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If you are a foreign national buying property in Turkey, paying a deposit for a medical or aesthetic procedure, or making an advance payment for a vehicle or a yacht, you will encounter the term kapora. It is the everyday Turkish word for a down payment or deposit, and it appears in almost every transaction where money changes hands before a contract is completed.
The difficulty is that kapora has no legal definition in Turkish law. It is a commercial expression, not a legal category. The Turkish Code of Obligations recognises two distinct concepts that a deposit may fall into, and they produce opposite results when a transaction fails: baglanma parasi, binding money, and cayma parasi, cancellation money. Which of the two applies determines whether you get your money back.
The distinction is not academic. In our practice, deposit disputes are among the most common matters foreign clients bring to us, and the outcome almost always turns on two questions: how the payment was characterised, and whether the underlying contract was valid in the first place. This guide explains both, along with the limitation periods, the evidence required, and the practical steps to take when a deposit is withheld.
Quick answer: Under Article 177 of the Turkish Code of Obligations, a sum paid at the time a contract is made is presumed to be binding money (baglanma parasi), which is refundable, unless it was expressly agreed as cancellation money (cayma parasi). The party asserting that it was cancellation money bears the burden of proving it. Critically, cancellation money can only exist where the underlying contract is valid. Because real estate and motor vehicle sales require official form, a deposit paid on an informal contract for either can never be forfeited as cancellation money and must be returned. Claims for return are frequently governed by the unjust enrichment limitation period of two years from discovery, not the ten-year general period, and this distinction has cost claimants their cases.
Turkish contract law does not use the word kapora. What the law regulates is the legal effect of a sum of money handed over at the time a contract is concluded, and it addresses that question through two provisions of the Turkish Code of Obligations (Law No. 6098):
When a dispute reaches a Turkish court, the judge does not ask what the parties called the payment. The judge asks which of these two categories the payment falls into, applying the statutory presumption and the evidence. A receipt that says only kapora tells the court nothing decisive, which is precisely why so many of these disputes are litigated.
Article 177 of the Turkish Code of Obligations provides that a sum of money given by one party at the time a contract is concluded is deemed to be evidence that the contract has been concluded, unless it has been agreed as cancellation money. The provision further states that, unless local custom provides otherwise, the binding money is deducted from the principal debt.
Two consequences follow from this, and both favour the party who paid:
As a general rule, yes. Where the transaction does not proceed, binding money is refundable to the party who paid it. This is the default position under Turkish law and it applies unless the recipient can establish an entitlement to retain it.
The recipient's principal route to retaining some or all of the money is to prove that they suffered loss as a result of the other party's withdrawal. Under Article 236 of the Turkish Code of Obligations, a seller who has suffered actual damage may set that damage off against the binding money held. The critical point is that the loss must be proven, not merely asserted.
The Court of Cassation has applied this strictly. In a decision of the 19th Civil Chamber, the court held that where a seller refused to return binding money on the basis of an alleged loss arising from lost production, but was unable to prove that loss, the binding money had to be returned in full. A general assertion that the seller lost an opportunity, or that the property was taken off the market, does not discharge the burden.
Where the seller proves a loss smaller than the deposit, the loss is set off and the balance is returned. Where the seller proves no loss, the entire deposit is returned.
Article 178 provides that where cancellation money has been agreed in a contract, either party may exercise a right to withdraw from the contract. The party who paid the money forfeits it if they withdraw; the party who received it must return double the amount if they withdraw.
The symmetry is important and frequently overlooked by sellers who assume the arrangement operates in one direction only:
Cancellation money is, in substance, the price of a contractual right to walk away. It is not a penalty for breach; it is consideration for an option that both parties hold.
The statutory presumption in Article 177 operates against cancellation money. A payment is treated as binding money unless it was expressly agreed to be cancellation money, and the party asserting the latter carries the burden of proof.
In practice this means that a seller who wishes to retain a deposit on the basis that the buyer withdrew must produce a written agreement, signed by both parties, that unambiguously characterises the payment as cayma parasi. A receipt bearing only the word kapora will not achieve this. Nor will a verbal understanding, however genuine, in the absence of corroboration.
This is the single most important principle in Turkish deposit law, and it is the one most frequently missed. It determines the outcome of the majority of deposit disputes involving real estate and vehicles.
Cancellation money is an ancillary obligation. It exists only as an adjunct to a valid principal contract. Where the principal contract is invalid for any reason, there can be no cancellation money, because there is no valid contract for the cancellation right to attach to.
