proper financial and contractual due diligence process could have identified the guarantee before closing.

Practical Example: Mortgage Over a Hotel

A foreign investor acquires a company owning a hotel in Istanbul.

The hotel is worth USD 15 million, but the property secures substantial existing financing.

Because the company remains the property owner after the share sale, the mortgage remains relevant. The share transfer itself does not create clean title.

Practical Example: Foreign Ownership Reaches 60%

A foreign company purchases 60% of a Turkish company that already owns a logistics warehouse in Mersin.

Even though no direct property transfer occurs, Article 36 specifically addresses foreign investors acquiring 50% or more of shares in a domestically capitalized company that owns real estate.

The foreign-capital property consequences should therefore be reviewed before closing.

Practical Example: Development Land

A foreign investor purchases a Turkish company because its principal asset is development land in Izmir.

After closing, the investor discovers that the anticipated project cannot be developed at the expected density because of planning restrictions.

The legal title may be valid, but the commercial assumption underlying the acquisition can still fail.

This is why zoning due diligence is as important as ownership due diligence.

Practical Example: 50/50 Property Company

A foreign investor purchases 50% of a company owning commercial real estate in Bursa, while the seller retains the remaining 50%.

A later disagreement arises over whether the building should be sold or refinanced.

Without carefully drafted governance and deadlock provisions, the company can become effectively unmanageable despite owning a valuable asset.

Frequently Asked Questions

1. If I buy the shares, do I personally own the company’s property?

No. The company remains the registered owner. You own shares in the company.

2. Do company debts disappear when the shareholders change?

No. The company’s existing obligations generally remain with the company after the share transfer.

3. Should I check the property title even though I am only buying shares?

Absolutely. Mortgages, liens and other restrictions can materially affect the value of the company. Official investment guidance specifically recommends checking such burdens.

4. Can a foreign investor buy 100% of a Turkish property-owning company?

Potentially, yes, but Article 36 and the foreign-capital property rules must be examined.

5. Does buying shares avoid foreign real-estate restrictions?

No. Article 36 expressly addresses certain share acquisitions involving companies that already own Turkish real estate.

6. Does indirect foreign ownership count?

Yes. The statutory framework expressly addresses direct and indirect foreign ownership.

7. Can tax debts remain after closing?

Yes. Because the company itself continues to exist, historical tax exposure can remain relevant after the shares change hands.

8. What if the property is leased?

Existing leases can remain economically important because the company continues to own the property. All material leases should be reviewed before closing.

9. What documents should foreign buyers investigate?

The review should cover the corporate registry, articles of association, share ownership, financial statements, debts, tax history, litigation, material contracts, guarantees, property title, mortgages, attachments, leases, planning status, construction documentation and Article 36 compliance.

10. Is a share purchase agreement enough to protect the buyer?

No. The agreement should contain strong contractual protections, but independent corporate, financial, tax and property due diligence remains essential.

Legal Assistance for Foreign Investors Buying Turkish Property-Owning Companies

Buying shares in a Turkish company that owns real estate can provide an efficient route to acquiring an existing business or property investment, but it should not be treated as equivalent to purchasing a building directly.

The central legal risk is that the company survives the transaction together with its history. Its property remains its property, but its debts, contracts, tax exposure, guarantees, employees, litigation and regulatory risks also remain relevant. The foreign buyer therefore needs to investigate both sides of the balance sheet.

Foreign investors face an additional issue under Article 36 of Land Registry Law No. 2644. The legislation expressly addresses circumstances in which foreign investors directly or indirectly acquire at least 50% of a property-owning Turkish company, as well as relevant changes in existing foreign ownership. Current official investment guidance likewise confirms that Turkish companies with at least 50% foreign ownership or qualifying foreign management control are subject to the special foreign-capital real-estate framework.

Accordingly, a foreign buyer should complete legal due diligence before signing or before the transaction becomes unconditional. At minimum, the review should establish who owns the shares, what the company actually owes, whether its properties are clean, whether development and use are lawful, whether undisclosed guarantees exist and whether the proposed foreign ownership structure creates additional regulatory requirements.

Firat Fesih Kaya Law Office provides legal assistance to foreign investors, international companies, private equity investors and entrepreneurs acquiring shares in Turkish companies that own real estate in Ankara, Istanbul, Izmir, Mersin, Bursa and throughout Turkey.

Legal assistance may include corporate and real-estate due diligence, title investigations, mortgage and attachment reviews, examination of company debts and guarantees, shareholder and management analysis, review of Article 36 foreign-ownership requirements, preparation and negotiation of share purchase agreements, warranties and indemnities, shareholder agreements, closing conditions and post-acquisition restructuring.

Phone: +90 312 434 22 22
Mobile / WhatsApp: +90 532 769 22 22
Email: info@firatfesihkaya.av.tr
Office: Mevlana Boulevard No:221, Yildirim Tower, Balgat, Cankaya, Ankara, Turkey

The key 2026 principle is straightforward: buying shares in a Turkish company that owns valuable real estate means buying exposure to the company, not merely the property. Foreign investors should therefore investigate the company’s complete legal and financial history, the title and regulatory status of every material property, and the consequences of crossing the foreign-ownership and control thresholds before completing the acquisition.