Can You Recover Foreign Currency Paid Under a Property Sale Not Made Before a Notary? A Guide to Refunds in Invalid External Sales

In commercial real estate transactions — especially high-value deals involving warehouses, factories or land — the parties sometimes skip the official form requirements and reach an agreement through an "ordinary written" contract. Payment is made, the property may even be physically handed over; yet the title deed transfer never takes place. When the other party starts demanding an additional fee, the buyer is left facing the question: "how do I get this money back?" In this article, we examine the legal invalidity of real estate sales made without complying with the official form, and how the amount paid — in particular payments made in foreign currency — can be recovered.

Summary of the Situation

A company agrees with a counterparty to purchase a property in the nature of a warehouse for commercial use, and pays a significant sum, the greater part of it in foreign currency (for example, Euro). However, the contract between the parties was drawn up in ordinary written form, not at the land registry office or before a notary. As the process moves forward, the counterparty, instead of transferring the property, starts demanding an additional amount (for example, additional VAT). The buyer wishes to withdraw from the contract and recover the entire amount paid, both because the property has not been transferred and because of this unjustified additional demand.

The Legal Issue

Under Turkish law, real estate sales are subject to an official form requirement. Pursuant to Article 706 of the Turkish Civil Code, Article 237 of the Turkish Code of Obligations, Article 26 of the Land Registry Law and Article 60 of the Notaries Law, real estate sale contracts must be executed before an official officer (the land registry director or a notary). "External sale" contracts made without complying with this form are absolutely null and void; that is, they create no rights or obligations for the parties from the outset. So in that case, what happens to the amount already paid under the invalid contract? And if that amount was paid in foreign currency, will the refund also be claimed in the same currency?

What Does the Yargıtay (Court of Cassation) Say?

In an invalid contract, restitution is governed by unjust enrichment rules

According to the settled case law of the Yargıtay, in real estate sale contracts deemed invalid for failure to comply with the official form, the parties may reclaim what they have given under the rules of unjust enrichment (Yargıtay 3rd Civil Chamber, T. 2013; Yargıtay 13th Civil Chamber, T. 2012). This is the natural consequence of invalidity: since the contract is legally deemed non-existent, neither party may retain an enrichment in their assets that lacks a legitimate cause at the expense of the other.

A refund claim in foreign currency is possible

One of the most frequently asked questions in practice is whether, when payment was made in foreign currency, the refund can also be claimed in the same currency. The Yargıtay has taken a clear position in favor of the buyer on this point: in whichever currency the enrichment occurred, the restitution claim may also be asserted in that same foreign currency (Yargıtay 3rd Civil Chamber, T. 2025). In similar disputes, for example, payments made in Euro were ordered to be refunded in Euro in kind (Yargıtay 3rd Civil Chamber, T. 2023; Yargıtay 3rd Civil Chamber, T. 2020). In addition, under Article 99/3 of the Turkish Code of Obligations, the creditor also has the right to demand payment of a foreign currency receivable either in kind or in its Turkish Lira equivalent at the prevailing rate on the actual date of payment.

Type of interest and when it starts

The interest applicable to foreign currency receivables is, pursuant to Article 4/a of the Law No. 3095 on Legal Interest and Default Interest, the highest interest rate paid by state banks on a one-year time deposit account opened in that foreign currency (Yargıtay 3rd Civil Chamber, T. 2025; Yargıtay 13th Civil Chamber, T. 2010). The date from which interest starts to run is determined according to the following distinction:

• If a formal notice (ihtarname) was served: Interest starts to run from the date the notice was served and the debtor was thereby put in default (Yargıtay 3rd Civil Chamber, T. 2024).
• If no formal notice was served: Interest runs from the date the lawsuit was filed (Yargıtay 15th Civil Chamber, T. 2012; Yargıtay 13th Civil Chamber, T. 2014).
• If the buyer holds possession of the property: If the property was actually delivered to the buyer, the buyer cannot claim interest without returning the property; in that case, interest starts from the date the property was returned to the seller (Yargıtay 3rd Civil Chamber, T. 2013).

The strategic importance of serving a formal notice

Under the Code of Obligations, the debtor of a due and payable debt is put in default only upon the creditor's notice. For this reason, before filing suit, serving a formal notice through a notary is a critical step in order to start interest running and put the debtor in default (Yargıtay 13th Civil Chamber, T. 2014). The formal notice is at the same time an important means of proof for communicating the intention to withdraw from the contract and for concretizing the refund claim.

Points to Watch

• The official form requirement admits no exception. In real estate sales, a "handshake" or an ordinary written contract is legally invalid no matter how much good faith the parties acted with; this invalidity is taken into account by the court ex officio.
• If you paid in foreign currency, frame your refund claim in foreign currency as well. This is the safest strategy for eliminating exchange-rate losses that may arise during the course of the proceedings.
• Do not file suit without serving a formal notice. The formal notice both ensures that interest starts from an earlier date and strongly documents your intention to withdraw from the contract.
• The counterparty's unjustified additional demands (for example, an extra amount demanded later) can be an indicator in your favor. Such a demand can be treated as a sign that the counterparty will not perform the contract and that the refund process has begun.
• Identify the competent court correctly. Where one of the parties is a merchant and the matter is commercial in nature, the competent court is the Commercial Court of First Instance (Asliye Ticaret Mahkemesi).

Conclusion: What Should You Do?

The amount you paid under a real estate sale contract executed without complying with the official form requirement is not "lost" money. Even though the contract is invalid, thanks to the rules on unjust enrichment you have the right to recover the amount you paid — and if you paid in foreign currency, in that same currency. In this process:

1. Keep all documents relating to the payment (receipts, wire/EFT records, the contract, correspondence) complete and safe.
2. Immediately serve a formal notice putting the counterparty in default and granting a reasonable period for the refund.
3. If the refund is not made, file suit before the Commercial Court of First Instance claiming restitution of the amount you paid in kind (or its Turkish Lira equivalent at the exchange rate on the actual date of payment).
4. Remember that the counterparty's subsequently asserted unjustified additional demands (VAT, price difference, etc.) have no legal basis; such demands are an indicator that the contract will not be performed.

Since determining the right strategy in disputes of this kind — particularly on technical issues such as foreign currency, the starting date of interest and the competent court — is of great importance, we recommend obtaining support from a commercial law specialist at the outset of the process.