Promise-of-Sale Contract for Immovable Property — Validity and Land Registry Annotation

A promise-of-sale contract for immovable property is a preliminary contract between the parties that an immovable will be sold in the future. Learn about the notarial form requirement, the land registry annotation, its duration and the action for compulsory registration.

A promise-of-sale contract for an immovable is a preliminary contract in which one or both parties undertake to transfer the ownership of a specified immovable to the other in the future. Resting on the provisions on preliminary contracts (pactum de contrahendo) in Article 29 of the Turkish Code of Obligations, this contract type is one of the most important and most frequently used instruments in property law. Particularly for immovables over which construction servitude or condominium ownership has not yet been established, immovables encumbered by a mortgage or attachment, and land undergoing the planning process, the promise-of-sale contract is the principal means by which the parties secure a future transfer of ownership.

Legal Nature of the Promise-of-Sale Contract

A promise-of-sale contract for an immovable is by its legal nature a preliminary contract. Under TBK Art. 29 the parties may undertake by preliminary contract to conclude a contract in the future. In a promise-of-sale contract for an immovable the parties agree that an immovable will in future be transferred by an official contract of sale at the land registry. This contract creates a personal right, not a right in rem. In other words, a promise-of-sale contract does not of itself transfer ownership.

The contract imposes obligations on both parties (it is synallagmatic). The party promising to sell assumes an obligation to transfer the immovable, while the party promising to buy assumes an obligation to pay the price. Unilateral promise-of-sale contracts, in which only one party makes the promise, are also valid. In that case only the promising party assumes an obligation, and the other party acquires a right to purchase. The most fundamental difference between a promise-of-sale contract and a contract of sale is that the promise of sale does not transfer ownership directly. In a contract of sale, ownership passes to the other party upon transfer of title; in a promise of sale, only an undertaking that a sale will be made in future is given. The right arising from a promise-of-sale contract is therefore a personal claim and, under TMK Art. 1009, cannot be asserted against third parties unless annotated in the land register.

The Notarial Form Requirement

A promise of sale of an immovable is made in the form of an official record at a notary, under TBK Art. 29 and Arts. 60 and 89 of the Notaries Law. The land registry directorate's power over sales of immovables and the notary's power over promises of sale — and, since 4 July 2023, over contracts for the sale of immovables — are distinct. A promise of sale does not transfer ownership; it creates a future obligation to sell and register.

Mandatory Elements of the Contract

The contract must contain the identity of the parties and any authority to represent, an unambiguous identification of the immovable promised, the sale price or an objectively determinable method of fixing it, and the reciprocal obligations. It is not a condition of validity that the price be stated in figures alone; it must be determined or determinable. Payment, delivery, the date of registration, costs and any penalty clause should be expressly regulated.

The Land Registry Annotation and Its Legal Consequences

Either party may request annotation in the land register of a promise of sale drawn up by a notary (Land Registry Law Art. 26). The annotation does not convert the personal right into a right in rem; it makes it assertable against subsequent rightholders. If the sale or registration is not requested within five years of the annotation, the registry directorate deletes it of its own motion.

Duration of the Annotation and Its Removal

The annotation lasts five years and rests on Art. 26 of the Land Registry Law. On expiry it may be removed by deletion of the registry's own motion, at the parties' request, on termination of the contract, or by court order. The five-year annotation period is not the ten-year limitation period for the substantive claim and does not of itself interrupt or suspend limitation. The exceptions relating to transfer of possession and the rule of good faith are assessed on the facts.

The Action for Compulsory Registration

The buyer may seek compulsory registration provided there is a valid official contract, the promisor is the owner or is able to procure registration, the buyer has performed or tendered their own counter-obligation, and the obligation to register has fallen due. Where there are several promises relating to the same immovable, an earlier date does not automatically confer priority; the annotation, the promisor's ownership, the possibility of performance and the third party's good faith are examined together.

Limitation Period

A claim for registration arising from a promise of sale is as a rule subject to a ten-year limitation period running from maturity. The starting point is not in every case the date of the contract. Where possession of the immovable has been transferred to the buyer and the contract has in fact been performed over a long period, whether a plea of limitation offends the rule of good faith may be assessed by reference to the specific criteria in the case law. The land registry annotation is a five-year registry effect distinct from substantive limitation.

Termination of a Promise-of-Sale Contract

A promise-of-sale contract for an immovable may terminate for various reasons. Performance, mutual rescission, termination, limitation and expropriation of the immovable are the principal grounds. Termination means that the parties' rights and obligations cease.

