The provisions of the “Prepaid Housing Sales Contract,” regulated by Articles 40 through 46 of Law No. 6502 on Consumer Protection (TCL), aim to protect consumers against the seller’s failure to fulfill their obligation to transfer ownership and deliver the property after the consumer has fulfilled their obligations under the contract by paying a portion or all of the sales price. Indeed, the preamble of the law states that “selling a house before it is available for sale or while construction is underway constitutes an abuse of consumer good faith and requires regulation.” It should be noted that, in addition to Articles 40-46 of the TCL, there is also a “Regulation on Prepaid Housing Sales” in Turkish law. However, there are contradictions between the Consumer Protection Law and the Prepaid Housing Sales Regulation, and these contradictions can lead to significant problems, particularly regarding the right of withdrawal.

A prepaid housing sales contract is defined in Article 40/1 of the Turkish Commercial Code (TCC) as a contract in which the consumer undertakes to pay the sale price of a residential property in advance, either in cash or in installments, and the seller undertakes to transfer or deliver the property to the consumer after full or partial payment of the price. As can be seen, the order of performance for the obligations in the prepaid housing sales contract is determined, and the payment of the sales price is given priority. Accordingly, the consumer must first fulfill the obligation to pay the sales price, while the seller must fulfill the obligation of transfer and delivery after the sale price is paid in full or in part. According to the relevant legal provision, it is important to note that the transfer and delivery of ownership of the property occurs after the consumer pays the sale price. If the transfer of ownership is carried out simultaneously with the payment of the sales price, that is, in accordance with Article 40/1 of the TKHK, If the consumer is not required to pay the sales price before the delivery of the property during the performance of the obligations specified under Article 40, the existence of a prepaid housing sales contract referred to in Article 40 of the Turkish Commercial Code (TCC) cannot be considered.

A prepaid housing sales contract is considered a consumer contract, and therefore, the primary objective of the legislator’s regulations regarding this matter is to protect the consumer. In this context, Article 43 of the TCC grants the consumer the right to withdraw from the contract within fourteen days of the conclusion of the contract, without providing any reason or penalty. Regarding the consumer’s right of withdrawal, the seller has the obligation to inform the consumer of their right of withdrawal. Pursuant to Article 47/6 of the TCC, if the seller has not informed the consumer of their right of withdrawal at all, the consumer is not bound by the fourteen-day period to exercise their right of withdrawal. However, in this case, the period expires one year after the expiration of the withdrawal period.

It should be noted that the articles of the Consumer Protection Law (CKHK) governing prepaid housing sales contracts do not specify any formal requirements for the exercise of the right of withdrawal. However, Article 8 of the Regulation states that notification of the exercise of the right of withdrawal must be sent to the seller via notary publics within fourteen days. If a portion of the housing price is covered by a tied loan, the seller must immediately notify the relevant housing finance institution of the exercise of the right of withdrawal.

In light of the above information regarding the right of withdrawal, the prepaid housing sales contract is terminated upon the consumer’s exercise of the right of withdrawal. Pursuant to Article 43 of the CKHK, upon exercising the right of withdrawal, the seller shall return the amount received from the consumer and any documents that encumber the consumer’s debt. The consumer shall then return the purchases within ten days of the seller fulfilling his/her return obligations. However, Article 43 of the Turkish Commercial Code (TCC) regulates the period within which the consumer must return their purchases, but does not specify the period within which the seller must return the amount received from the consumer and any documents that encumber the consumer with debt. However, Article 8/5 of the Regulation stipulates that, in the event of exercising the right of withdrawal, the amount to be refunded to the consumer and any documents that encumber the consumer with debt must be returned to the consumer no later than fourteen days from the date the notice of withdrawal reaches the seller. As is clearly understood from this provision, if the consumer exercises their right of withdrawal, the seller must return the amount to be refunded to the consumer and any documents that encumber the consumer with debt within fourteen days from the date the notice of withdrawal reaches the seller. This period begins from the date the notice of withdrawal reaches the seller. The consumer is obligated to return their purchases within ten days of the seller’s return of the purchases.

Another important issue when a consumer exercises the right of withdrawal in prepaid housing sales contracts is if the real estate sales price, which is the subject of the prepaid housing sales contract, is financed by a tied loan agreement. By exercising this right of withdrawal, the consumer retroactively terminates the prepaid housing sales contract. In such a case, the question of what will happen to the tied loan agreement between the consumer and the housing finance institution regarding the financing of the real estate sales price arises. Article 43 of the Turkish Commercial Code (TCC) contains a clear provision on this matter. Accordingly, if the real estate is purchased partially or fully with a tied loan, the tied loan agreement shall enter into force at the end of the fourteen-day right of withdrawal period, effective as of the date the contract was established. Furthermore, in this case, the housing finance institution cannot claim any expenses from the consumer during the right of withdrawal period, including interest, commission, legal obligations, or similar. Therefore, the effective date of the tied loan agreement is determined by law as the end of the consumer’s right of withdrawal from the prepaid housing sales contract. In other words, the Law ties the effect and consequences of the tied credit agreement to the suspensive condition that the consumer has not withdrawn from the prepaid agreement.

Another issue that may arise when the consumer exercises their right of withdrawal in prepaid housing sales contracts is the impact of the exercise of the right of withdrawal on building completion insurance. Various problems can arise in prepaid housing sales contracts, such as securing the consumer’s prepayments until the property is transferred or delivered. To prevent consumer grievances and provide protection to consumers in this regard, the legislator included a regulation regarding building completion insurance in Article 42 of the Turkish Commercial Code (TCK). Accordingly, for projects exceeding a size determined by the Ministry based on the number of housing units in the project or the total cost of the project, the seller is required to obtain building completion insurance, the scope, conditions, and application principles of which are determined by the Undersecretariat of Treasury, or to meet other guarantees and conditions determined by the Ministry, before commencing the sale of prepaid housing. Furthermore, compensation, collateral, and similar assurances provided under building completion insurance cannot be included in the bankruptcy or liquidation estate, cannot be seized, and cannot be subject to precautionary measures or liens.

On the other hand, Article 8 of the Regulation states that if building completion insurance is taken out for the property, the insurance coverage will come into effect at the end of the right of withdrawal period, effective from the date of its establishment. As can be seen, if the seller has taken out building completion insurance as collateral, the building completion insurance will come into effect at the end of the right of withdrawal period. However, if it has already passed, it will be effective, in other words, from the moment the contract is established. It is important to note that, for building completion insurance, just as in tied housing loan agreements, the effective date of the building completion insurance is determined as the end of the fourteen-day period, which is the consumer’s right of withdrawal period, as a suspensive condition.

[1] In this study, the following academic article was used: İşgüzar, Nefise Hürriyet. “Ön Ödemeli Konut Satış Sözleşmelerinde Tüketicinin Cayma Hakkı ve Yasal Uyuşmazlıklar”. Ankara Üniversitesi Hukuk Fakültesi Dergisi 73, sy. 4 (Mart 2025): 3067-90. https://doi.org/10.33629/auhfd.1639052.