Pursuant To The Article Of The Turkish Civil Code, The Right Of Preemption Is A Right That Can Be Exercised By The Sale Of The Share And The Establishment Of A Sales Contract Is Not Sufficient For The Exercise Of This Right
T.C. JUDICIARY
14th Civil Chamber
Basis: 2015/15448
Decision: 2016/2537
Date of Decision: 01.03.2016
REGISTRATION CASE – AS PER ARTICLE TMK, PRE-EMPTION RIGHT IS A RIGHT THAT CAN BE EXERCISED BY THE SALE OF THE SHARE AND THE ESTABLISHMENT OF A SALES CONTRACT IS NOT SUFFICIENT FOR THE EXERCISE OF THIS RIGHT – THE JUDGMENT SHOULD BE REVERSED
SUMMARY: The lawsuit is related to the request for cancellation and registration of the title deed due to the pre-emption right. In addition, according to the article of the TMK, the right of pre-emption is a right that can be exercised by selling the share and it is not sufficient to establish a sales contract in order to exercise this right. The sale gains validity and publicity with the registration of the ownership in the land registry.
Since the plaintiff filed this lawsuit on the … day after the … date when the share subject to the lawsuit was registered in the name of the defendant, the two-year statute of limitations described in the article of the TMK has not expired. While the court should make a decision on the merits of the case by considering the mentioned issues, the dismissal of the lawsuit was not deemed correct and the judgment should be reversed for this reason.
(4721 S. Code Art. 54, 105, 599, 705, 732, 733, 1022)
Case: At the end of the proceedings upon the petition filed by the plaintiffs’ attorney against the defendant on 11.12.2013 for the cancellation and registration of the title deed due to pre-emption; the judgment dated 09.04.2015 on the dismissal of the lawsuit was requested by the plaintiffs’ attorney for a hearing to be examined by the Court of Cassation, and upon the notification made for the appointed date of 16.02.2016, the appellant plaintiffs’ attorney Av. … and the defendant’s attorney Av. … came. The open hearing started. After it was decided to accept the petition of appeal, which was understood to be in due time, the verbal explanations of those who came were heard. The hearing was declared over. The matter was left for decision. Subsequently, the file and all the papers in it were examined and the necessity was considered:
Decision: The plaintiffs claimed that the shares subject to the lawsuit were registered forfeitly in the name of the defendant with the lawsuit filed on the basis of the sales promise agreement between the defendant and the non-suiting previous shareholder of the real estate parcel numbered 397, of which they are shareholders, and that he acquired the other shares through sales, and that no notification was made, and requested the registration of the shares subject to the lawsuit in their names due to pre-emption.
The defendant defended the dismissal of the lawsuit by stating that the statute of limitations had expired, there was a de facto division, and that he acquired some of the shares through exchange.
The court decided to dismiss the lawsuit on the grounds that the statute of limitation had expired.
Judgment was appealed by the counsel for the plaintiffs.
The lawsuit is related to the request for cancellation and registration of the title deed due to the right of pre-emption.
The right of pre-emption is a right that authorizes other shareholders to purchase this share in the event that a shareholder sells his share in the immovable immovable immovable partially or completely to a third party in immovable immovables subject to the provisions of shared ownership. This right arises at the time of the establishment of the shared ownership relationship and becomes exercisable upon the sale of shares.
In the concrete dispute, the ownership of the disputed share in the immovable property numbered 397 parcel became final on 02.11.2011 …. The ownership of the disputed share in the immovable property numbered 397 parcel was acquired by the judgment of the Civil Court of First Instance numbered 2009/556 Main, 2010/563 Decision. The said judgment was executed on 12.12.2011 and the share was registered in the name of the defendant.
Registration is mandatory for the birth of real rights. Unless the registration, which has an innovative nature, is made, the right in rem will not be disposable and cannot gain publicity.
Pursuant to Article 705/1 of the TCC, “Acquisition of immovable property is by registration.”
Pursuant to Article 705/2 of the TCC; in cases of inheritance, court decision, forced execution, occupation, expropriation and other cases stipulated by law, ownership is acquired before registration. However, in these cases, the owner’s ability to make disposition transactions depends on the registration of the ownership in the land registry.”
Article 1022/2 of the TCC states that the effect of the registration shall commence on the date of registration in the journal. In this way, the right of ownership becomes public upon registration and becomes assertable against everyone. “…It should be noted immediately that, in Turkish Law, registration is required in principle for the acquisition of immovable property. As a matter of fact, according to Article 705 of the Turkish Civil Code No. 4721, the acquisition of immovable property is through registration.