The Court of Cassation General Assembly of Civil Chambers confirmed this position in a decision of 22 September 2022, holding that, as with binding money, the contract must be valid for cancellation money to be claimable, since cancellation money is an ancillary obligation. Where the contract is invalid, cancellation money cannot arise, and any sum paid as cancellation money must be returned under the rules on unjust enrichment.
Why this matters so much: Turkish law imposes strict form requirements on several categories of transaction. Where those requirements are not observed, the contract is invalid, and a forfeiture clause in that contract is unenforceable regardless of how clearly it was drafted or how willingly the buyer signed it.
| Transaction | Required Form | Effect on an Informal Deposit |
|---|---|---|
| Sale of immovable property | Official form at the land registry; a promise to sell must be executed before a notary in drafting form | An informal contract is void; cancellation money cannot arise; the deposit is recoverable |
| Sale of a motor vehicle | Written sale contract executed before a notary | An oral or ordinary written agreement is invalid; the deposit is recoverable |
| Lease of residential property | No mandatory form; may be oral or written | A valid contract may exist; characterisation of the deposit governs |
| Services, medical and aesthetic procedures | No general mandatory form; consumer protection rules may apply | A valid contract may exist; consumer protections may additionally apply |
| Sale of a business or commercial undertaking | Specific requirements apply depending on the structure | Assessed case by case |
Under Turkish law, the transfer of ownership of immovable property requires official form. The sale must be executed at the land registry office, and where the parties wish to formalise an intention to sell in advance, the correct instrument is a promise-to-sell contract executed before a notary in drafting form.
A handwritten agreement between buyer and seller, an ordinary written contract signed at an estate agency, or an exchange of messages agreeing terms does not satisfy these requirements. Such an agreement is void as a contract for the sale of the property.
The consequences for a deposit paid under such an arrangement are as follows:
Where buyers and sellers wish to secure a transaction in advance, a promise of sale contract drawn up before a notary is the proper instrument, and it is the arrangement under which a deposit can be given genuine legal effect.
Ownership of motor vehicles in Turkey can only be transferred by a written sale contract executed before a notary. Oral agreements and ordinary written agreements between the parties do not effect a valid transfer and do not constitute a valid sale contract.
The practical consequence is the same as for real estate: a deposit paid on an informal vehicle sale agreement cannot be forfeited as cancellation money, because the contract to which the forfeiture clause is attached is invalid. This is directly relevant to foreign buyers purchasing vehicles or boats in Turkey, who are frequently asked for a substantial deposit on an informal written agreement.
Where the underlying contract is invalid, the claim for return of the deposit is founded on unjust enrichment (sebepsiz zenginlesme) under Articles 77 and following of the Turkish Code of Obligations. The elements are that one party has been enriched, the other correspondingly impoverished, that there is a causal link between the two, and that the enrichment has no valid legal basis.
A deposit paid under a void contract satisfies these elements: the recipient holds money, the payer has parted with it, and the contract that was supposed to justify the transfer does not legally exist.
This is a point on which incorrect information circulates widely, and acting on it can extinguish an otherwise strong claim.
Article 82 of the Turkish Code of Obligations provides that a claim arising from unjust enrichment is time-barred on the expiry of two years from the date on which the claimant learned of the right to claim, and in any event on the expiry of ten years from the date the enrichment occurred.
The two-year period is the one that matters in practice. A buyer who paid a deposit on a void real estate contract, discovered within weeks that the transaction would not proceed, and waited three years before instructing a lawyer may find the claim time-barred despite being well inside the ten-year outer limit.
Where the claim is founded on a valid contract rather than on unjust enrichment, the general ten-year contractual limitation period applies. The correct characterisation of the claim therefore determines the applicable period, and the difference between two years and ten years is decisive.
From our practice: We treat the two-year period as the operative deadline in every deposit matter until we have satisfied ourselves that the claim is properly contractual rather than restitutionary. Clients who have been told they have ten years frequently have two. Where a deposit has been withheld and the transaction has clearly failed, the time to act is immediately, not eventually.
