What is the Right of Redemption (Fidelity), How is it Used?
Giving the right to purchase a real estate primarily to the former owner is called the right of fidelity. Also known as the right of redemption, this practice allows the former owner to reserve the right to repurchase the property.
People who have difficulty in paying the bank loan can request the establishment of the right of fidelity. If the debts are not paid, the bank takes over the mortgaged real estate against the debt. In case the bank wants to resell this real estate, the former owner who uses the right of fidelity can buy the real estate. In addition to the collateral against the debt, the right of fidelity can be established between the parties at any time.
How to Use the Right of Redemption?
When a real estate is put up for sale, the former owner has the right to purchase the real estate with priority. The establishment of the right of redemption does not restrict any right of use of the new owner of the real estate. It can use the real estate or benefit from income such as rentals.
The validity period of the right of redemption is 10 years at the most. If 10 years have passed since a sale, the right of fidelity will expire. In addition, the right of redemption cannot be transferred to another person, unless otherwise stated in a contract. However, it can be transferred by inheritance.
How to Make a Right of Repurchase Agreement?
The right of redemption can be established at the Land Registry and Cadastre Directorates during the sale of the real estate or in the presence of a notary public after the sale. An annotation can be made on the title deed upon the request of the parties. The documents required for the right of fidelity agreement are as follows:
- Identity cards or passports of the person claiming the right of fidelity or their representatives
- Notarized contract
- Mandatory Earthquake Insurance (DASK) for real estate that has the characteristics of a building
What is the Right of Redemption Fee?
The fee to be paid varies according to the issuance of the right of redemption in the notary public or the title deed. If the right of fidelity is established during the sale of real estate, no other fees are paid except the title deed transfer fee. However, stamp duty is paid at the rate of 7.5 per thousand.
If a fiduciary contract is to be prepared at the notary public after the sale, a title deed fee of 5.94 per thousand is collected. For the cancellation of the right of fidelity, that is, for the drawing of the annotation on the deed, a fee called maktu renunciation is paid.
