Lawsuit for Elimination of Partnership in Turkish Law
Lawsuits for the elimination of partnership are legal processes that terminate joint ownership on movable or immovable properties subject to shared or joint ownership and enable transition to individual ownership. These lawsuits can be filed by co-owners, shareholders, or creditors under Article 121 of the Enforcement and Bankruptcy Law. The subject of these lawsuits includes immovable properties registered in the land registry, independent and permanent rights, independent sections subject to condominium ownership, ships registered in the registry, and movables that are subject to joint ownership.
Subject of the Lawsuit and Limitations
Point to note: Money cannot be the subject of a lawsuit for elimination of partnership. If there is money in the estate, the partnership should be eliminated by converting joint ownership into shared ownership (Article 644 of the Turkish Civil Code).
Limitations on filing the lawsuit:
- In cases of joint ownership, elimination of partnership cannot be requested for a specific share. The entire property must be subject to the lawsuit.
- Elimination of partnership through sale is not possible for ten years for places allocated according to Law No. 2510, for twenty-five years for places given according to Law No. 4753, and for ten years for places given according to Law No. 6188.
Right to File a Lawsuit and Party Formation
Persons who can file a lawsuit for elimination of partnership:
- One or several co-owners
Any of the owners of property subject to shared or joint ownership can file a lawsuit for elimination of partnership without obtaining the consent of other co-owners. This right is regulated in Article 698 of the Turkish Civil Code. The size of the co-owner’s share is not important; even the co-owner with the smallest share can file this lawsuit. This right is seen as an extension of the right of ownership and provides co-owners with the opportunity to exit the partnership.
- Legal entities such as the Treasury, municipalities, special provincial administrations, foundations
Public legal entities or private law legal entities can also file a lawsuit for elimination of partnership for properties in which they are co-owners. For example, if the Treasury is a co-owner of an immovable property, it can file this lawsuit against other co-owners. Municipalities frequently file this lawsuit for properties they co-own within the scope of urban transformation or zoning applications. Foundations also have the right to file a lawsuit for the elimination of partnership on foundation properties. The filing of lawsuits by these legal entities usually occurs in line with public interest or institutional purposes.
- Creditor of the indebted partner (pursuant to Article 121 of the Enforcement and Bankruptcy Law)
Article 121 of the Enforcement and Bankruptcy Law grants the right to file a lawsuit for elimination of partnership to the creditor who has seized the debtor’s share in a property. The creditor can file this lawsuit with the authorization certificate obtained from the enforcement court. This provision is introduced to facilitate the creditor’s recovery of their receivables. Through this lawsuit, the creditor has the opportunity to collect their receivables from the amount that will fall to the indebted partner’s share. However, in the lawsuit filed by the creditor, all co-owners must be included in the lawsuit, and if a sale decision is made, not only the indebted partner’s share but the entire property is sold.
Those who do not have the right to file a lawsuit:
- Usufructuary
Usufruct is a limited real right that gives the right to use and benefit from a property. Since the usufructuary does not own the property, they do not have the right to file a lawsuit for elimination of partnership. However, as the interests of the usufructuary need to be protected, especially in usufruct rights established after 01.01.2002, it is mandatory to include the usufructuary in the lawsuit. Although the usufructuary may be affected by the outcome of the lawsuit, they cannot directly file a lawsuit as they do not have ownership rights.
- Person with an annotation in their favor in the declarations section of the land registry
Persons who have an annotation in their favor in the declarations section of the land registry (for example, a tenant with a lease agreement annotation or a buyer with a promise to sell annotation) cannot file a lawsuit for elimination of partnership as they are not the owners of the immovable property. Although the rights of these persons appear in the land registry record, they do not confer ownership rights. The annotation is usually made to strengthen a personal right or to make it assertable against third parties. However, the annotation holder may need to be included in the lawsuit as they may be affected by the outcome of the lawsuit.
- Heir who has rejected the inheritance, has been disinherited, or has renounced the inheritance
These persons do not have any rights over the inheritance assets as they have lost their heir status through legal or voluntary means. Therefore, they do not have the right to file a lawsuit for elimination of partnership on these properties.
- A person who rejects the inheritance loses their heir status retroactively from the moment the inheritance is opened.
- A person who has been disinherited has been deprived of their heir status by the will of the testator.
- A person who has renounced the inheritance has given up their inheritance rights before the inheritance is opened.
In any of these situations, as the person cannot claim rights over the inheritance, they also lose the right to file a lawsuit for elimination of partnership on the inheritance assets. If these persons file a lawsuit, it will be rejected due to lack of standing.
Points to consider in party formation:
- Pursuant to Article 27 of the Civil Procedure Law, all co-owners must be included in the lawsuit.
- This aspect of party formation should be considered ex officio by the court.
