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LITIGATION FOR THE DISSOLUTION OF JOINT OWNERSHIPS UNDER TURKISH LAW
When any owner or multiple owners come together and exercise this right, it impacts all the others as well. Each of the owners could file the lawsuit for the elimination of the joint ownership separately or more than one owner may come together and file this case against others. If the cases are filed separately, they are merged into one and the case is heard by the same Court. The partition lawsuit is filed against all joint-owners who are partners in the movable or immovable property. All owners shall become part of the lawsuit and the owners other than the plaintiff (filing owner/s) become defendants in a technical sense. If the plaintiff is a minor, is limited to use powers or is a legal person, a lawsuit could be filed through the legal representatives of the plaintiff (parents, guardians, company managers, etc.). In the event that one of the joint-owner dies before or after the trial, regardless of the plaintiff or defendant, it is possible to conclude the case by adding the heirs as parties.
Types of Division in Dissolution of Joint Ownership Cases
a) Dissolution of joint ownership through partition in kind
In line with the request for partition/division, the parties can reach an agreement on how they will divide the said property and convey their demands on this matter to the Court. In this case, the judge may execute the partition in accordance with the contract. The joint ownership terminated in this way becomes the subject of consensual sharing. According to Article 699/1 of the TCC, the parties may make this distribution in the form of partition in kind or by selling the property through bargaining or auctioning and dividing the proceeds. The distribution made in this way can be realized within the scope of “partition” or “sharing agreement”. The validity conditions of this partition or sharing agreement will also vary depending on whether the property subject to joint ownership is movable or immovable.
However, if an agreement cannot be reached, a lawsuit shall be filed at the request of one of the joint owners in order for the partition to be carried out by the Court. Distribution in this way is called judicial sharing. If possible, the judge decides to divide the property by partition in kind; if the values of the divided parts do not coincide, monetary values can be added to the missing value. It should be noted that unless there is an agreement between the joint owners, the judge cannot decide on the distribution of the immovables to the owners by partition in kind ex officio.
It is sufficient for only one of the parties to make a request for partition in kind and if one of the parties raises such inquiry, the judge should first investigate whether there are the conditions for partition in kind. At this point, the issues that need to be investigated by the Court are stated in the decision of the 14th Civil Chamber of the Court of Cassation dated October 28, 2019 and numbered 2016/1022 E. and 2019/7149. Pursuant to the decision; in order for the Court to decide for partition in kind, it is necessary to investigate whether the division is possible according to the nature of the immovable, the surface area, the number of shares and joint owners, and the nature of the agricultural lands and the zoning legislation. If the immovable property (real estate) will lose value significantly at the end of the partition, the decision of partition in kind cannot be made. Pursuant to the decision of the 6th Civil Chamber of theCourt of Cassation dated April 5, 2010, numbered 2009/11775 E. and 2010/3836; it has also been stated that some part of the immovable property cannot be left with joint shares unless the stakeholder’s consent.
b) Dissolution of joint ownership through sale
Dissolution through sale could occur if the property cannot physically (or equitably) be divided among the joint-owners or if the division request is not deemed appropriate to the situation and conditions, and especially if there is no possibility of dividing the shared goods without a significant depreciation. In these cases, the sale of the property by auction is applied. The sale of the immovable is rendered through the sales administration ‘satis memurlugu’ or the enforcement offices of the Courts, not actually by the Court hearing the actual dispute. Pursuant to Article 699/3 of the TCC, the decision to make the sale by auction among the joint owners is subject to the unanimous agreement of all parties. If the sale is made, the resulting price is divided among the joint-owners. In the event that it is decided to eliminate the joint ownership by sale, the sales transactions are carried out in accordance with the provisions of the Enforcement and Bankruptcy Law No. 2004 (EBL) published in the Official Gazette on June 19, 1932, with the number 2128. Additionally, in accordance with the decision of the 14th Civil Chamber of the Court of Cassation dated June 27, 2012, case file 2013/4662 E. -2013/7052 K. "In case there are records such as seizure annotation, mortgage record and redemption annotation in favor of a third party in the land registry of the immovable property requested to be shared, the sale of the immovable must be done together with the impositions".
The Sale
Movable properties are sold by auction as a rule within two (2) months after the file is sent to the sales administration following the request for sale in accordance with Article 112 of the EBL. However, in some cases, it is also possible to make the sale by negotiation, these cases are listed separately in Article 119 of the EBL.
The sale of the immovables is conducted by auction by the enforcement office within three (3) months from the request for sale. Unlike movables, it is not possible to sell immovable properties by negotiation.
Although the general rule in terms of both movables and immovables is an auction, it can also be decided to make a ‘closed sale’ (direct sale) if all joint-owners consent.
Pre-auction measures
Law No. 7343 on the Amendments to the Enforcement and Bankruptcy Law and Certain Laws (Amendment Law) was published in the Official Gazette No.31675 on November 30, 2021. With Law No. 7343, some fundamental changes took place in many provisions of the EBL. In the previous version of the Law, the preparatory procedures for the auction were involving auction declaration and the auction specification processes. In addition, for immovables there were two more stages named; list of liabilities and appraisal processes. However, as a result of the amendments made in Article 114 titled Pre-auction Measures, the preparation procedures for the auction of the distrained goods and the tendering procedure are rearranged in accordance with electronic sales procedure. Considering this information, Article 114 of EBL should be taken into account at the point of the preparation process for the auction in terms of both movables and immovables.
