RETENTION OF TITLE UNDER TURKISH LAW (MARCH 2019)

The transfer of title of a movable property requires delivery of possession pursuant to Article 763 of Turkish Civil Code numbered 4721. However, in some cases, the parties wish to prevent the transfer of title though transfer of possession of the movable property which regulated as “Retention of Title” under Turkish Law. It is crucial to state that such sales contracts are not allowed either for animal sales or immovable sales.  

Retention of Title can be agreed under a contract to be executed by and between the seller and the purchaser to keep the ownership of the movable at seller until fulfillment of a condition (i.e. full payment of sales price).foreseen under such contract.  

Turkish Civil  Code set forth  a form requirement for retention of title. Such contracts must be made and concluded  in official form before a Turkish Notary Public pursuant to the article 764 of Turkish Civil Code and Article 89 of the Notarial Law. Besides, the movable subject to such contracts must be registered before the notary public, residing at the residing address of the purchaser as per article 108 of Notary Law. The mentioned registration is constituent for validity of Since there isn’t any rule which foresees that such records are deemed to be known by third parties, there are possibility of possessors in good faith.    

In case any fail in form requirement of retention of title,  such sale is considered as an ordinary sale and title of good is deemed transferred up on delivery pursuant to Supreme Court decisions In such a case, the seller is entitled to terminate the sales contract and claim return of good. However, the seller shall not be entitled to claim negative damages or loss of profit from the purchaser  

Consequently, retention of title is a legal arrangement which provides seller to hold the title of the movable until fulfillment of contractual conditions by the purchaser.  However, it is not commonly in practice in Turkey due to form requirements, especially registration of the good before the Notary Public where the purchaser is residing in.