- It must be absolutely checked whether the lawsuit and hearing summons have been duly served to the concerned parties.
- In case a lawsuit is filed against a co-owner who died before the lawsuit was filed, the lawsuit is not rejected. The lawsuit should be directed to the heirs of the deceased co-owner.
- If one of the co-owners transfers their share during the trial, the transferees gain party status in the lawsuit, and as party formation is related to public order, the plaintiff’s attorney should be given time and opportunity to direct the lawsuit against the new owners.
Special situations:
- A person filing a lawsuit as a guardian should be asked to obtain permission from the family judge in accordance with the provisions on the protection of the child’s property (Turkish Civil Code Article 352 et seq.).
- In case the minor and the guardian are joint owners as the land registry owner, and if the plaintiff is the minor and/or the guardian, a trustee appointment is required due to conflict of interest pursuant to Article 426/2 of the Turkish Civil Code.
- If there is a Syrian or Lebanese co-owner among the co-owners, attention should be paid to the restrictions imposed based on Law No. 1062. In this case, the lawsuit should also be directed against the Treasury.
Competent and Authorized Court
Competent court: Pursuant to Article 4/1-b of the Civil Procedure Law No. 6100 (HMK), the civil court of peace is competent.
Authorized court:
- For immovable properties: The court of the place where the subject immovable property is located
- For movable properties: Pursuant to Article 6 of the HMK, the court of the defendant’s place of residence at the time the lawsuit is filed
- In lawsuits related to the testator’s estate: Pursuant to Article 11 of the HMK, the court of the testator’s last place of residence
- For ships: The court of the place where it is registered
If multiple immovable properties are subject to the lawsuit, the court of the place where one of them is located is authorized (HMK. Article 12).
Trial Procedure and Evidence to be Collected
Pursuant to Article 316/1-a of the HMK, simple trial procedure is applied.
Evidence to be collected:
- Land registry records for immovable properties, ownership documents for movable properties
Land registry records are official documents showing the ownership of the immovable property and the rights on it. These records are of critical importance in determining the ownership status, co-owners, and share ratios in the lawsuit for elimination of partnership. For movable properties, documents showing ownership such as invoices and licenses should be collected. These documents help determine who owns the property and the sharing ratios.
- Inheritance certificates of deceased partners
If one or more of the partners are not alive, their heirs should be included in the lawsuit in their place. The inheritance certificate shows the legal heirs of the deceased partner and their inheritance shares. This document can be obtained from the court or notary and is necessary for the correct formation of parties in the lawsuit. Without the inheritance certificate, it cannot be determined how and to whom the share of the deceased partner will be distributed.
- Inspection and expert report (to determine if division in kind is possible)
Inspection is the court’s on-site examination of the subject property. An expert prepares a report containing technical evaluations of the property by specialists in the field. These pieces of evidence are particularly important for determining whether division in kind (physical division and distribution of the property) is possible. The expert report includes the value of the property, its divisibility, the value of each share, and possible division scenarios. The court decides how to eliminate the partnership based on this report.
Point to note: Making a decision without inspection can be grounds for reversal.
Methods of Eliminating Partnership
The court can decide to eliminate the partnership of the subject property in three ways:
- Division in kind
Division in kind is the physical division and distribution of the subject property among the co-owners. This method is especially applied to immovable properties. If the court determines that the property can be divided according to its nature, location, and the shares of the co-owners, it decides on division in kind. For example, a large plot of land can be divided into parts and each co-owner can be given a part. However, for a division in kind decision to be made, the property must be divisible without losing value. Additionally, legal regulations such as zoning legislation should also be taken into account.
- Elimination of partnership through sale
If the property is indivisible or would suffer significant loss of value if divided, the court may decide to eliminate the partnership through sale. In this case, the property is sold by auction and the proceeds are distributed among the co-owners according to their share ratios. The sale is usually done through an open auction, but if all co-owners consent, it can also be done through negotiation. This method is often applied especially for movables and indivisible immovables (for example, a single apartment).
- Elimination of partnership by establishing condominium ownership
This method is especially applied to structures with multiple independent sections. If the subject immovable property is suitable for transition to condominium ownership and the shares of the co-owners can be divided to correspond to independent sections, the court may decide to eliminate the partnership by establishing condominium ownership. In this case, each co-owner becomes the owner of the independent section corresponding to their share. For example, if a four-story apartment has four co-owners, the partnership can be eliminated by giving each of them one apartment.
Points to consider regarding division in kind:
- If one of the parties requests division in kind and it is determined that division in kind is possible, a decision cannot be made to eliminate the partnership through sale.
- If it is understood that division in kind is possible as a result of inspection and expert examination, a subdivision sketch is prepared by the expert and its approval is obtained by the court according to Article 16 of the Zoning Law.