Turkish commercial practice uses several terms for money paid before completion, and they have different legal effects. Foreign clients frequently encounter them used interchangeably.
| Term | What It Is | Effect on Failure of the Transaction |
|---|---|---|
| Baglanma parasi (binding money) | Evidence that a contract was concluded; part payment | Refundable, subject to set-off of proven loss |
| Cayma parasi (cancellation money) | The price of a contractual right to withdraw | Forfeited by the payer; double repayment by the recipient; requires a valid contract |
| Avans (advance) | Part payment of the price, without evidentiary or forfeiture function | Recoverable where the transaction does not proceed |
| Teminat (security) | Security for performance of an obligation | Returned once the secured obligation is performed or discharged |
| Cezai sart (penalty clause) | Agreed consequence of breach of a valid contract | Payable on breach; subject to judicial reduction if excessive |
The distinction between cancellation money and a penalty clause deserves particular attention. Cancellation money is the price of a right to withdraw lawfully; a penalty clause is the consequence of breaching an obligation. A party who pays cancellation money and withdraws has not breached the contract, they have exercised a right for which they paid. A party who breaches a contract containing a penalty clause has done something the contract prohibited. The remedies and the judicial treatment differ accordingly, and a penalty clause the court considers excessive may be reduced.
In a decision of the 13th Civil Chamber dated 31 May 2017 (E. 2016/31227, K. 2017/6741), a buyer had paid 2,000 TL as a deposit and 18,000 TL as a down payment for an apartment under a handwritten agreement. When the transaction fell through, the seller refused to refund the deposit.
The court held that under Article 177 such payments are presumed to be binding money unless proven otherwise. The seller had failed to prove that the payment was cancellation money, and since the transaction had not proceeded, the deposit had to be refunded.
The Court of Cassation General Assembly of Civil Chambers held in its decision of 22 September 2022 (E. 2020/551, K. 2022/1147) that cancellation money, like binding money, presupposes a valid contract, because cancellation money is an ancillary obligation. Where the contract is invalid, cancellation money cannot be claimed, and any sum paid must be returned under the rules on unjust enrichment.
This decision is the authority most frequently decisive in deposit disputes concerning real estate and vehicles, where form requirements are commonly not observed.
The 19th Civil Chamber has held that where a seller declines to return binding money on the basis of a loss suffered, but cannot prove that loss, the binding money must be returned. The assertion of loss is not sufficient; it must be evidenced.
Almost every deposit dispute we handle would have been avoidable, or would have been resolved without proceedings, had the payment been documented properly at the outset. Documentation costs nothing and takes minutes.
A deposit receipt is not legally mandatory, but its evidential value is decisive. The document should record:
A receipt that records only the word kapora and an amount leaves the characterisation entirely open, which is why so many of these matters end up before a court determining what the parties intended years after the event.
Payment should be made by bank transfer, with a transfer description identifying the transaction and the character of the payment. A transfer reference reading "deposit for apartment, block 123 parcel 45, binding money" is contemporaneous documentary evidence created by a third party, and it is considerably more persuasive than a receipt produced after a dispute has arisen.
Cash payments, even where receipted, are the source of a disproportionate share of the disputes we see. Where cash is unavoidable, the receipt should be countersigned and, ideally, witnessed.
For foreign buyers, payments made from abroad should identify the payer clearly and should match the name that will appear on the transaction documents. Payments made by a third party, or from an account in a different name, create complications in establishing who is entitled to recover the money.
Where there is no written agreement or receipt at all, the position deteriorates sharply:
That said, the absence of a written contract is not necessarily fatal where the payment itself can be proven. Where a bank transfer record establishes that money passed from one party to another and no valid legal basis for the transfer exists, an unjust enrichment claim may be available on the strength of the transfer evidence alone. Well-drafted contracts nevertheless remain the far better course, because they define the characterisation of the deposit rather than leaving it to be reconstructed.
The most common context, and the one with the clearest legal framework. Deposits are frequently taken by developers, estate agents, and private sellers on informal agreements. Because the underlying contract is void for want of form, the deposit is recoverable, and any forfeiture clause is unenforceable. Foreign buyers should be aware that this position holds regardless of what they were told at the point of payment.
A separate question arises where the deposit is held by an estate agent rather than the seller. The agent's entitlement to retain any part of it depends on the intermediation agreement, and the statutory commission framework applies to what the agent may charge.
Turkey is a significant destination for medical and aesthetic treatment, and clinics routinely require a deposit at the point of booking. These arrangements are service contracts, and where the patient is a consumer, the consumer protection framework applies alongside the general law.
