This study aims to provide a comprehensive answer, in light of various court decisions, to questions concerning the validity conditions of the withdrawal fee in movable and immovable property sales contracts, the circumstances under which it can be reclaimed, and the meaning of frequently confused concepts such as earnest money, deposit, and commitment fee, in comparison to the withdrawal fee.

1. Validity Conditions of the Withdrawal Fee (Withdrawal Money) in Movable and Immovable Property Sales:

Explicitly Stipulated: The most fundamental validity condition for a withdrawal fee is that this matter must be explicitly stated in the contract as “withdrawal money” or “withdrawal compensation”. As emphasized in many decisions, “unless it is explicitly stipulated as withdrawal compensation, sums given as earnest money or down payment cannot be considered withdrawal compensation” (Supreme Court of Appeals – 19th Civil Chamber – 2003/6039E.) According to Article 178 of the Turkish Code of Obligations (TBK), the stipulation of a withdrawal fee grants the parties the right to withdraw.

Validity of the Main Contract: The withdrawal fee is an accessory (subsidiary) obligation attached to the main sales contract. Therefore, if the main contract is invalid for any reason (e.g., due to non-compliance with the official form requirement in immovable property sales, pursuant to Turkish Civil Code (TMK) Art. 706, Turkish Code of Obligations (TBK) Art. 237, Land Registry Law (Tapu K.) Art. 26), the agreement regarding the withdrawal fee also becomes invalid.

2. Cases in Which the Withdrawal Fee Can Be Reclaimed:

If Not Explicitly Agreed as a Withdrawal Penalty: If the paid amount is not explicitly stated as a withdrawal penalty in the contract, it is generally considered as “earnest money (deposit)” and when the contract is not fulfilled or is terminated, the party who gave the money is entitled to reclaim it, regardless of whether they were justified in breaching the contract.

If the Main Contract is Invalid: A withdrawal penalty paid based on an invalid contract can be reclaimed according to the provisions on unjust enrichment (Court of Appeals-13th Civil Chamber-2014/14864).

If the Party Who Received the Money Withdraws: According to Article 178 of the Turkish Code of Obligations (TCO), “if the party who gave the money withdraws, they forfeit what they gave; if the party who received it withdraws, they return double the amount they received.”

3. Concepts of Earnest Money, Deposit, Commitment Fee:

Earnest Money (Commitment Money): According to Article 177 of the TCO, “A sum of money given by a person when concluding a contract is considered to have been given as proof that the contract was concluded, not as a withdrawal penalty.” Unless otherwise agreed or customary, it is deducted from the principal debt.

Deposit: It is generally used interchangeably with earnest money or commitment money. This money, also called ‘kaparo’, is not a withdrawal penalty. Unless it is explicitly agreed that the deposit, which is in the nature of commitment money, is a withdrawal penalty, if the contract is breached, it must be returned, regardless of whether the contract was terminated for a just or unjust reason.”

Binding Fee: This term, similar to earnest money and down payment, refers to a payment given as an assurance and proof that the contract has been made, but which does not constitute a withdrawal penalty.

General Refunds: Unless such payments are explicitly agreed upon as a withdrawal penalty in the contract, and when the contract is not performed or becomes invalid, they are generally refunded according to the provisions on unjust enrichment. According to the established jurisprudence of the Court of Cassation, it is decided that unless explicitly stipulated as a withdrawal compensation, moneys given as down payment, earnest money, etc., cannot be considered withdrawal compensation, and therefore the party who made the payment is entitled to reclaim it, regardless of whether they were justified in terminating the contract.

Conclusion

From the examination of court decisions, the fundamental distinction between a withdrawal penalty and earnest money/down payment/binding fee is based on the parties’ will and the explicit reflection of this will in the contract. Articles 177 and 178 of the Turkish Code of Obligations (TBK) form the legal basis for this distinction. Article 177 of the TBK states that money given when concluding a contract, unless otherwise agreed, “shall be deemed to have been given as proof that the contract has been made” and that this is a “binding payment” (earnest money). Article 178 of the TBK, on the other hand, regulates the “withdrawal payment” and states that if this is agreed upon, it grants the parties the right to withdraw. Therefore, for a payment to be considered a withdrawal penalty, an explicit provision to that effect in the contract is of critical importance.

Especially in real estate sales, the requirement for contracts to be made in a formal manner (TMK art. 706, TBK art. 237, Land Registry Law art. 26) comes to the forefront. Since contracts made without adhering to the formal requirements are invalid, the penalty clause agreed upon based on these contracts is also considered invalid, and the amount paid can be reclaimed according to the provisions on unjust enrichment.

While the money given is presumed to be earnest money, the party claiming it is a penalty for withdrawal (usually the party receiving the money) must prove this situation.

In the decision of the Bakırköy 6th Civil Court of Commerce (File No. 2022/203, Decision No. 2022/1057), it was stated that if the party paying the penalty withdraws from the contract due to the fault of the other party, or if the penalty amount is excessive, a refund or reduction may be made in accordance with equity. This indicates that the principle of equity can also be taken into consideration.

Expert Opinion / Why is a Tuzla Lawyer Necessary?

Legal processes related to penalty clauses in movable and immovable property sales contracts are quite technical and complex. In Istanbul’s districts, especially in Tuzla, Pendik, and Kartal, where there is intense real estate activity, disputes arising from sales transactions and penalty clause disagreements are frequently observed. In these regions, market conditions, contract practices, and court precedents may differ from each other.

Therefore, it is of vital importance for real estate owners and buyers in Tuzla, Pendik, and Kartal to seek support from a specialized real estate law attorney on matters such as the validity and reclaimability of the withdrawal fee. The expert lawyer, taking into account regional market dynamics and local court decisions, can prevent loss of rights during contract drafting, dispute management, and litigation processes. A suggested article on the withdrawal fee.