On the other hand, the principle of registration in Turkish Law is not absolute. In the presence of certain legal grounds, immovable property may be transferred and acquired even before registration. However, in order to speak of an exception to the principle of registration, this exception must be stipulated by law. The cases of acquisition of immovable property not based on registration are set forth in Article 705/2 of the TCC and Articles 54, 105 and 599 of the same Code, and partially in Article 151 of the abrogated Turkish Commercial Code No. 6762. Pursuant to Article 705/2 of the TCC; “In cases of inheritance, court decision, forced execution, occupation, expropriation and other cases stipulated by law, ownership is acquired before registration. However, in these cases, the ability of the owner to perform disposition transactions depends on the registration of the ownership in the land registry.”
Pursuant to Article 705/1 of the Turkish Civil Code, in cases of inheritance, court decision, forced execution, occupation, expropriation, ownership is acquired before registration. In this case, the immovable property passes to the new owner together with all the burdens that have been registered or annotated. Provided that he/she is in good faith, the person who acquires ownership without registration cannot assert a right that is not recognized in the registry, in other words, the provision of Article 1023 of the TMK shall also apply to this person.
The person who acquires the property without registration benefits from all the rights and powers of an owner before the registration, but these rights and powers cannot be asserted against bona fide third parties unless the property right is registered in the title deed, because they have not yet become clear. For this reason, it is of great benefit for this person to register the unregistered property right immediately. Subsequent registration has only a declaratory nature (Jale G. Akipek, Turkish Property Law, In rem Rights, Book Two, Property, Second Edition, Sevinç Matbaası, Ankara, 1973, pp.121-122).
However, in acquisitions that are not based on registration, disposals cannot be made unless registration is made, because the person who acquired the immovable without registration does not appear as the owner in the land registry.
As a matter of fact, this issue is stated in Article 705/2 of the Turkish Civil Code as follows: “However, in these cases, the owner’s ability to make disposals depends on the registration of the ownership in the land registry”.
In the concrete case; in the execution proceedings initiated by the plaintiff İş Bankası attorney against the debtors Öz Aksarıhanlar Hayvancılık Gıda Maddeleri Tarım Ürünleri Zirai Aletler San ve Tic Ltd. Şti. and Ü. S. and carried out in the file numbered 2007/3965 E of İzmir 8th Execution Directorate; Akhisar 2. Execution Directorate’s 2007/346 instruction file, it is understood that the sale of the 8000/12200 shares of Ü. S., one of the debtors registered in parcel 725, was requested through tender; in the forced tender held on 14.05.2009, the immovable share in question was tendered to the creditor İşbankasıA.Ş. for 13.400 TL, and the tender was finalized on 04.09.2009.
As stated in the decisions of the General Assembly of Civil Chambers dated 01.11.1972 and numbered 1968/2-869 E., 1972/891 K.; dated 13.03.2002 and numbered 2002/8-160 E., 2002/191 K., filing a lawsuit is a disposition transaction, and the plaintiff who has not been registered on behalf of the immovable has no right to file the present lawsuit. While the Local Court should have decided to dismiss the lawsuit by considering this issue, it is inappropriate to establish a written judgment with an erroneous evaluation…” (Y. HGK 13.11.2013 2013/6-299 E. 2013/1566 K.).
In the case subject to the lawsuit, the defendant acquired a share in the immovable property subject to the lawsuit with a judgment to which the plaintiff was not a party. Although the defendant acquired the right of ownership on the date of finalization of the judgment, he acquired the right of disposition on this share through registration. In a situation where the party who acquired the right of ownership before the registration can acquire the right of disposition only after the registration, it is contrary to the principle of “openness of the land registry” regulated in Article 1020 of the TMK to know that the judgment to which the plaintiff was not a party became final and to expect the plaintiff to use his pre-emption right accordingly.
Moreover, since the decisions regarding registration do not contain a provision of condemnation for performance and have an innovative nature, they can be executed at any time by the person who is entitled to registration. In this case, the execution of the judgment after the expiration of the periods specified for pre-emption in Article 733/last of the TMK may lead to abuse of the right.
In addition, pursuant to Article 732 of the TCC, the right of pre-emption is a right that can be exercised by the sale of the share, and it is not sufficient to conclude a sales contract in order to exercise this right. The sale becomes valid and public with the registration of the ownership in the land registry. Since the plaintiffs filed this lawsuit on 11.12.2013, after 12.12.2011, the date on which the share subject to the lawsuit was registered in the name of the defendant, the two-year prescriptive period described in Article 733/last of the TMK has not expired.
While the court should make a decision on the merits of the case by considering the mentioned issues, the rejection of the lawsuit on written grounds was not deemed correct, and the judgment should be reversed for this reason.
Conclusion For the reasons explained above, it was decided by majority of votes on 01.03.2016, with the acceptance of the appellate objections of the plaintiffs’ attorneys, that the judgment be reversed, that the 1.350 TL Supreme Court of Appeals hearing attorney fee be taken from the defendant and given to the plaintiffs, that the prepaid fee be returned to the depositor upon request, and that the way of decision correction be open within 15 days from the notification of the decision.
