What Is A Pledge Right? How Is A Pledge Established?
The right of pledge is a right that authorizes the creditor to convert a movable or other right into money and receive the amount obtained from the amount obtained, in the event that the creditor cannot receive his/her receivable. The owner has allocated the power of disposition arising from the right of ownership to the holder of the right of pledge. Pledge rights are divided into two as immovable and movable pledges. In order to establish a right of pledge, there must first be a valid right of receivable. The legal principles regarding the right of pledge are set out in the Civil Code as listed below.
I. Types of immovable pledge
ARTICLE 850.- A pledge of immovable property may only be established in the form of mortgage, mortgaged promissory note or revenue note.
II. Secured claim
1. Main money
ARTICLE 851.- A pledge of immovable property may be established for a certain receivable, the amount of which is indicated in Turkish currency. In case the amount of the receivable is not certain, the parties shall specify the upper limit to be secured by the immovable to meet all the claims of the creditor.
A pledge of immovable property in foreign currency may be established in order to secure loans granted by credit institutions operating in or outside the country in foreign currency or in foreign currency measurements. In this case, the amount expressed by each degree shall be indicated in the currency in which the receivable subject to the pledge is determined. However, pledges may not be established using more than one type of currency in the same degree.
In the event of a vacancy in a grade of a pledge established in foreign currency, a pledge may be established in Turkish currency or foreign currency equivalent to its value on the date of registration. In the event that the rank of a pledge established in Turkish currency becomes vacant, a pledge may be established in its equivalent foreign currency at the date of registration.
The foreign exchange buying rate of the Central Bank of the Republic of Turkey on the day of calculation shall be taken as basis in the calculation of foreign or Turkish currency equivalents. The foreign currencies in which pledge rights may be established shall be determined by the Council of Ministers.
2. Interest
ARTICLE 852.- Without prejudice to the limiting provisions, the parties may agree on the interest rate as they wish.
III. Immovable property
1. Being subject to pledge
ARTICLE 853.- The right of pledge may only be established on immovables registered in the title deed.
2. Being certain
a. If the immovable is single
ARTICLE 854.- When establishing a pledge, the immovable which is the subject thereof must be specified.
Unless the parcels of the divided immovable are registered separately in the land registry, they cannot be subject to pledge.
b. If the immovable is more than one
ARTICLE 855.- The pledge of more than one immovable for the same debt depends on the immovables belonging to the same owner or to owners who are jointly and severally liable for the debt.
In other cases where more than one immovable is pledged for the same receivable, the amount for which each immovable constitutes security for the receivable shall be specified when the pledge is established.
Unless there is an agreement to the contrary, the land registry office shall ex officio distribute the security to each of the immovables in proportion to their value.
B. Establishment and termination of the pledge
I. Establishment of the pledge
1. Registration
ARTICLE 856.- Immovable pledge is established upon registration in the land registry. The exceptions stipulated in the law are reserved.
The validity of the agreement on the establishment of a pledge of immovable property depends on its being made in an official form.
2. In immovables belonging to more than one person
ARTICLE 857.- In shared ownership, a shareholder may pledge his own share.
After the pledge is established on the share, the shareholders may not pledge the whole property.
Immovable property subject to joint ownership may only be pledged as a whole and in the name of all the owners.
II. Termination of the pledge
ARTICLE 858.- The pledge of immovable property shall terminate upon the cancellation of the registration or the complete destruction of the immovable property.
The provisions of the law on expropriation are reserved.
III. Consolidation of immovable properties
1. Transfer of the pledge to another immovable property
ARTICLE 859.- The pledges on the parcel merged as a result of the parcel merger and distribution process carried out by the authorized public institution or organization shall be transferred to the immovable given in place of that parcel by preserving their order.
If the immovable property resulting from the merger replaces several parcels pledged for different receivables or some of which are not pledged, the pledge rights on this immovable property shall cover the immovable property as a whole and preserve their order to the extent possible.
2. Release of the immovable from pledge by the debtor
ARTICLE 860.- The debtor of the receivable secured by one of the merged immovables may release the immovable from pledge by paying its value during the merger, provided that he notifies three months in advance.
3. Money paid as consideration
ARTICLE 861.- The money paid as consideration for a pledged immovable shall be divided among the creditors according to their ranks, and if they are in the same rank, in proportion to the amounts of their claims.
If this amount is more than one-twentieth of the amount of the claim secured by the pledge or if the new immovable property does not constitute sufficient security for the claim, it may not be paid to the debtor without the consent of the creditor.
C. Ruling
I. Scope of the pledge
ARTICLE 862.- The pledge makes the immovable property liable together with its integral parts and attachments.
Things which are clearly shown as attachments during the establishment of the pledge, such as machinery, hotel furnishings, etc., and written in the column of declarations in the land registry, shall be deemed as attachments unless it is proved that they cannot be of this nature according to the law.
The rights of third parties on attachments are reserved.