Termination by performance is the most natural way for the contract to end. Where the immovable is transferred by a contract of sale at the land registry, the promise-of-sale contract has achieved its purpose and terminates automatically. Any annotation entered in the land register must then also be removed.

In the case of termination, the contract is brought to an end because of one party's breach. Under TBK Arts. 123-126, where the debtor is in default the creditor may allow an additional period and call for performance; if performance is not made within that period, the creditor may withdraw from the contract. On withdrawal, the parties come under obligations to restore what they have received.

The commencement of expropriation proceedings in respect of an immovable does not of itself transfer ownership to the administration merely by an administrative expropriation decision. The compensation and registration process in Art. 10 of the Expropriation Law and any urgent expropriation decision are assessed separately. If performance of the promisor's obligation to transfer subsequently becomes impossible through registration or another cause, the conditions in TBK Art. 136 as to impossibility without fault, notification and restitution of what has been received are examined; if the impossibility is attributable to the debtor, liability in damages may also arise. Any claims the promisee may have in respect of the expropriation compensation or loss are determined separately by reference to the annotation and the specific contract.

Problems Encountered in Practice and Their Solutions

Many problems arise in the application of promise-of-sale contracts for immovables. Foremost among them is a promise of sale of the same immovable being given to more than one person. Where there are several promises, neither the date of the contract alone nor the existence of an annotation alone creates an automatic rule of priority for all disputes. The validity and maturity of the promises, the date and rank of the annotation in the land register, the promisor's ownership and ability to perform, possession, and the good or bad faith of the subsequent rightholder are assessed together.

Another common problem is the subsequent creation of a mortgage, attachment or a right in rem or personal right in favour of a third party over the immovable promised. The annotation makes the personal right arising from the promise of sale assertable against subsequent rightholders within the framework of TMK Art. 1009 and Art. 26 of the Land Registry Law; it does not, however, mean that every subsequent entry is automatically disregarded. The date and rank of the annotation, the type of the subsequent entry, the provisions on compulsory execution and the third party's position are examined. An unannotated promise may also remain valid between the parties; as regards third parties, bad faith, collusion and the provisions on reliance on the land register are assessed on concrete evidence.

A change in the planning status of the immovable promised is another frequently encountered problem. Situations such as the immovable being allocated to a different purpose in the development plan, construction becoming impossible, or the parcel being reduced in size may lead to adaptation or termination of the contract. Under TBK Art. 138, in the event of excessive difficulty of performance the parties may ask the court to adapt the contract to the changed circumstances.

As a matter of succession law, where the promisor dies the obligations arising from the contract pass to the heirs. The heirs are obliged to perform the deceased's obligation to transfer arising from the promise-of-sale contract. If they refuse to do so, the promisee may bring an action for compulsory registration against them.

Advantages and Risks of a Promise-of-Sale Contract

A promise-of-sale contract for an immovable may offer various advantages to both seller and buyer. The buyer obtains a contractual right in respect of an immovable whose title cannot yet be transferred. A promise of sale may be used in particular for projects in which construction servitude or condominium ownership has not been established; the identifiability of the independent unit promised, the promisor's ownership or ability to procure registration in future, and consumer legislation must nonetheless be examined separately. An annotation in the land register strengthens protection against third parties within its statutory period.

From the seller's standpoint, a promise-of-sale contract is used to secure the sale of the immovable and to receive a deposit or instalment payments. The seller secures the sale at a specified price while being able to collect payments from the buyer.

The absence of an annotation may weaken the protection of the personal right against subsequent rightholders. Where the seller transfers the immovable to a third party, or a mortgage or attachment is entered over it, the annotation, the rank in the register, the third party's good or bad faith and the provisions on compulsory execution are assessed together. The availability and effect of an annotation should therefore be examined against the actual land registry record before the transaction.

In conclusion, a promise-of-sale contract for an immovable is an important legal instrument in property dealings and, where properly drawn up and annotated in the land register, effectively protects the parties' rights. Care in ensuring that the contract is made in notarial form, that the mandatory elements are set out in full, and that an annotation is entered in the land register is of critical importance in preventing future disputes.

This article has been prepared for general information purposes and does not constitute legal advice. In specific disputes, professional legal support must be obtained from a specialist attorney.

Frequently Asked Questions

Who may have a promise of sale annotated?

Either party.

How long does the annotation last?

Five years; it should not be confused with the ten-year limitation period for the substantive claim.

Must the price be stated in figures?

No; it must be determined or objectively determinable.

Is a valid contract alone sufficient for registration?

Ownership or the ability to perform, maturity and the buyer's counter-performance are also required.