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Goal – An efficient institutional framework that balances the rights of the public, owners, lenders and borrowers in the event of a dispute or loan default
Core Question: Do all market participants abide by the rule of law and have confidence in the courts and the ability of police to control crime[h1] ? No – Weak, the judiciary is subject to government influence.
4.1.1 What is the confidence level of the strength and impartiality of the police, courts and contract enforcement? Strong – Percentile Ranking – 57.7 Trend ↑
Source: Governance Matters 2011, World Bank, www.govindicators.org
4.1.2 Can members of the judiciary be held accountable for their actions? Yes – Score 69 out of 100 – Weak
Source: Global Integrity Report 2010 – https://www.globalintegrity.org/global/the-global-integrity-report-2010/turkey/
Costs of Crime
4.1.3 What are the business costs of crime and violence? Weak – Ranking 76th out of 144 – Score 4.8 out of 7
Source: The Global Competitiveness Report 2012-2013, World Economic Forum
Core Question: Are systems in place for timely and efficient enforcement of contracts?
Commercial – Yes – Very Strong
Residential – Yes – Strong
4.2.1 – Judicial Enforcement
Commercial – Very Strong – Ranking 40th out of 183 Trend ↑
22.214.171.124 What is the number of procedures involved in resolving a commercial dispute? 36
126.96.36.199 What is the time between the filing of a lawsuit and resolution in judicial enforcements? 420 days
188.8.131.52 What is the cost of judicial enforcements as a percentage of debt value? 24.9%
Source: Doing Business 2013– http://www.doingbusiness.org/data/exploreeconomies/turkey#enforcing-contracts
Residential – Strong
SQ 12 What is the time between notice of intent to foreclose and loan collection in judicial enforcements? see Summary Proceedings
SQ 13 What is the cost of judicial enforcements as a percentage of property value? see Summary Proceedings
4.2.2 – Summary Proceedings
SQ 14 Summary proceedings are alternative dispute resolution processes where creditors can apply for a direct court order in property disputes. What is the time between notice of intent to foreclose and loan collection in summary proceedings if available to lenders? 161 days – Strong
SQ 15 What is the cost of summary proceeding if available to lenders as a percentage of property value? 7.55% – Strong
SQ 16 Power-of-sale agreements give creditors to power to sell properties after notice to the borrower without court intervention. What is the time between notice of intent to sell and loan collection for power-of-sale agreements if available to lenders? Unavailable – Very Weak
SQ 17 What is the cost of power-of-sale agreements if available to lenders as a percentage of property value? Unavailable – Very Weak
Source – Financing Homes 2008, World Bank and International Housing Finance Corporation http://www.cipe.org/sites/default/files/publication-docs/Financing%20Homes%202008.pdf
Core Question: Can commercial disputes be resolved efficiently and fairly without exorbitant expense and delay? Yes – Strong, but the courts are over burdened and slow.
SQ 18 Do specialized commercial courts exist for the handling of property disputes and foreclosures? Yes – Strong
Source: Turkey: Commercial Litigation in Turkey: How Does It Work? http://www.mondaq.com/x/259062/Arbitration+Dispute+Resolution/Commercial+Litigation+In+Turkey+How+Does+It
Alternative Dispute Resolution
SQ 19 Are alternative dispute resolution mechanisms in place including commercial arbitration, private mediation and community based processes? Yes – Strong.
SQ 20 What bilateral, regional and international commercial treaties exist concerning business between countries[h2] ? Very Strong – Turkey has 17 FTAs in force; namely, EFTA, Macedonia, Bosnia-Herzegovina, Albania, Israel, Palestine, Morocco, Tunisia, Egypt, Syria1, Georgia, Serbia, Montenegro, Chile, Jordan, South Korea and Mauritius
Source: Republic of Turkey, Ministry of Economy http://www.economy.gov.tr/index.cfm?sayfa=tradeagreements&bolum=fta®ion=0
FQ 7. To what extent do practitioners report contracts as enforceable?
The legal system in Turkey lacks experience in dealing with sophisticated real estate issues.
For example, in Bodrum, a master plan was put on hold indefinitely—stopping all new development—because the court was unable to make a ruling for a single case. The new master plan that was put in effect changed the land use for one property owner, who in turn sued the municipality for damages to his property value. The court, however, could resolve this issue.
Source: Summer 2011 Field Research Visit by Lin Mao, CIPE Intern and student at Johns Hopkins University