Fraudulent Registration and Lawsuit for Correction of the Land Registry in Turkish Law

LEGAL ISSUES WITH FRAUDULENT REGISTRATION

Essentially, fraudulent registration can arise in two ways: First, a land registry can be inherently fraudulent from the outset due to illegal grounds. Second, a registration may start legally but become fraudulent over time due to various conditions.

Owning property is important for many people, but the path to legal ownership, particularly through the land registration process, is crucial. A misstep can lead to complex scenarios, especially when faced with “fraudulent” records, which primarily violate actual ownership rights through an unfortunate illegal event.

When it comes to ownership, whether movable or immovable, the essence of legal rights lies in property. For movable assets, possession is generally sufficient to prove ownership. However, when dealing with immovable assets like real estate, more concrete evidence of ownership is guaranteed. This is where land registries come into play, serving as a public and legal ledger for all property transactions, providing visibility and legitimacy.

Various factors can catalyze such illegal records. These range from duplicate land records, invalid records due to the absence or invalidity of legal reasons, lack of authority, errors made by land registry officials, to violations of imperative legal provisions, ethical norms, public order, personal rights, overuse, and covert agreements that render the legal basis invalid.

According to the Civil Code, a fraudulent registration is typically a record based on an unenforceable legal transaction or one that completely lacks a legal basis. The consequences of such illegal actions can be serious. For example, if a real right is registered illegally, or a valid registration is canceled or changed illegally, the person whose right is violated can apply to the court to correct the land registry.

The transparency principle in the Civil Code requires that the land registry be open to public scrutiny. This openness ensures that no record is overlooked due to negligence. As a result, third parties relying on the land registry for the acquisition of real rights are protected. This eliminates the need for good-faith individuals to question the accuracy of the records.

Moreover, the Civil Code emphasizes the trust principle by safeguarding both actual and apparent right holders in the land registry. However, this system can significantly harm right holders. Therefore, identifying, examining, and correcting potential fraudulent registrations is crucial.

This in-depth guide delves into the complexities of fraudulent registrations by examining their causes, consequences, and correction methods under civil law and Supreme Court case law. By enhancing our understanding of fraudulent records, we can develop more effective strategies to detect and correct them, thereby preserving the integrity of our legal system and protecting legal ownership. Accurate definitions and robust legal frameworks are key to ensuring that land records accurately reflect true property ownership and rights.

FRAUDULENT REGISTRATION FROM THE OUTSET

Fraudulent registration refers to the situation where a property’s land record does not accurately reflect its legal or factual conditions. This recording error can manifest in several ways: the record may be based on an invalid legal reason, lack a legal reason, or be made by an unauthorized person.

For a registration to be valid and legal from the outset, three conditions are required. First, a valid legal reason is necessary. This could be a legal transaction, a legal event, or a judicial process. If a registration lacks a legal reason or if the legal reason is invalid, the registration becomes fraudulent. Second, the person requesting the registration must be authorized to do so. This authority ensures that the right person is making the request. If the person requesting the registration is not authorized or has deficiencies in their authority, the registration is considered fraudulent. The final condition for a valid registration is a registration request. This refers to the act of applying for registration. Without a registration request or with an invalid request, the record is also considered fraudulent.

The reasons for such misuse can range from the absence of any legal basis to non-compliance with formality. A lack of legal capacity or disposal power of the person making the registration request, distortions arising from the registration request, or cadastre determination can also lead to such faulty registrations. These issues highlight the complexity and necessity of meticulous scrutiny in the property registration process to ensure registrations are accurate and legal.

1. LACK OF LEGAL BASIS

Real rights are typically established through registration, but it is crucial for this registration to be based on a valid legal reason to implement the appropriate provisions and effects. Essentially, registration is a causal procedure. The legal reason on which the registration is based usually involves a lawful transaction that imposes rights and obligations regarding the transfer or removal of the real right.

Examples of such legal reasons can range from an obligation contract for the creation of a real right, like a sale or donation, to mortis causa provisions such as a will or an inheritance division agreement. In cases where the real right is acquired before registration, such as inheritance, compulsory enforcement, or expropriation, the acquired right and the transaction or event that forms the basis of this acquisition constitute the legal reason for registration. This complex process underscores the vital role of a valid legal reason in ensuring a correct and legal ownership record.

2. INVALID LEGAL BASIS

When the legal basis is invalid, we often encounter examples of fraudulent registration. Instances where land records are jeopardized due to non-compliance with formality, violation of imperative legal provisions, public order or general moral rules, infringement of personal rights, impossibility, excessive exploitation, and fraudulent transactions.

