REAL ESTATE SHOWING DOCUMENTS- ARE THEY LEGALLY VALID?

1.INTRODUCTION

Real estate showing documents signed between real estate agents and clients who wish to lease or purchase real estate are frequently encountered in practice. As will be examined in details below, real estate showing documents are considered as a type of real estate brokerage contracts.  Real estate brokerage contracts do not differ from brokerage contracts in terms of their elements, yet there is a specific provision in article 520 of the Turkish Code of Obligations (“Law”) regarding the form of real estate brokerage contracts. Brokerage contract is defined as the contract where the broker undertakes to mediate the establishment of a contract between the parties and is entitled to a commission in when such contract is concluded.
In accordance with the above definition of the brokerage contract, it is aimed to mediate the purchase and sale or lease of real estate by the real estate brokerage contracts. 

2.REAL ESTATE SHOWING DOCUMENTS AS A BROKERAGE CONTRACT

 1.Elements of Brokerage Contracts

The elements of the brokerage contracts should be examined in order to better understand the legal dimensions of real estate showing documents, considering that they are regarded as real estate brokerage contracts when the necessary conditions are met. In accordance with the decision of the Supreme Court Assembly of Civil Chambers, the elements of the brokerage contracts are as follows:

a) Parties to a brokerage contract are the client and the broker.

b) Subject of a brokerage contract is to mediate in the establishment of contracts for various works.

In the light of the above, a real estate showing document as brokerage contract would include the establishment of a real estate purchase or lease contract between the client and the owner of the real estate.

2.Written Form and Breach of Contract

Real estate showing documents signed between real estate agents and clients are accepted as real estate brokerage contracts if the real estate showing documents include the necessary elements. Moreover, when Article 520 of the Law is taken into consideration, being in written form is a condition for validity of real estate showing documents.

In order for real estate showing documents to be regarded as real estate brokerage contracts, elements such as commission, duration, etc. have to be included in these documents.^[1] Therefore, real estate showing documents, which are usually printed and include above mentioned elements, will be deemed valid if signed by the parties. In practice, it is sometimes seen that clients exclude real estate agents and lease or purchase real estates by directly contacting with the owners or negotiating via another real estate agent. In order to prevent this situation, certain provisions are added in the real estate showing documents.

As a result of these provisions aiming the protection of real estate agents, the client may be prohibited from purchasing or leasing the same real estate for a certain period of time through other means or relatives of the client, who are explicitly stated in the contract.

In practice, a provision is added in the real estate showing documents that if the client her/himself, her/his spouse, partners, blood and affinity relatives purchase the real estate within a certain period of time, the real estate agent will be entitled to a commission.  It is seen in various Supreme Court of Appeals decisions that such provisions are accepted to be legitimate and valid.

A crucial and explanatory decision on this matter was rendered by the Supreme Court Assembly of Civil Chambers. Accordingly, the brokerage contracts must be specific and explicit. In the real estate showing document subject to dispute, relatives, in case of purchase of which the real estate agent would be entitled to a commission, are explicitly stated. However, the spouse has not been included within these relatives. As per the relevant decision, since there is no specific provision stating the purchase by the spouse, the real estate agent will not be entitled to a commission as a result of this purchase. Thus, considering this decision, it is necessary that the provisions of real estate showing documents are specific and explicit.

2.Real Estate Showing Documents According to the Regulation on Real Estate Trade (“Regulation”)

Elements regarding the content of real estate showing documents are included within article 19 of the Regulation. Initially, it is stipulated in the relevant article that the service of showing real estate in physical or electronically environment to purchase, sale or lease, will be provided by issuing a real estate showing document. It is set forth that the real estate showing documents shall be issued in at least two copies, one for each party. However, if the real estate showing document is issued for more than one property, the signature of the buyer or the tenant shall be taken separately for each property. As stated above, in real estate brokerage contracts, real estate agents as brokers will be entitled to a commission after the relevant contracts are made between clients and the real estate owners.  Accordingly, the real estate agent will not be entitled to a commission by only showing the real estate without the execution of a written contract.

Finally, it is stipulated in article 20 of Regulation that the real estate agent will be entitled to a commission in situations where the real estate is purchased or leased directly from the owner by eliminating the real estate agent within the period specified in the contract.

3.CONCLUSION

As can be noted from the above explanations, the terms and penalty clauses included in real estate showing documents, which contain elements of real estate brokerage contracts, are legally binding for the parties signing this document.  Pursuant to the Law, real estate brokerage contracts must be executed in writing. In a situation where there is no real estate showing document in accordance with the Law, if there is a dispute regarding the real estate, any verbal declaration by the real estate agent that she/he has provided a brokerage service will not be sufficient to claim a right. However, the signing of a duly executed real estate showing document enables the real estate agent to collect her/his commission and claim penalty against buyers/tenant or owners eliminating the real estate agent.

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[1] Taşınmaz Simsarlığı Sözleşmelerinde Yargıtay Uygulaması, Av. Çağlar ÇAĞLAYA2