Foreign Buyer Purchases Property From a Company in Financial Difficulty in Turkey: Due Diligence Guide (2026 Updated Guide)

Foreign buyers purchasing Turkish property from a financially distressed company should investigate title, mortgages, attachments, insolvency, creditor claims, authority to sell and payment risks before completing the transaction.

Buying real estate from a company experiencing financial difficulty can create significantly greater risks than an ordinary property transaction. The property may appear legally transferable, yet the seller may have unpaid bank loans, tax or social security debts, enforcement proceedings, mortgages, attachments, pending litigation or insolvency-related problems. In more serious cases, creditors may later allege that the sale was designed to remove assets from their reach. A foreign buyer should therefore investigate not only the property itself but also the financial and legal position of the selling company, the authority of the persons signing the transaction, the commercial reasonableness of the purchase price and the manner in which payment will be made.

Why Is Buying From a Financially Distressed Company Riskier?

A company experiencing financial problems may be attempting to generate urgent liquidity, repay secured creditors or sell non-core assets. None of these circumstances automatically makes the transaction unlawful. However, financial distress increases the possibility of enforcement measures, creditor disputes, insolvency proceedings and challenges concerning transactions completed shortly before financial collapse.

For a foreign buyer, conventional title-deed due diligence may therefore be insufficient.

Investigate the Seller Before Paying a Deposit

The buyer should identify the exact legal entity owning the property. Similar corporate names, subsidiaries and related companies can cause confusion.

The company shown as owner in the land registry should be compared with the entity named in the reservation agreement, preliminary sale documentation, invoice, payment instructions and final transfer documents.

Confirm Ownership Through the Land Registry

The first property-specific investigation should establish who currently owns the real estate and what rights or restrictions are registered against it.

The buyer should not rely solely on a copy of a title deed supplied by the seller. The current registry position must be reviewed as close as possible to completion.

Check for Mortgages

A distressed company may have mortgaged its real estate to secure bank or commercial financing. A mortgage does not necessarily make a sale impossible, but the buyer must understand whether the property will be transferred subject to the mortgage or whether it will be released as part of closing.

Paying the full purchase price while assuming that the seller will remove the mortgage later can create substantial risk.

Check for Attachments

Creditors may have placed attachments on the property through enforcement proceedings. The buyer should determine whether any attachment prevents or materially affects the intended transfer and what must occur for it to be removed.

A transaction should not proceed merely because the seller says that the debt “will be paid soon.”

Check for Court-Ordered Restrictions

Interim injunctions, litigation annotations or other restrictions can affect transferability or expose the buyer to an existing dispute.

The legal effect of each annotation should be examined individually.

Investigate Tax and Public Debt Exposure

Financially distressed companies may owe taxes or other public debts. The existence of corporate debt does not automatically mean that every company asset cannot be sold, but enforcement measures may affect the property or sale proceeds.

The buyer should determine whether relevant public-law enforcement has already reached the property.

Investigate Enforcement Proceedings Against the Seller

A broader review of enforcement exposure can provide important context. Numerous enforcement proceedings may indicate that the company’s financial problems are more serious than disclosed during negotiations.

This information can affect the buyer’s decision regarding price, payment structure and closing protections.

Check Whether the Company Is in Concordat Proceedings

A company facing severe financial distress may seek concordat protection. If concordat proceedings exist, the proposed sale should be reviewed carefully within the applicable insolvency framework.

The buyer should not assume that ordinary management authority continues unchanged for every transaction.

Check Whether Bankruptcy Proceedings Exist

If the seller has entered bankruptcy, control over company assets can be fundamentally different from an ordinary corporate sale.

The buyer must determine who legally has authority to dispose of the property and whether the proposed transaction can lawfully proceed.

A Pending Insolvency Risk Also Matters

Even where no formal insolvency proceeding exists on the signing date, evidence that the company is unable to pay its debts can become relevant to later creditor disputes.

The transaction should therefore be structured as a genuine arm’s-length purchase supported by objective commercial evidence.

Can Creditors Challenge the Sale Later?

Potentially. Turkish enforcement and insolvency law contains mechanisms through which certain transactions prejudicing creditors may be challenged under the conditions established by law.

This does not mean that every sale by a financially troubled company can be cancelled. The transaction’s timing, consideration, parties, financial circumstances and other facts can become important.

Market Value Is Particularly Important

A foreign buyer should be cautious where a distressed company offers valuable real estate at a dramatically reduced price.

A low price may be commercially explainable because the seller urgently needs liquidity, but a significant departure from market value can create additional questions if creditors later challenge the transaction.

An independent valuation can provide important evidence.

Keep the Valuation Report

The buyer should preserve the valuation used when negotiating the price. The report can help demonstrate that the consideration reflected the property’s actual condition and market circumstances at the time of sale.

The valuation should not be created merely after a dispute begins.

Investigate Relationships Between Buyer and Seller

Transactions between related parties can receive greater scrutiny in creditor disputes.