Deposits taken for procedures that are subsequently cancelled by the patient, or that the clinic fails to perform as agreed, give rise to recurring disputes. The clinic's entitlement to retain the deposit depends on the terms agreed and on whether the clinic can establish loss. Where the clinic cancels or fails to perform, the deposit is recoverable and a damages claim may additionally arise.
As set out above, motor vehicle ownership transfers require a notarial contract. Deposits taken on informal agreements for vehicles are therefore recoverable on the same basis as real estate deposits. Yacht and vessel transactions have their own registration framework, and the position should be assessed against the specific requirements applicable to the vessel concerned.
Wedding venues, event organisers, and providers of luxury services commonly require substantial deposits. These are ordinarily valid service contracts, so the characterisation of the deposit governs. The Court of Cassation has considered deposit retention in the context of wedding organisation contracts, examining both the fairness of the terms and the actual loss suffered by the business. Standard-form terms providing for complete forfeiture regardless of circumstances are open to challenge, particularly in a consumer context.
Where a deposit has been withheld and the transaction has not proceeded, the following sequence applies in most cases.
The first step is a written demand to the recipient, setting out the payment, the failure of the transaction, and the legal basis for return. Where the matter is likely to proceed further, this demand should be served as a formal notice through a Turkish notary (ihtarname), which establishes default, interrupts limitation, and creates a documented record admissible in subsequent proceedings.
Where the payer is a consumer and the recipient is acting commercially, the dispute falls within the consumer protection framework. Depending on the value, the claim is brought before the consumer arbitration committee (Tuketici Hakem Heyeti) or the consumer court. The arbitration committee route is inexpensive and does not require legal representation, though representation is advisable where the sums are significant or the facts are contested.
Where the dispute is commercial rather than consumer, mandatory mediation applies to commercial claims for payment before proceedings can be issued. Where mediation does not produce a settlement, the claim proceeds to the competent civil or commercial court.
Where the claim is clear and supported by documentation, enforcement proceedings through the enforcement directorate may be initiated directly. If the recipient does not pay or raise a formal objection within the statutory period, enforcement may proceed against their assets. Where an objection is raised, the matter proceeds to the enforcement court.
Deposit arrangements are sometimes used fraudulently, particularly against foreign buyers, through fake listings, sellers who do not own the property, or agents with no authority to act. Where fraud is suspected, speed is critical: evidence should be preserved, the bank should be notified where the transfer is recent, and a criminal complaint should be considered alongside the civil claim.
12.1. Is kapora refundable in Turkey?
In most cases, yes. Under Article 177 of the Turkish Code of Obligations, a deposit is presumed to be binding money, which is refundable where the transaction does not proceed. It is only non-refundable where it was expressly agreed as cancellation money, the party asserting this can prove it, and the underlying contract is valid. Since real estate and vehicle sales require official form, deposits paid on informal agreements for either are recoverable.
12.2. What is the difference between binding money and cancellation money?
Binding money is evidence that a contract was concluded and is credited against the price. It is refundable, subject to set-off of any loss the recipient can prove. Cancellation money is the price of a contractual right to withdraw: the payer forfeits it on withdrawal, and the recipient must repay double if they withdraw. The law presumes binding money unless cancellation money is expressly agreed and proven.
12.3. The contract said the deposit was non-refundable. Can the seller keep it?
Not necessarily. Two questions arise. First, does the clause clearly establish cancellation money rather than merely stating that the deposit is non-refundable? Second, and more importantly, is the underlying contract valid? Where the contract is void for want of form, which is the position for informal real estate and vehicle sale agreements, the forfeiture clause is unenforceable and the deposit is recoverable regardless of its wording.
12.4. I paid a deposit on a handwritten property agreement. Can I get it back?
Very probably. A handwritten or ordinary written agreement for the sale of immovable property does not satisfy the form requirements of Turkish law and is void. Cancellation money cannot arise under a void contract, so the deposit is recoverable under the rules on unjust enrichment. The seller may attempt to set off a loss, but must prove it. You should act promptly because of the limitation period.
12.5. How long do I have to claim my deposit back?
This depends on the basis of the claim, and getting it wrong can be fatal. Where the claim is based on unjust enrichment, which is the usual position where the underlying contract was invalid, the limitation period is two years from the date you learned of your right to claim, and in any event ten years from the date of payment. Where the claim is contractual, the general ten-year period applies. Because the two-year period frequently governs, we advise clients to act immediately rather than relying on the ten-year figure that circulates widely.