VOTE AGAINST
The dispute is centered on whether the pre-emption right arose on the date of the finalization of the registration decision or on the date of the registration of the decision to the title deed, and accordingly, whether the two-year prescriptive period for filing a lawsuit has expired, since the ownership right passed to the defendant on the date of the finalization of the forced registration decision.
As stated in the decision of the General Assembly of the Court of Cassation dated 20.03.2013 and numbered 2012/6-855 Main, 2013/376 Decision;
Article 732 of the Turkish Civil Code No. 4721 reads as follows: “In the event that a shareholder in a shared ownership sells his/her share on the immovable to a third party in whole or in part, the other shareholders may exercise the right of pre-emption.” Article 734 of the same law reads as follows: “The right of pre-emption is exercised by filing a lawsuit against the buyer. The owner of the right of pre-emption is obliged to deposit the sale price and the title deed expenses incurred by the buyer in cash to the place to be determined by the judge within the period determined by the judge before the registration of the share in his name is decided.”
As can be seen, the relevant articles regulating the “right of pre-emption” always mention “sale”, emphasizing that the right of pre-emption arises upon the sale of the share. In other words, in order to exercise the pre-emption right, it is sufficient to establish the sales contract as valid and there is no need to wait for the registration of the share in the title deed in the name of the defendant. As a matter of fact, the same issue was accepted in the Decision of the General Assembly of the Court of Cassation dated 06.02.1957 and numbered 1957/6-1-6.
“The share with shuf’al was acquired as a result of a forced registration case. Registration to the title deed is not obligatory for the acquisition of the right of ownership. Since the lawsuit was filed within one month after the finalization of the registration decree, it is in due time.” (6th Civil Chamber of the Court of Cassation Decision No. 7.7.1994/7426-7710).
“The share was sold to the defendant through a voluntary tender dated 14.07.1993. This sale replaces the contract of sale made in the presence of the official and the contract of sale is completed with this tender pursuant to Article 225/2 of the Code of Civil Procedure. Thereafter, the registration process required for the transfer of ownership is not an element of the completion of the contract of sale. The right of shuf’a becomes exercisable with the contract of sale.” (6th Civil Chamber of the Court of Cassation 06.06.1995 t. 5559-5754 p. Decision). Also similar judgments: 6th Civil Chamber of the Court of Cassation, 21.04.1993 t. 4653-4852, 17.12.1986 t. 12701-14545, 15.01.1986 t. 11822-32 and 10.07.1962 t. 3628-4814 p. Decision). Source: (Müslüm Tunaboylu – Preemption Cases 5th Edition p. 237 to 286).
“…If the share subject to the lawsuit has been acquired by a court decision, the prescriptive period for the exercise of the pre-emption right starts to run upon the finalization of the court decision. This is because, pursuant to Article 705/2 of the Civil Code, ownership is deemed to have been acquired without the need for registration upon the finalization of the court decision. Since the two-year prescriptive period has elapsed as of the date of the finalization of the judgment at the time the lawsuit was filed, the court should decide to dismiss the lawsuit due to the time limit…” (6th Civil Chamber of the Court of Cassation, 13.03.2007 t. 395-2647 numbered reversal decision).
Article 733 of the TCC states that “…The sale shall be notified to the other shareholders by the buyer or seller through a notary public.
The right of pre-emption shall lapse three months from the date of notification of the sale to the right holder and in any case two years from the date of the sale.”
According to the explanations made above, it is sufficient for a valid sale to be made in order for the forfeiture period to begin to run. The buyer or seller notifies the other shareholders of the sale through a notary public. If the notification is made through a notary (there is no obligation), the right of pre-emption action shall be dismissed within three months and in any case two years after the sale. Both in the text of the law and in the case law, the date of registration to the title deed is not taken as a basis for the beginning of the period.
The period starts to run with the sale. Acquisition of shares with the registration lawsuit filed as a result of the sales promise agreement is also a kind of sale. The court decree replaces the contract of sale in this case. In this respect, the periods determined by the law for the pre-emption right should be determined according to the date of finalization of the decision regarding the registration. The preemptive share is acquired as a result of a forced registration case and there is no obligation to register the title deed in order to acquire the right of ownership. The lawsuit must be filed within three months and in any case within two years after the finalization of the registration decision.
In the concrete case, considering the date of finalization of the registration decision, the prescriptive period has passed, therefore, the court’s decision to “dismiss the lawsuit in terms of the prescriptive period” is in accordance with the law and jurisprudence, and the decision should be upheld.
For the reasons explained, I do not agree with the majority’s reversal opinion.
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