If the foreign buyer, its shareholders or directors have connections with the selling company, those relationships should be identified and legally assessed before completion.

Avoid Artificial Payment Arrangements

The purchase price should follow a transparent and documented payment structure.

Unrecorded cash payments, payments to unrelated third parties or unexplained offshore transfers can make it more difficult to demonstrate that the transaction was genuine and that the seller actually received the consideration.

Pay the Correct Seller

Payment instructions should be checked against the ownership and contractual structure. If the seller requests payment to an affiliate, shareholder, director or creditor, the legal reason should be documented.

A foreign buyer should not redirect substantial purchase funds based solely on an informal email.

Direct Payment to a Bank May Sometimes Be Part of Closing

Where a mortgage must be released, the parties may structure closing so that an agreed portion of the purchase price is applied to the secured debt.

The documentation should clearly establish how payment results in release of the mortgage and transfer of clean title.

Verify Corporate Authority to Sell

The buyer should determine whether the persons representing the company have authority to complete the transaction.

Review corporate representation records, signature authority and any required internal corporate approvals.

Board or Shareholder Approval May Need Review

Depending on the company’s structure, internal rules and characteristics of the transaction, corporate approvals may be relevant.

A high-value disposal representing a substantial company asset deserves particular scrutiny.

Check for Unauthorized Signatures

Foreign buyers should verify the identity and authority of individuals signing preliminary contracts, payment instructions and other documents.

A company employee involved in negotiations does not necessarily have authority to sell company real estate.

Power of Attorney Must Be Examined Carefully

If the seller acts through an attorney-in-fact, verify that the power of attorney provides sufficient authority for the proposed transaction and remains valid.

The buyer should not rely on an informal translation or partial copy where substantial funds are involved.

Investigate the Property’s Legal Status Separately

Seller due diligence does not replace property due diligence.

Review zoning, building permits, occupancy status, condominium or construction servitude status, independent-unit information and other matters relevant to the particular property.

Check for Unauthorized Construction

The physical property should correspond with official records.

Extensions, enclosed terraces, additional floors or altered commercial areas can create regulatory and valuation problems even where ownership itself is clear.

Verify the Independent Unit

For apartments, offices and commercial premises, confirm that the unit shown to the buyer corresponds to the independent unit recorded in the registry.

Foreign purchasers should not rely solely on unit numbers used by the seller’s marketing department.

Investigate Existing Leases

A company may have leased the property to another person or business. Determine whether a tenant occupies the premises and whether the lease will continue after the sale.

Possession should not be assumed merely because ownership transfers.

Check for Long-Term Commercial Rights

For commercial property, examine whether tenants or other parties claim contractual rights affecting possession, use or income.

These issues can materially affect investment value.

Review Pending Litigation Concerning the Property

Determine whether ownership, construction, contractual rights or another aspect of the property is already disputed.

A buyer acquiring property while litigation is pending may face consequences that should have been assessed before closing.

Deposits Require Special Protection

A foreign buyer should avoid paying a large non-refundable deposit before completing basic legal checks.

The preliminary agreement should address what happens if due diligence reveals a mortgage, attachment, insolvency proceeding, authority problem or other material risk.

Include Due-Diligence Conditions

Where appropriate, the transaction documentation can make completion conditional upon specified legal requirements being satisfied.

This can protect the buyer if previously undisclosed risks emerge before title transfer.

Include Representations and Warranties

The seller may be required contractually to make representations concerning ownership, encumbrances, litigation, insolvency status, corporate authority and other material matters.

These provisions do not replace independent investigation, but they can strengthen contractual remedies.

Consider Indemnification Provisions

Where identifiable risks remain, the agreement may allocate responsibility for losses resulting from undisclosed debts, title problems or breaches of seller representations.

The enforceability and practical value of an indemnity should be assessed in light of the seller’s financial condition.

A Claim Against an Insolvent Seller May Have Limited Value

A strong contractual indemnity is less useful if the seller later has no assets.

This is why transaction structure and pre-closing protection are particularly important when purchasing from a distressed company.

Avoid Paying the Entire Price Too Early

Where legally and commercially appropriate, payment should be coordinated with satisfaction of closing conditions and title transfer.

The buyer should understand precisely when ownership changes and what happens to the money if transfer cannot be completed.

Use Traceable Banking Channels

Maintain complete evidence of every payment, including bank transfer records, contractual references and payment instructions.

This evidence may later be essential to demonstrate the genuine purchase price.

Foreign Exchange and Banking Compliance Should Be Planned

Foreign investors transferring substantial funds into Turkey should coordinate the payment structure before closing and maintain documentation showing the source and purpose of funds where required by the relevant banking process.

Unexpected banking delays should not be discovered on the scheduled transfer date.

Buying Shares Is Different From Buying the Property

A seller may suggest purchasing shares in the company that owns the property instead of purchasing the real estate directly.

