Did the Bank Put a Mortgage on the Apartment You Bought Under a Promise of Sale? Conditions for Winning a Title Annulment and Mortgage Removal Case

There is a frustrating situation commonly encountered in build-and-sell construction projects and pre-paid housing sales: the buyer has paid all instalments and even moved into the property, yet the property is still registered in the title registry in the name of the contractor or landowner, and a bank mortgage has been placed on it as security for a loan taken by the contractor. In this situation, the buyer naturally asks: "I never knew about this mortgage — how can a mortgage be placed on the property I paid for, and can I have it removed?" This article examines the legal status of bank mortgages established after a promise-of-sale agreement and the conditions for winning a title annulment and mortgage-removal lawsuit.

Summary of the Situation

A person purchases a property under construction, or already completed, from a contractor or landowner under a promise-of-sale agreement (satış vaadi sözleşmesi), pays the full price and physically moves into the property. However, because the transfer of title has not yet taken place, the property is still registered in the seller's name. The seller uses this property as collateral to obtain a bank loan, and a mortgage is established on the property. The buyer wants to have their independent unit registered in their own name free of the mortgage.

The Legal Issue

Two fundamental principles conflict in this type of dispute:

• Reliance on the title registry (Turkish Civil Code (TMK), Article 1023): The acquisition of third parties (banks) who act in good faith relying on the title record is protected.
• Improper registration (TMK, Article 1024): If a right in rem has been registered improperly, third parties who knew or should have known this cannot rely on that registration.

The core of the issue is whether the bank should have known, at the time it extended the loan, that the mortgaged property had in fact already been sold to and delivered to a buyer. If the bank could have learned of this through reasonable investigation, it cannot benefit from the protection of good faith, and the mortgage may be regarded as an "improper registration."

What Does the Court of Cassation Say?

Banks' duty to investigate as a "prudent merchant"

Article 18/2 of the Turkish Commercial Code (TTK) requires merchants (including banks) to act as a "prudent businessperson" in their commercial activities. Court of Cassation case law emphasizes that banks are obliged to investigate the status of the property they take as collateral when extending a loan:

• It has been held that banks cannot benefit from the protection of reliance on the title registry, because they were in a position to learn that the property might have been transferred under a land-share-for-construction agreement when extending the loan (Kayseri Regional Court of Appeal, 6th Civil Chamber, 2023).
• It has been stated that the bank could have determined through a simple inquiry that the unit had been sold, and that its failure to fulfil this duty rendered the mortgage an improper registration (Court of Cassation, 6th Civil Chamber, 2025).
• It has been emphasized that the bank has a duty to obtain an appraisal review and conduct risk analysis, and that relying solely on the title record is contrary to the duty of care (Court of Cassation, 7th Civil Chamber, 2024).

Payment and actual delivery weaken the bank's good-faith claim

The fact that the buyer has performed all obligations (payments) arising from the promise-of-sale agreement, and that the property has been actually delivered, are decisive factors in winning the case:

• Where the plaintiff had paid all instalments and the property had been actually delivered, it was decided that the property should be registered in the plaintiff's name "free of mortgages and attachments" (Istanbul Anadolu 3rd Civil Court of First Instance for Commercial Matters, 2026).
• Where the property was actually delivered to the buyer, the bank's claim of having acquired rights in good faith by relying on the title registry was rejected, and the mortgage was ordered removed (Court of Cassation, 7th Civil Chamber, 2024).
• It was decided that the mortgage should be removed because the bank could not prove that the appraiser had inspected the independent unit on site and prepared a report before the mortgage was established (Kayseri 2nd Civil Court of First Instance for Commercial Matters, 2023).

Absence of an annotation of the promise of sale: the other side of the coin

However, there is also an important risk factor for the buyer in these cases: the promise-of-sale agreement not being annotated on the title registry. The Court of Cassation has stated that a promise-of-sale agreement that has not been annotated on the title registry provides only a "relative right" and cannot be asserted against third parties unless bad faith is proven, and that in such a case the mortgage established in favor of the bank cannot be considered improperly registered (Court of Cassation, 7th Civil Chamber, 2024; Court of Cassation, 7th Civil Chamber, 2025). There are also decisions rejecting a request for removal of the mortgage on the ground that the bank could not have been expected to know of a promise-of-sale agreement that did not yet exist at the date the mortgage was registered (Court of Cassation, 7th Civil Chamber, 2024).

Procedural requirement: proper party (husumet)

In claims for registration free of mortgage and for cancellation of a mortgage/pledge, all mortgage and pledge holders must be named as defendants in the lawsuit; otherwise the claim is dismissed for lack of proper party status (Court of Cassation, 7th Civil Chamber, 2024; Istanbul 18th Civil Court of First Instance for Commercial Matters, 2023).

Points to Watch

• Be sure to document your payment records and delivery date. Receipts showing that instalments were paid, invoices, delivery minutes, and bills evidencing actual occupancy (electricity, water, natural gas subscriptions) are the strongest evidence in the case.
• Annotating the promise-of-sale agreement on the title registry is the most effective protection. An annotated agreement provides direct priority against mortgages established afterward; if there is no annotation, the presumption of good faith in favor of the bank is strengthened.
• Naming the correct parties in the lawsuit is essential. The mortgagee bank (and any other pledge/attachment creditors, if any) must be named as defendants; otherwise the case may be dismissed on procedural grounds.
• Proving the bank's bad faith or lack of due care is the key to the case. Whether the appraisal report reflects the true situation, and whether it was investigated who was actually using the property during the loan approval process, are the most critical factors determining the outcome of the case.

Conclusion: What Should You Do?

If a bank mortgage has been placed on a property that you purchased under a promise-of-sale agreement and paid for in full, you do not have to accept this mortgage as unavoidable "fate." Court of Cassation case law consistently emphasizes that banks are obliged to conduct the necessary investigation as prudent merchants, and that banks that fail to fulfil this obligation cannot benefit from the protection of good faith. In this situation, you should:

1. Gather all documents relating to the payment and delivery dates in full.
2. Check whether your promise-of-sale agreement was annotated on the title registry; if not, be aware that this may make your case more difficult and plan your strategy accordingly.
3. Be sure to name the mortgagee bank as a defendant when filing suit.
4. Collect evidence showing whether the bank exercised the required due care during the loan approval process (appraisal report, on-site inspection).

Because these cases contain technical details in both substantive and procedural law, it is important to conduct the process together with a real estate law specialist to avoid the loss of rights.