Dissolution Of Partnership Case
The action for dissolution of joint ownership is a bilateral (actioduplex) action.
Both parties will benefit from the decision to be rendered in the action for dissolution of joint ownership.
Due to this feature, the parties are both plaintiffs and defendants in the action, and the procedural rules to be applied are specifically set forth in Articles 561/570 of the Code of Civil Procedure. Indeed, in doctrine, it is argued that these rules, which are compiled in Articles 561 to 568 of the Code of Civil Procedure, should be accepted as special procedural rules to be applied to lawsuits to be filed in accordance with Article 569.
Therefore, even if the plaintiff only requests the dissolution of the joint ownership through sale, if the defendant requests the dissolution of the joint ownership through partition and the conditions for this are found to exist, the court may undoubtedly decide to dissolve the joint ownership through partition.
It is not possible to terminate the joint ownership of a portion of immovable property. According to both the provisions of the Civil Code and the Rules of Procedure, only the termination of joint ownership of the entire property may be requested.
Article 569 establishes the rule regarding the method of division. Accordingly, if division by physical partition is possible, the judge will decide on that method; otherwise, the judge will decide on sale by public auction.
This article of the law is mandatory. Article 703/final of the same law also stipulates that, unless otherwise specified, the division of joint ownership shall be carried out in accordance with the provisions on shared ownership.
In joint ownership, each co-owner has the right to request the termination of the joint ownership at any time with regard to their own share. This right is explicitly stated in Article 698 of the Civil Code.
Furthermore, Article 627 of the Civil Code specifies the limits of this right, and Article 628 sets out the procedure to be followed to terminate the partnership. If none of the circumstances preventing or limiting the dissolution of the partnership, as set forth in Article 627 of the Civil Code, exist, the dissolution of the partnership must be decided upon by applying the procedure set forth in Article 628 of the same Code.
The circumstances preventing the dissolution of the partnership, as set forth in Article 627 of the Civil Code, are
1 – Legal disposition,
2 – Allocation of the immovable property for a permanent purpose,
3 – Requesting and carrying out the division at an inappropriate time.
Legal disposition refers to the agreement of the co-owners to continue the co-ownership for a period not exceeding 10 years. With this agreement, the co-owners are deemed to have suspended the right of all co-owners or a specific co-owner to withdraw from the co-ownership. This agreement binds those who made it and those who acquired shares by inheritance. In our case, there is no explicit statement in the existing construction contract between the parties that such an agreement was made. In the absence of an explicit provision, the existence of such an agreement cannot be accepted. The argument that the main purpose of the existing agreement is the construction and that the obligation to continue the partnership will exist until the construction is completed is not valid. This is because the parties’ free wills are only united in the conclusion of a construction contract and the status to be applied if the construction is not carried out, but they are not united on the continuation of the partnership. It is not possible to interpret the construction contract in this way. The legal consequences arising from the construction contract are determined by law. Accepting that these legally determined consequences would give rise to another legal consequence, also determined by law, is contrary to the provisions of the law.
The permanent allocation of immovable property means that the co-owners can benefit from the property in accordance with the purpose for which it was allocated. Examples include a wall between two immovable properties, a road opened for multiple immovable properties, a well, a fountain, or facilities that provide heating for separate buildings from one location.
The conclusion of a construction contract by one co-owner with another for the construction of a building on the joint property cannot be considered as the allocation of the immovable property for a permanent purpose. Building a structure is not an allocation and does not have a permanent nature. The condominium ownership to be established also cannot be considered as the allocation of real estate for a permanent purpose, since it relates to a specific property right within the scope of the provisions determined by the Law after the legal consequences of the construction contract have been realized. Moreover, according to the Condominium Ownership Law, the sale of apartments subject to easement and condominium ownership is always possible.
As for the sale of the immovable property at an appropriate time, this provision is intended to prevent a partner who wishes to withdraw from the partnership from using this request in a manner that would be detrimental to the other partners. It is a special application of Article 2 of the Civil Code. Therefore, it is not appropriate to consider the appropriate time as the time when the real estate can be sold at the highest price. There may be partners who suffer damage due to the unsuitability of the time, despite the high sale price. However, it cannot be expected that the partners wait for an unusually long period. If the damage suffered by the partner has ceased or the usual period has passed, the request for dissolution of the partnership shall be accepted.
When it comes to selling real estate at an appropriate time, this provision is intended to prevent a partner who wishes to withdraw from the partnership from using this request in a way that would be detrimental to the other partners. It is a special application of Article 2 of the Civil Code. Therefore, it is not appropriate to consider the most opportune time as the time when the real estate can be sold at the highest price. There may be partners who suffer damage due to the unsuitability of the time, despite the high sale price. However, it is not reasonable to expect the partners to wait for an excessive period of time. If the damage suffered by the partner has ceased or the customary period has passed, the request for dissolution of the partnership must be accepted. Consequently, the appropriate time must be determined by weighing the interests of both parties and exercising the discretion provided for in Article 4 of the Civil Code. There are even those who argue that the specific time should be determined not by the judge but by the sales officer at the time of sale.