These structures involve fundamentally different risks. A share buyer may indirectly acquire the company’s historical liabilities, contractual obligations, tax exposure and litigation risks.

A transaction should not be converted from an asset purchase into a share acquisition merely to simplify title transfer without comprehensive corporate due diligence.

Examine the Source of the Seller’s Financial Difficulty

Understanding why the company is distressed can materially affect the risk assessment.

A temporary cash-flow problem is different from extensive litigation, unpaid taxes, defaulted bank financing or imminent insolvency.

Preserve Evidence of Good-Faith Due Diligence

Keep valuation reports, registry investigations, corporate documents, correspondence, payment records and professional reports.

If creditors later question the transaction, contemporaneous evidence can be considerably more valuable than explanations reconstructed years later.

What If an Attachment Appears Before Closing?

Do not proceed automatically. Determine the legal effect of the attachment and whether it can be removed through a properly documented closing mechanism.

The purchase agreement should address newly registered encumbrances.

What If an Attachment Appears After the Transfer?

The answer depends on the timing and legal basis of the creditor’s rights. The buyer should obtain immediate legal analysis rather than assuming that registration of ownership resolves every possible creditor claim.

What If the Seller Enters Insolvency After the Sale?

A later insolvency does not automatically invalidate every earlier sale. However, transactions completed before insolvency may be examined under applicable creditor-protection rules.

The commercial reality, consideration, timing and relationships between the parties can become important.

Foreign Investors Should Avoid “Emergency Discount” Pressure

A distressed seller may tell the buyer that an unusually favorable price is available only if money is transferred immediately.

Urgency should increase due diligence rather than eliminate it.

2026 Due Diligence Strategy

For a foreign investor purchasing property from a financially distressed Turkish company, the safest approach is to conduct property, corporate, enforcement and insolvency due diligence simultaneously. The buyer should investigate ownership, mortgages, attachments, litigation, corporate representation, financial distress, creditor exposure, valuation and payment structure before becoming economically committed to the transaction.

Lawyer Fırat Fesih Kaya emphasizes a transaction-based approach in which title transfer, release of encumbrances and payment are coordinated rather than treated as separate events. This is particularly important where the seller needs the buyer’s funds to discharge an existing secured debt.

Frequently Asked Questions

Can a foreigner legally buy property from a company in financial difficulty?

Yes, financial difficulty by itself does not automatically prevent a company from selling property. However, the company’s legal status, authority to dispose of assets, registered encumbrances and creditor risks must be examined.

Can a mortgaged property be purchased?

Potentially. The buyer should understand whether the mortgage will remain or be released as part of the closing structure.

Can creditors later challenge the property sale?

Potentially, where the legal requirements for creditor-protection remedies are satisfied. The transaction’s timing, consideration, parties and surrounding financial circumstances can become important.

Is buying significantly below market value risky?

It can increase risk, particularly where the seller is financially distressed. An independent valuation and documented commercial explanation can be important.

Should the buyer check the company’s debts?

Yes. Corporate, enforcement and insolvency due diligence can reveal risks that a title-deed examination alone may not show.

What happens if the company enters bankruptcy before title transfer?

The buyer should immediately reassess who has authority over the property and whether the transaction can legally proceed. Do not make further payments without reviewing the insolvency position.

Is a deposit safe if the seller later becomes insolvent?

Not necessarily. Recovery can become difficult. The amount, timing and contractual protection surrounding any deposit should therefore be considered carefully.

Should the buyer purchase the company shares instead?

Not without separate corporate due diligence. Purchasing the company can expose the investor to liabilities that would not ordinarily transfer with a direct real-estate acquisition.

How should the purchase price be paid?

The payment structure should be transparent, traceable and coordinated with the title-transfer and encumbrance-release mechanism. Unexplained third-party payments should be avoided.

What is the most important protection for a foreign buyer?

Do not investigate only the property. When the seller is financially distressed, investigate the seller, its authority, creditor exposure and insolvency position as carefully as the title itself, and coordinate payment with a legally secure closing structure.

Client-Focused Legal Support for Foreign Property Buyers

Purchasing real estate from a financially distressed company can involve mortgages, attachments, creditor claims, enforcement proceedings, concordat or bankruptcy risks, corporate authority issues and challenges to transactions completed before insolvency. Fırat Fesih Kaya Law Office assists foreign individuals, investors and international companies with legal due diligence before acquiring real estate in Turkey. Lawyer Fırat Fesih Kaya provides legal assistance in title and encumbrance investigations, seller-company due diligence, contract review, corporate authority checks, payment and closing structures, creditor-risk analysis and disputes arising after property acquisition.

Phone: +90 312 434 22 22

Mobile / WhatsApp: +90 532 769 22 22

Email: info@firatfesihkaya.av.tr

Address: Mevlana Boulevard No:221, Yıldırım Tower, Office No:148, 06520 Balgat, Çankaya, Ankara, Turkey