Is the Legal Validity Of The Private Sale Of A Registered Property Recognized? What Rights Does A Private Sale Grant To The Parties?
Supreme Court of Turkey
16th Civil Chamber
Case No.: 2015/20772
Decision No.: 2016/7160
Date of Decision: June 29, 2016
CASE FOR CANCELLATION OF TITLE DEED AND REGISTRATION – EXTRAJUDICIAL SALE OF PROPERTY WITH TITLE DEED – NECESSITY TO RENDER A JUDGMENT BASED ON THE MARKET VALUE CALCULATED AS OF THE DATE WHEN THE TRANSFER OF THE PROPERTY VIA TITLE DEED BECAME IMPOSSIBLE – THE JUDGMENT WAS REVERSED
SUMMARY: In a valid sales contract regarding the transfer of real property that lacked a title deed at the time it was entered into between the parties’ decedents, the title deed created in the name of the seller … …the title deed established in the buyer’s name, the judgment should have been rendered based on the market value calculated as of April 26, 1966, the date on which the transfer of the property via title deed became impossible from the seller’s perspective; however, the judgment was erroneously rendered due to errors in the characterization of the case and the assessment of evidence, the appellants’ counsel’s appeals were accepted for these reasons, and it was decided to overturn the judgment, which was contrary to procedure and law.
(Turkish Civil Code No. 4721, Art. 706) (Turkish Commercial Code No. 6098, Art. 237) (Turkish Code of Civil Procedure No. 2644, Art. 26) (Turkish Code of Civil Procedure No. 1512, Art. 60)
Case: Upon the request for the Supreme Court to review the judgment rendered in the case between the parties through an oral hearing; on the scheduled date and time for the hearing, the appellants’ counsel, Attorney … and …, and the counsel for the party against whom the appeal was filed, Attorney …, appeared. The hearing commenced in the presence of those present. After hearing the parties’ oral statements, the hearing was declared closed. The review report and the documents in the file were read within the prescribed timeframe. The matter was deliberated:
Decision: As a result of the cadastral survey, the real property located within the work area of … Village, parcel no. 218, with an area of 6,600.00 square meters, was first identified in the name of … in 1959 and registered by court order in 1966; in the same year, it was registered in the name of his spouse … due to a gift; following the death of the aforementioned individual, it was transferred to the defendants, as heirs, in 2007; after the filing of the present lawsuit, it was registered in the name of … due to a sale, and subsequently, again due to a sale, in the name of … The plaintiffs … and their associates claim that the property was purchased from the registered owner … by their decedent … via a private deed in 1962, after the cadastral survey but before its finalization, and that possession has been held by their decedent and, following the decedent’s death, by themselves since the date of sale, and that the defendants have refused to transfer the title deed. They have filed this lawsuit seeking the cancellation of the title deed registered in the defendants’ names and, if such registration is not made in their own names in proportion to their inheritance shares, the payment to them of the current value of the property and the current value of the 500.00 TL penalty clause specified in the sales contract. Following the trial, the court ruled in favor of the plaintiffs’ claim for compensation; it ordered the joint and several recovery of 204,600.00 TL from the defendants and its payment to the plaintiffs; the judgment was appealed by the defendants’ counsel.
Result: The court ruled that the extrajudicial sale of the titled property was not legally valid, however, the court issued a written judgment stating that the property’s title had lost its legal validity due to the plaintiffs’ use of the property for over 20 years based on the extrajudicial sale, and that the plaintiffs’ possession was in the capacity of owners; yet, the investigation and examination conducted were found insufficient to support the judgment, and the conclusion reached and the characterization of the case were also found inconsistent with the record. It is undisputed that written contracts regarding the sale of a property registered in the land registry are legally invalid because they were not executed in the required formal manner (Turkish Civil Code, Art. 706; Turkish Commercial Code, Art. 237; Land Registry Law, Art. 26; and Notary Law, Art. 60). Therefore, since such contracts do not create rights and obligations for the parties as valid contracts do, the parties may claim back what they have given under the rules of unjust enrichment. There is no statutory formality required for the transfer of unregistered real estate; the agreement between the parties and the subsequent transfer of possession of the property to the purchaser are sufficient. The formation of a land registry entry regarding the real property after the transfer of possession does not affect the validity of the contract entered into prior to such entry. As for whether the sales contract between the plaintiffs’ decedent and the defendants’ decedent is a valid contract: the plaintiffs filed this lawsuit based on the sale made by the owner of the property on February 18, 1962—prior to the establishment of the title and before the date of finalization—and on the possession they held from the date of sale. The file records establish that possession of the property remained with the plaintiffs’ side until the date of the lawsuit. Therefore, the creation of a title deed in the name of the defendant’s decedent … after the transfer of the sale and possession to the plaintiffs’ decedent does not affect the validity of the contract entered into between the parties’ decedents; since the statute of limitations does not begin to run as long as possession remains with the purchaser, the court’s finding that the contract is invalid renders the defendant’s appeals regarding this matter unfounded. Another issue concerns the calculation of the requested amount—specifically, the date and value to be used—in a case filed based on a valid contract where the cancellation and registration of the title deed are not possible. Under the contract entered into between the parties, the seller … is not the registered owner of the real property as of the date of the lawsuit. Therefore, since the seller’s performance of transferring the real property—of which he is no longer the owner—through the land registry has become impossible, it is clear that the plaintiffs cannot request the cancellation of the title deed and registration in their names. Since the court ruled that the market value of the property as of the date of the lawsuit should be paid to the plaintiffs, and given that the plaintiffs have not appealed this ruling, the subject of the appellate review is whether the amount determined by the court is in accordance with the law. Therefore, it is first necessary to determine when performance became impossible. The disputed property was registered in the name of the seller … by court order on April 20, 1966, and six days later, on April 26, 1966, it was transferred by deed to his spouse …… due to a gift. In other words, from the seller’s perspective, the transfer of the property to the plaintiff became impossible as of April 26, 1966, due to the transfer of the property to another person through the land registry. The fact that the property was registered in the names of the defendant’s heirs in 2007 following …’s death in 2004, and that the heirs of … and … are the same individuals, does not alter this outcome. Moreover, the plaintiffs have not alleged that the transfer of the property to the spouse … due to a gift was made in bad faith, nor has any lawsuit been filed within the prescribed time limit based on such an allegation of bad faith. Under these circumstances, since there was no land registry record for the property at the time of the transfer between the parties’ decedents, the court must rule based on the market value calculated as of April 26, 1966—the date on which the transfer of the property via the land registry became impossible for the seller due to the title deed issued in the name of the seller … , the court should have rendered a judgment based on the market value calculated as of April 26, 1966—the date on which the transfer of the property via the land registry became impossible for the seller. However, the court erred in characterizing the case and evaluating the evidence, leading to an erroneous judgment as rendered in writing; the defendants’ counsel’s appeals are hereby accepted for these reasons, and the judgment, which is contrary to procedure and law, is SET ASIDE, The attorney’s fee of 1,350.00 TL set for the Supreme Court hearing shall be collected from the plaintiffs and paid to the defendants who were represented by counsel at the hearing; the advance appeal filing fee shall be refunded to the appealing defendants upon request; it was decided unanimously on June 29, 2016.