12.6. Can the seller deduct their losses from my deposit?
Yes, but only losses they can prove. Under Article 236 of the Turkish Code of Obligations a seller may set off actual damage against the binding money held. The Court of Cassation requires the loss to be evidenced, not merely asserted. A seller who claims the property was off the market or that an opportunity was lost, without documentary proof, will generally be required to return the full amount.
12.7. The seller withdrew from the deal. What am I entitled to?
Where the deposit was binding money, you are entitled to its return and, where the seller's withdrawal caused you loss, to damages. Where the deposit was validly agreed as cancellation money under a valid contract, the seller who withdraws must repay double the amount. This second consequence is frequently unknown to sellers who insert cancellation money clauses assuming they operate only against the buyer.
12.8. I have no written agreement, only a bank transfer. Do I have a claim?
Possibly. The absence of a written contract makes the position harder but not hopeless. Where the transfer record establishes that money passed to the recipient and there is no valid legal basis for the transfer, an unjust enrichment claim may proceed on that evidence. A transfer description identifying the purpose of the payment strengthens the position considerably. Cash payments without documentation are substantially more difficult.
12.9. What should a deposit receipt say?
It should identify both parties in full, the date, the exact amount and currency, the specific transaction including the land registry details for property, and, critically, whether the payment is binding money or cancellation money. It should also state the completion deadline and what happens to the money if completion does not occur. A receipt that says only kapora and an amount leaves the central legal question unresolved.
12.10. Is a deposit for a medical or aesthetic procedure treated differently?
The same statutory framework applies, but where the patient is a consumer, the consumer protection regime applies in addition. This provides further protections and gives access to the consumer arbitration committee or the consumer court. Whether a clinic may retain a deposit on cancellation depends on the terms agreed and on whether the clinic can establish loss. Where the clinic cancels or fails to perform, the deposit is recoverable.
12.11. I paid a deposit for a car on a written agreement, not at a notary. What is my position?
Ownership of motor vehicles can only be transferred by a contract executed before a notary. An ordinary written agreement between the parties is not a valid sale contract. The same analysis as for real estate therefore applies: no valid contract, so no cancellation money, and the deposit is recoverable subject to any proven loss.
12.12. How is a deposit different from a rental security deposit?
They are different mechanisms entirely. A purchase deposit is governed by the binding money and cancellation money provisions described in this guide. A rental security deposit secures the tenant's obligations under a lease and is governed by the tenancy provisions of the Turkish Code of Obligations, with its own rules on the maximum amount and the conditions for return. See our guide on the rental deposit refund system for that framework.
12.13. What should I do first if my deposit is being withheld?
Preserve all evidence, including the transfer record, any receipt, the agreement, and all correspondence including messages. Then serve a written demand, ideally as a formal notice through a Turkish notary, which establishes default and interrupts the limitation period. Do not delay: the two-year unjust enrichment period runs from when you learned you had a claim, and it runs whether or not you are in Turkey.
12.14. Can I recover the deposit if I am the one who changed my mind?
Frequently yes. Where the deposit is binding money, it is refundable even where the buyer withdrew, subject only to set-off of loss the seller can prove. It is only where cancellation money was validly agreed under a valid contract that a withdrawing buyer forfeits the payment. Buyers frequently assume that changing their mind forfeits the deposit automatically. Under Turkish law it does not.
Paying a deposit before a proper legal agreement is in place exposes foreign nationals to entirely avoidable financial risk in Turkey. The legal framework is, however, considerably more favourable to the party who paid than most buyers realise.
The default position is that a deposit is binding money and is refundable. Retention requires the recipient to establish that cancellation money was expressly agreed, to prove it, and to demonstrate that the underlying contract was valid. Where the transaction concerns real estate or a motor vehicle and the agreement was not executed in the required official form, that last requirement cannot be satisfied, and the deposit is recoverable regardless of what the document says.
The two practical points that determine outcomes are documentation and timing. A deposit properly characterised in writing at the point of payment rarely becomes a dispute. A claim brought promptly is rarely defeated by limitation. The opposite of each is what brings most of these matters to litigation.
Whether you are buying a property, booking a medical procedure, purchasing a vehicle, or entering a commercial arrangement, we strongly recommend obtaining legal advice before the money leaves your account rather than after.
Contact Bayraktar Attorneys to ensure your deposit is properly documented and protected. We also act in disputes where deposits have been wrongfully withheld, including formal notices, consumer proceedings, mediation, and litigation.
