Escrow in Turkey

The escrow agent's first task is to help the buyer and seller agree on the conditions under which funds or assets will be released to the seller. The escrow agent drafts and signs an escrow agreement between the buyer, seller, and escrow agent.

Once the conditions are met, the escrow agent releases the funds to the seller without requiring further action or permission from the buyer.

In many cases, the escrow agent also assists with drafting or reviewing the underlying purchase agreement to ensure the transaction is structured safely from the outset.

The process generally follows these steps:

1. The buyer and the seller agree to use an escrow for the transaction.
2. The buyer, seller, and escrow agent sign an escrow agreement.
3. The buyer transfers the sale amount/agreed funds to the escrow agent's designated client account via bank transfer. The escrow agent confirms receipt and notifies both parties that the funds are secured.
4. The seller delivers the goods, or fulfills the agreed condition (e.g., transfer of ownership, share registration, vessel delivery).
5. The escrow agent monitors and verifies that the contractual conditions are fulfilled.
6. Once the conditions are met, the escrow agent releases the funds to the seller without requiring further action or permission from the buyer.
7. If the seller fails to meet the contractual requirements within the agreed timeframe, the funds are returned to the buyer in full.

Escrows are typically used in sales agreements where the buyer and the seller are doing business for the first time. In such agreements, the buyer and the seller agree to entrust the escrow with the sale amount until the transaction is completed.

• Does the opposite party insist that you fulfill your contractual obligation (whether to sell or pay) before they fulfill theirs?
• Is this your first time conducting business with the opposite party?
• Is the transaction amount too high to risk?
• Is it a cross-border transaction?
• Does the transaction involve complex paperwork that requires due diligence, such as a bill of lading, quality test reports, or a charterparty?

If the answer to any of these questions is "yes," using an escrow is highly recommended to ensure the security of the transaction. Escrow is commonly needed when large sums of money are involved and the parties do not fully trust each other yet — real estate purchases, company share acquisitions, yacht sales, aircraft purchases, and other high-value international transactions.

Yes. Escrow agreements can legally be made under Article 26 and 561 of the Turkish Code of Obligations. As long as payments are made through banks and supported by proper documentation — such as invoices or official sale agreements — escrow arrangements are fully lawful.

Escrow agreements are legal in Turkey, though they may be referred to under different names:

• The Regulation on the Trade of Motor Land Vehicles, Article 26, regulates mandatory escrow payment systems in vehicle sales.
• The Regulation on the Trade of Immovable Property, Additional Article 1, regulates mandatory escrow payment systems in property sales.
• Articles 26 and 561 of the Turkish Code of Obligations allow other types of escrow agreements, and there is no law that forbids escrow agreements.
• Escrows and lawyers must comply with anti-money laundering regulations, especially Law No. 5549.

For the contractual side — clauses, parties, release provisions and drafting — see Escrow Agreements in Turkey.

Yes. Attorneys in Turkey maintain designated client accounts, usually at Vakıfbank, where they hold funds belonging to clients. Under Article 82/2 of the Turkish Enforcement and Bankruptcy Law and Article 164/5 of the Turkish Attorney Law, funds held by attorneys on behalf of clients are protected and cannot be seized or blocked by third parties.

Depending on the type of agreement, different professionals and entities are used as Turkish escrow agents for specific transactions:

• In cross-border transactions, lawyers are commonly preferred as escrows.
• In government auctions, government-appointed individuals or entities typically act as escrow agents. These are called Turkish trustees.
• In real estate and vehicle sales, banks are often used as escrow agents.

Escrow fees generally range between 1% and 3% of the transaction amount, depending on the complexity and risk level of the transaction. This cost is usually shared between the parties involved in the transaction. The exact fee depends on several factors, including:

• The transaction amount
• The complexity of the transaction and the amount of paperwork involved
• Banking regulations in respective countries

Yes. The escrow fee can be shared between the buyer and the seller if the parties agree on this arrangement in the escrow agreement. This is standard practice in many transactions.

Escrows in Turkey are subject to both civil and criminal law. In the unlikely event that a Turkish escrow violates the escrow agreement or embezzles the entrusted funds, they face both civil and criminal liability.

Under civil law, the escrow is legally responsible for any damages caused to both parties as a result of actions that violated the escrow agreement.

Under criminal law, the escrow could be charged with crimes such as Breach of Trust or Abuse of Duty, both punishable by imprisonment. If an attorney acting as escrow violates the agreement, the aggrieved party can file a criminal complaint for breach of trust under Turkish Penal Code Article 155 and pursue civil damages. Additionally, the attorney faces disciplinary proceedings before the Bar Association, which can result in suspension or disbarment.