Form Compliance

It is important to note the significance of legal form when it comes to land registry registration. Form freedom is a principle in contract law that states contracts are generally valid regardless of their form unless otherwise specified by law. However, if the law requires a specific form or if the parties agree on a specific form, the contract becomes invalid if it does not adhere to these forms. This applies to the registration of real rights on property, which must be formally documented and evidenced according to legal requirements.

Transactions carried out according to established procedures and under the guidance of an official authority representative are said to comply with the ‘formal form.’ Particularly in the context of real estate transactions, the validity of property sale contracts depends on adhering to this formal form. Therefore, for a real estate sale contract to be legally binding, it must comply with the prescribed protocols and arrangements.

Legal Capacity

Legal capacity refers to an individual’s ability to enter into legal transactions and assume legal responsibilities. Relevant legislation requires verifying whether applicants have legal capacity when registering title deeds. If there are doubts about the applicant’s capacity to act according to their behavior, a photo doctor’s report clarifying the person’s discerning ability is requested.

Legal capacity is essential for the validity of a legal transaction. Some individuals may not have this capacity due to various conditions. Individuals can be divided into two groups concerning legal capacity: fully incapacitated and limitedly incapacitated.

Fully incapacitated individuals lack discerning power and thus cannot enter into legally binding transactions. Any contract made with such individuals does not protect the good faith of the other party. Transactions conducted by these individuals are invalid and lead to a fraudulent registration.

Limitedly incapacitated individuals, such as minors or those with limited reasoning abilities, require the approval of their legal representatives for transactions. Transactions conducted without such approval by these individuals are suspended until their legal representatives express their will. If approval is given, the legal transaction is valid from the outset. If not, the transaction is invalid. Any record made based on such an invalid legal transaction is considered fraudulent.

Fraudulent Transaction

When determining and interpreting the type and content of a contract, the true and mutual intentions of the parties are considered, regardless of the words they mistakenly or intentionally use to conceal their actual purpose. A debtor cannot claim that a transaction is fraudulent against a third party who has acquired a claim by relying on a written acknowledgment of debt.

Fraudulent transaction, also known as collusion, refers to a situation where the parties make an agreement that they do not genuinely intend to support, usually to deceive third parties. It can be absolute or relative. Absolute collusion involves making an agreement that the parties do not intend to support, for example, to avoid debt recovery actions. Relative collusion involves a hidden agreement that differs from the one openly stated, typically to manipulate outcomes, such as reducing the inheritance value for certain heirs.

Because fraudulent transactions do not reflect the true intent of the parties, they are considered absolutely invalid. Consequently, any registration based on an absolute fraudulent transaction is also considered fraudulent. For relative collusion, the apparent transaction is absolutely invalid as it does not reflect the parties’ true intent. However, if the hidden agreement made by the parties meets the conditions for validity, it gains validity.

Violation of Mandatory Legal Provisions, Public Order, Morality, and Personal Rights

Contracts that violate mandatory legal provisions, morality, public order, personal rights, or are based on an impossible subject matter are absolutely void. If part of the provisions contained in the contract is invalid, it does not affect the validity of the others. However, if it is clear that the contract would not have been made without these provisions, the entire contract becomes absolutely void.

3. REGISTRATION BECOMING FRAUDULENT LATER

In some cases, a registration that was initially legally valid may lose its legal status and become inconsistent with the property’s situation. This occurs when a new right arises outside the registry, conflicting with the existing real right in the registry, or when the real right is transferred or terminated to another person outside the registry. The legal basis must be valid throughout the registration period. A valid legal basis at the time of registration is not sufficient; if the legal basis later becomes invalid, a registration that was initially valid becomes invalid later.

Defective Will

A contract is formed by the mutual and reciprocal declarations of the parties’ wills. A party who makes a contract under a fundamental mistake is not bound by the contract. If one party makes a contract due to the other’s deception, the other or a third party’s intimidation, or their own mistake, even if the mistake is not fundamental, they are not bound by the contract. If the party whose will is defective does not exercise their right to annul within one year from discovering the mistake or deception or from the cessation of intimidation, the right to annul lapses.

Exploitation

If there is a clear disproportion between the mutual performances in a contract, and this disproportion is realized by exploiting the injured party’s difficult situation, thoughtlessness, or inexperience, the injured party may either declare that they are not bound by the contract and request the return of their performance or request the correction of the disproportion while remaining bound by the contract. The injured party can exercise this right within one year from discovering their thoughtlessness or inexperience or from the end of their difficult situation, and in any case within five years from the date of the contract.