Bidding announcement
The day and period for the first and second auctions must be announced at least fifteen (15) days before the start of the auction. The announcement to be made on the electronic sales portal is kept open to access until the end. The start date of the second auction is determined not to exceed one (1) month from the end date of the first auction. The form of the announcement and whether it shall be made in the newspaper is determined by the enforcement office, considering what is most appropriate for the interests of the relevant parties. In the event that the announcement is decided to be made with a newspaper published at the domestic level, this announcement is made with one of the newspapers with a circulation of more than fifty thousand (50,000) at the date of the request for sale and distributed at the domestic level.
What needs to be included in the announcement to be made on the electronic sales portal
- The type, nature, important qualifications, appraisal value, location, and visuals, if any, and other information included in the bidding announcement
- In order to participate in the auction, it is obligatory to deposit the security amounting to ten percent (10%) of the value of the seizure into the bank account of the enforcement office, if the security deposit is in cash, it has to be deposited until 23:30 at the latest on the day before the end of the auction period.
- In the event that collateral to be shown is in form of a letter of guarantee, those who shall participate in the auction are obliged to submit the final and indefinite letter of guarantee (‘kesin ve suresiz banka teminat mektubu’) to the enforcement office that makes the sale, in an amount that shall meet ten percent (10%) of the value of the confiscated subject to sale, until the end of the business day before the end of the auction period at the latest.
- Those who shall participate in the auction through the representative are obliged to apply to the enforcement office that made the sale until the end of the business day before the end of the auction period at the latest
- In cases where joint-owned sale (‘hisseli satis’) is possible, it is obligatory for joint buyers who want to purchase the property subject to auction with certain shares to apply to the enforcement office that makes the sale until the end of the business day before the end of the auction period at the latest.
- If the creditor who requests the sale and wants to participate in the auction and the joint-owner who wants to participate in the auction in the partition by sale apply to the enforcement office that made the sale until the end of the business day before the end of the auction period at the latest, the amount of the receivable or the amount the partnership share meets the guarantee shall not be taken from them.
- That the goods shall be tendered to the highest bidder if the conditions are fulfilled.
- The bids to be submitted on the electronic sales portal must exceed fifty percent (50%) of the appraised value of the seized property and the sum of the receivables secured by that property, whichever is higher than the receivables of the seller, whichever is greater, and in addition to this amount, the costs of realization and distribution.
- In the event that the tenderer submits the highest bid and fails to deposit the tender price within the period, the guarantee received shall not be returned and shall be paid to the right holders for their receivables to be deducted primarily from the sales costs.
- In cases where the tender cannot be held because the minimum tender price is not offered or the tender is canceled because the highest bidder does not deposit the tender price, the second auction shall be held again within the framework of the conditions in the first auction.
- The tenderer has to pay the entire sales price to the enforcement offices account within seven days at the latest from the date of announcement of the minutes regarding the realization of the tender on the electronic sales portal.
- Participants of the sale shall be deemed to have seen the specification and accepted its content with all its annexes.
- Upon the finalization of the tender, the registration and delivery procedures of the goods will be conducted.
- Transfer to one heir or if it meets the agricultural land sizes with sufficient income for more than one heir,
- Transfer to a family property partnership or a profit-sharing family property partnership to be established in accordance with Article 373 of the TCC and its continuation,
- Transfer of all heirs to a limited liability company to be established in accordance with the provisions of the Turkish Commercial Code, of which they are shareholders at the rate of their inheritance share,
- Transfer of ownership to third parties.
- Transfer to the competent heir, determined by taking into account his abilities and situations, based on the agricultural income value, in case there is more than one competent heir, firstly to the heir who earns his living from these agricultural lands with sufficient income, in the absence of this, to the heir who offers the highest price among these heirs, if there is no qualified heir, the judge decides to transfer it to the heir who offers the highest price among the heirs.
- If there is more than one competent heir and these heirs have non-inherited agricultural lands, the judge may decide to transfer the agricultural lands to these heirs without seeking a sufficient income size in order to bring the existing lands of these heirs to a sufficient income size or to contribute to the economic operation of these lands.
- If no heir is requesting the transfer of the agricultural land with sufficient income subject to the inheritance, the judge decides on its sale. The income obtained as a result of the sale to be made in this way is distributed to the heirs in proportion to their shares.
- Twenty (20) points for those who earn their living from inherited agricultural lands,
- Ten (10) points for those who have no non-agricultural income,
- Ten (10) points for those whose spouses are actively engaged in agricultural activities,
- Ten points (10) for those who have the professional knowledge and skills to process agricultural lands,
- Five (5) points for those residing within the boundaries of the district where the inherited lands are located for up to five (5) years, ten (10) points for those residing for five (5) years or more,
- Ten (10) points for those who do not have any social security,
- Five (5) points for those who have agricultural insurance under the Social Security Institution (SGK),
- Five (5) points for those who are registered in the current registration systems of the Ministry for up to five (5) years, ten (10) points for those who have five (5) years or more,
- Two (2) points for those who are registered to agricultural organizations for up to five (5) years, five (5) points for those who have five (5) years or more,
- Five (5) points for those who own agricultural tools and equipment.
- Five (5) points to women.
- Qualifications of the competent heir are determined by the regulation to be issued by the Ministry.