- If division in kind is possible, each co-owner is asked which section they want. If an agreement cannot be reached, a draw is made.
- If multiple immovable properties are subject to the lawsuit, the possibility of division in kind should be investigated separately for each immovable property.
Points to consider in eliminating partnership through sale:
- Unless there is a special reason, it should be decided that the sale should be made in the form of an open auction open to the public.
- If all parties unanimously agree, it can also be decided to make the sale in the form of an open auction only among the co-owners.
- In case of a sale decision, it should be decided that the money obtained at the end of the sale will be distributed to the parties in proportion to their shares.
Points to consider in eliminating partnership by establishing condominium ownership:
- In case there is a structure with more than one independent section suitable for establishing condominium ownership on the immovable property subject to the lawsuit for elimination of partnership, if there is a request, it should be investigated whether it is possible to eliminate the partnership by establishing condominium ownership.
Special Situations and Points to Consider
In case of superstructure:
- If there is a superstructure belonging to one of the co-owners on the land, the ratio of the superstructure to the total value of the immovable property should be determined, and the money corresponding to this ratio should be paid to the owner of the superstructure first, and the remaining amount should be distributed to the parties in proportion to their shares.
- The ratio of the money to be paid to the owner of the superstructure should be clearly shown in the judgment clause.
In case of expropriation annotation:
- By obtaining the expropriation documents, it should be investigated whether the expropriation proceedings have become final, if the expropriation has become final, the plaintiff should be given an appropriate time for the subdivision of the expropriated part, and it should be decided to eliminate the partnership of the remaining part of the immovable property.
In immovable properties with family residence annotation:
- In cases where the spouse’s consent to the lawsuit cannot be obtained, the lawsuit should be rejected.
Other special situations:
- The fact that the immovable property is subject to usufruct, seizure, and mortgage does not prevent the elimination of its partnership. It should be sold with these rights, and in case of division in kind, these rights and claims should pass to each part.
- It is possible to convert the usufruct right established before 01.01.2002 into money at the request of the right holder. In the usufruct right established after 01.01.2002, the usufruct right holder must be included in the lawsuit according to Article 700 of the Turkish Civil Code.
Special Situations Regarding Lawsuits Filed by Creditors
- In lawsuits filed by the creditor of the indebted partner, if more than one immovable property is subject to the lawsuit, according to the amount of debt subject to enforcement proceedings, the value that will fall to the share of the indebted partner from the immovable properties as of the date of the lawsuit should be determined, and it should be decided to eliminate the partnership of enough immovable properties to cover the debt, and the request for excess should be rejected.
- In lawsuits filed by the creditor of the indebted partner; all partners (co-owners), including the indebted partner (co-owner), must be included in the lawsuit.
- In cases where a lawsuit for converting joint ownership to shared ownership is filed by the owners of the subject immovable property after the lawsuit for elimination of partnership is filed by the creditor according to Article 121 of the Enforcement and Bankruptcy Law, both lawsuits can be combined and heard, or the lawsuit for converting joint ownership to shared ownership can be made a preliminary issue in the lawsuit for elimination of partnership.
Fees and Trial Expenses
Since lawsuits for elimination of partnership are bilateral and produce similar results for the parties, trial expenses and attorney fees are imposed on the parties in proportion to their shares.
Decision and judgment fee:
- In case of decision to eliminate the partnership of the immovable property through sale: 11.38 per thousand over the sale price
In this case, the fee is calculated over the amount obtained from the sale of the immovable property. For example, for an immovable property sold for 1,000,000 TL, the fee to be paid will be 11,380 TL. This rate is applied due to the realization of the sale transaction and the parties obtaining cash. The fee is usually deducted from the sale price and the remaining amount is distributed among the co-owners.
- In case of decision to eliminate the partnership of the immovable property through division in kind: 4.55 per thousand over the value of the immovable property
In division in kind, a lower rate of fee is charged over the value of the immovable property. For example, in case of division in kind of an immovable property with a value of 1,000,000 TL, the fee to be paid will be 4,550 TL. This rate is kept lower because there is no sale and only a physical division is made between the parties. The fee is usually distributed among the parties according to their share ratios.
- Elimination of partnership of movable properties: Subject to fixed decision and judgment fee
A fixed fee is charged for movable properties. This fee is a fixed amount determined independently of the value of the movable and is updated periodically.
Point to note: Since the Treasury is one of the institutions exempt from fees according to Article 13 of the Fees Law, in lawsuits for elimination of partnership of immovable properties where the Treasury is a co-owner, it should be decided to collect the remaining fee from the co-owners in proportion to their shares after deducting the part falling to the Treasury’s share.
For more help or consultation on this matter, you can contact us.