In cases of dissolution of joint ownership, if the co-owners are alive, they must be included in the case, and if they are deceased, their heirs, determined by the inheritance certificate to be presented, must be included in the case, thus constituting the parties.
However, the right to file a lawsuit for the dissolution of joint ownership, i.e., the right to request division (to file a partition lawsuit), is generally granted to the co-owner in the case of shared ownership and to the heir in the case of joint ownership. A person who is not the owner is not granted the right to request division or to participate in the division. For example, although Articles 612 and 677 of the Civil Code allow for the conclusion of a contract with a third party regarding the transfer of an inheritance share, they do not grant that person the authority to participate in the division. Therefore, it is not possible for a person who is not a co-owner to file a division lawsuit.
According to Article 588 of the Civil Code, a creditor who has acquired or seized the share falling to an heir, or who has an enforcement document regarding the heir’s inability to pay their debt, may request to participate in the division in place of the heir.
Participation in the division also includes the right to request division (lawsuit). Since the right to file a lawsuit for division belongs to the co-owner or heir, and since it cannot be expected that the creditor would file a lawsuit resulting in the collection of the debt from the heir who has not paid the debt, this right is granted to the judge by the aforementioned article of the law, authorizing the creditor to file a lawsuit on behalf of the debtor heir. and the creditor would file a partition lawsuit based on this authority granted by the judge.
Since the legislator did not deem such a situation appropriate, a new provision was introduced with Article 648 of the Turkish Civil Code, stipulating that the creditor may request the appointment of a trustee by the conciliation judge to participate in the partition. Accordingly, the creditor will request the conciliation judge to appoint a trustee to participate in the distribution; once the trustee is appointed, the trustee will file a lawsuit for the dissolution of the joint ownership (distribution), and the lawsuit will proceed and be concluded with the trustee’s consent. In accordance with the previous practice, the lawsuit filed must be resolved by remedying the deficiency regarding the trustee without proceeding to dismissal, and a decision must be made thereafter.
A person who is a creditor of a debtor who has a share in property subject to joint ownership may, based on the authority obtained from the Enforcement Court, file a lawsuit against all joint owners, including the debtor, and conclude this lawsuit. The right to file this lawsuit is not granted to the judge or any other person, but only to the heir or the creditor who has obtained the authority to file a lawsuit for the dissolution of the joint ownership from the Enforcement Court in accordance with the provisions of Article 121 of the Enforcement and Bankruptcy Law. (5)
The creditor of the joint partner may also file a lawsuit for the dissolution of the partnership for the immovable property in which the debtor is a partner based on the authorization document obtained from the Enforcement Review Authority. According to the Judgment Consolidation Decision dated 14.4.1943 and numbered 15/48, it is mandatory to obtain the authorization document from the Enforcement Review Authority. The Enforcement Officer does not have the right to issue such an authorization certificate. If a lawsuit is filed directly without obtaining a certificate from the Review Authority or based on a certificate issued by the Enforcement Officer, the lawsuit shall not be dismissed; instead, the plaintiff shall be given time to obtain the necessary certificate from the competent authority.
If the creditor files a lawsuit to dissolve the partnership, all participating partners, including the debtor partner, must be included in the lawsuit.
In lawsuits to dissolve the partnership, a fixed attorney’s fee must be determined in accordance with the provisions of the Minimum Attorney’s Fee Schedule for the benefit of the partners who represent themselves through an attorney.
Partnership dissolution lawsuits are bilateral lawsuits that produce similar results for both parties. In these lawsuits, the defendant has the same rights as the plaintiff. Therefore, the plaintiff’s request for division by sale does not prevent the defendants from requesting division in kind.
In cases for the dissolution of co-ownership, in order for the court to decide on the division and distribution of the property in kind, it is necessary to investigate the area, nature, shares, and number of co-owners of the immovable property, as well as the nature of the agricultural land and whether division in kind is possible according to zoning regulations. If the immovable property suffers a significant loss in value, a decision cannot be made to divide and distribute it in kind. Likewise, if the co-owners do not consent, part of the immovable property cannot be left undivided.
If division by equal shares (partition) is possible, and the values of the divided parts are not equal, compensation (ivaz) is added to the part with the lower value to ensure equality. Unless there is an agreement between the co-owners in the case, the judge cannot decide on division by equal shares, assigning some real estate to some co-owners and the remainder to other co-owners.
In the case of division by equal shares (partition), a partition project is prepared by a technical expert, and based on this project, if the immovable property is within the boundaries of the municipality or its adjacent area, a decision is obtained from the municipal council, and if it is outside the municipality, the provincial administrative council is asked whether the division (partition) is possible according to the Zoning Law and Regulations. If the co-owners cannot agree on who will receive which parts in the subdivision project, this is determined by drawing lots in the presence of a judge.
If the approval authority responds negatively, it must be decided to terminate the co-ownership by sale.