Housing Co-operatives

Housing Cooperatives are legal entities established in line with Law No. 1163 and aim at providing their partners (or participants) with residential flats or houses.

These entities are one of the most favorable methods of acquiring a property among Turkish citizens, who are generally at the middle income levels.

Tax advantages and relatively cheaper loans provided by State organizations, great potential for economies of scale, and convenient financing requirements evenly distributed to a time scale extending to a couple of years are some of the appealing features of these entities.

However, right management of a cooperative is of high importance. The Board should assure a sound financial status and employing the right contracting company which will construct the complex is very crucial. Unless a good Board which is composed of trustworthy and talented people is in office, the designated targets may not be attained.

In this regard, if you are planning to purchase a flat, house or villa on a complex, as a part of a cooperative, you are strictly advised to search for all important and relevant aspects. You can hire a professional to do this on behalf of you. In case you need professional help, please be sure that you assign the professional in question through a sound Power of Attorney.

The following information briefly explains how cooperative mechanism works.

A cooperative has to have at least 7 partners (or participants or members). The Articles of Association (AA) has to be stamped by a notary public and to be registered to the Trade Registry. The followings are to be clearly stated in an AA:

• The name and address of the cooperative,
• Purpose and activities of the cooperative,
• The conditions which cause participants to lose their partnership,
• Shares of participants,
• The degree of the rights and liabilities of participants,
• How the cooperative can be represented,
• Methods for how revenues and expenditures accrue,
• Names and addresses of the founders,
• How contributions will be made by the participants,
• Other issues, where applicable.

Cooperatives have to arrange ‘partnership notes’ in the name of each partners and these documents have to be signed by participants and the representatives of the cooperatives. These notes are delivered to the partners and indicate that the note holder has a legal partnership in the cooperative.

Main decisions regarding a cooperative’s activities are made by the General Assembly, composed of partners. Usual General Assembly meeting has to be held within a period up to 3 years following the previous meeting. Participants are officially invited to General Assembly meetings by the people authorised to represent the cooperative. These representatives are selected by the General Assembly.

Bringing the partnership to an end is allowed by the Law. In some cases, there might be some special time restriction clauses in the AA. AA may envisage that partnership cannot be brought to an end within a period up to 5 years following the date of partnership. If any force majeure conditions are specified in the AA and a participant falls in a force majeure, then he is exempt from such time restriction.

Partnership rights can be transferred to others or sold out.

According to the regulations, any partner is allowed to ask the Board of a Cooperative to provide him/her with the information about the financial status of the cooperative.

A cooperative dissolves if

• All works envisaged by the AA have been materialized and the properties have been registered in the names of the participants.
• The General Assembly decides upon that the cooperative will no longer continue.
• Bankruptcy is declared.
• Relevant Courts have made a decision to dissolve the cooperative.
• Another cooperative takes over or purchases it.
• Usual General Assembly meeting has not been held for at least 3 years.
• The relevant ministry finds out that the cooperative can no longer attain the designated targets.