Subsequent Impossibility

The general rule is that for a real right on an immovable property to terminate, the right holder must request its cancellation and the real right must be removed from the land registry. However, if the immovable property ceases to exist, if the right holder dies concerning usufruct and residence rights, if the term of the easement expires, if the easement clearly loses its function, and if the mortgage debt is repaid, the real right on the immovable property terminates without cancellation. In such scenarios, the existing registration is considered fraudulent as it does not align with the real right status until cancellation.

CONSEQUENCES AND EFFECTS OF FRAUDULENT REGISTRATION

Fraudulent registration indeed creates various risks and disadvantages for the actual owner of the real rights. The acquisition of ownership or another real right by a third party relying on the land registry registration in good faith is protected. This can result in the true right owner losing their rights and suffering damage. If a person who is unlawfully registered as the owner in the land registry continues to possess the property without interruption and in good faith for ten years, their ownership acquired in this way cannot be challenged. If a fraudulent registry remains uncorrected for a certain period, the person appearing as the owner in the registry may acquire the right through ordinary prescription and jeopardize the real owner’s property. Only the person in whose name the registration is made can benefit from the right to file a lawsuit arising from the ownership presumption and possession. The presumption of ownership is tied to the registration. Therefore, since the presumption of ownership belongs to the registered owner, the true right owner cannot benefit from this presumption. The acquisition of property ownership occurs through registration. In cases of inheritance, court decisions, compulsory enforcement, occupation, expropriation, and other cases prescribed by law, ownership is acquired before registration. However, in such cases, the owner’s ability to perform disposal transactions depends on the registration of ownership in the land registry. The owner not appearing as the right holder in the registry due to fraudulent registration cannot perform disposal actions, including the transfer of the property or the establishment of limited real rights on the property.

CORRECTION OF FRAUDULENT REGISTRATION

The correction of the land registry is indeed a very important legal procedure to maintain the accuracy and reliability of land records. Correction refers to the adjustment of land records that do not reflect the true property rights to accurately represent the correct status. If a real right is fraudulently registered, or a registration is fraudulently canceled or altered, the person whose real right is infringed can file a lawsuit to correct the land registry. The real rights acquired by third parties in good faith relying on this registration and any compensation claims are reserved.

Unless the interested parties provide written consent, the land registry official can only correct the mistake in the land registry with a court decision. Correction may involve the cancellation of the old registration and the creation of a new one. The land registry official corrects simple clerical errors ex officio in accordance with the regulation issued by the President.

If the registration loses all its legal value with the termination of a real right, the owner of the encumbered immovable property can request its cancellation. If the land registry official fulfills this request, any interested party can file a lawsuit against the cancellation within thirty days from the notification of this transaction. The land registry official is authorized to apply to the judge ex officio to obtain a decision regarding the determination of the termination of the real right and to carry out the cancellation transaction based on the judge’s decision.

LAWSUIT FOR CORRECTION OF THE LAND REGISTRY

A lawsuit for the correction of the land registry can be filed if the land registry is fraudulent. That is, any record made without a legal reason, based on an invalid legal reason, or without the request of an authorized person is considered fraudulent.

1. Parties

In such cases, the plaintiff is typically the person whose real right or effective personal right has been harmed due to fraudulent registration or cancellation. Heirs, bankruptcy administration, and those with real rights acquired outside the registry can also file these lawsuits. In the case of joint ownership of a property, according to the prevailing opinion, any of the interest holders can file this lawsuit. If the ownership of a property is joint, this lawsuit must be filed jointly by all interest holders unless otherwise provided by law or contract. There is mandatory joinder of parties in this context.

In such lawsuits, the defendants are generally those who benefit from the apparent right due to the fraudulent registration. These include the persons unlawfully recorded and their successors. Other beneficiaries of the fraudulent registration, directly or indirectly, should also be considered defendants. In the case of shared ownership, the lawsuit must be filed against all interest holders.

2. Burden of Proof

The burden of proof in such lawsuits lies with the plaintiff. They must prove that the registration or cancellation was illegal, the right seen in the land registry does not exist, and the defective registration did not gain validity as a result of correction.

3. Statute of Limitations

As a rule, there is no statute of limitations for lawsuits regarding real rights, meaning that as long as the real right continues, the correction of the land registry record can be requested. However, the ordinary statute of limitations and extraordinary statute of limitations are applicable, and if the true right owner does not file the lawsuit within the prescribed period, they may lose their right.

4. Competent and Authorized Court

In such a lawsuit, the competent court, regardless of the value of the matter, is the civil court of first instance in the location of the property.

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