What is the Right of Pre-emption in Turkish Law?

PRE-EMPTION LAWSUIT – RIGHT OF PRE-EMPTION

The right of pre-emption can only be exercised through a pre-emption lawsuit. As a rule, while these rights, which create a new legal situation, can be exercised through unilateral declarations of intent, the legislator has made the exercise of some rights, such as the right of pre-emption, subject to legal action. While litigation was not required under the old law, it has become mandatory under the new law. Therefore, the holder of the right of pre-emption must apply to the court and file a lawsuit within three months from the notification made through a notary.

The right of pre-emption is a right that grants priority to specific individuals to purchase a share in an immovable property. Also known as the right of pre-emption, it restricts the right to transfer ownership of the immovable property. Thus, the sale of a co-owner’s share to a third party in co-ownership can be prevented by other co-owners. This right is attached to the share, not the individual, and whoever the co-owner is, they will have this right. The right of pre-emption is a real right and can be asserted against everyone.

The purpose of legally regulating the right of pre-emption is to prevent the entry of non-co-owners into the co-ownership by ensuring that the share does not pass into the hands of non-co-owners. This right aims to prevent the participation of non-co-owners in the immovable property as co-owners and to avoid further fragmentation of the property into smaller parts.

The right of pre-emption can arise in various ways.

1. PRE-EMPTION AGREEMENT

The right of pre-emption may arise from an agreement. In this scenario, a contract must have been made between the co-owner and the person granted the right of pre-emption. This person can establish a right of pre-emption in their favor or in favor of a third party. The contract must be in simple written form. If no price is specified in the contract, it is a simple right of pre-emption. In this case, the person with the right of pre-emption can acquire the share by paying the price paid by the buyer to the seller. However, if a price is specified in the contract, it is a qualified right of pre-emption, and the price specified in the contract must be paid regardless of the buyer’s price. Additionally, the contract may specify a duration, after which the right of pre-emption expires. If no duration is specified, this period can be up to a maximum of 10 years. The right of pre-emption arising from a contract cannot be transferred unless otherwise agreed in the contract but can pass through inheritance.

REGISTRATION OF THE RIGHT OF PRE-EMPTION ARISING FROM THE CONTRACT

The right of pre-emption arising from the contract mentioned above only binds the parties to the contract. In the absence of registration, it will be a personal right, and a claim for compensation may arise against the seller or their universal successors. However, this situation changes with registration. The legal effect of the right of pre-emption will expand with its registration in the land registry. By registering the right of pre-emption in the land registry, the right can also be asserted against third parties.

2. STATUTORY RIGHT OF PRE-EMPTION

The statutory right of pre-emption is a mechanism that comes into play when a share in an immovable property subject to co-ownership is wholly or partially sold to a third party. In this situation, other co-owners can exercise their right of pre-emption and acquire the share. The right of pre-emption is a priority given to other co-owners when shares in immovable property under co-ownership are sold to third parties. Co-ownership means that there are multiple right holders over a single immovable property, meaning the ownership does not belong to one person alone. The co-owner with the right of pre-emption can purchase the share sold by any co-owner by paying the price. Also known as the right of pre-emption, it can be exercised when the share is sold to third parties. That is, if the share is not sold, the right of pre-emption cannot be exercised at will. It should be noted that the right of pre-emption exists for all immovable properties subject to co-ownership. In this context, when selling shares in such immovable properties, priority must be given to other co-owners.

SITUATIONS GIVING RISE TO THE RIGHT OF PRE-EMPTION

• The sale of a share in an immovable property under co-ownership to a third party.

The share must be transferred through a valid sale agreement to a third party. The right of pre-emption does not arise in cases such as donation, contribution to a company’s capital, or promise of sale. The realization of the sale agreement is a condition for the right to arise.

• Sales made through public auctions.
• Sales of fragmented shares.
• Sales to friends or relatives, or sales to charitable organizations at a lower value can also trigger the right of pre-emption.

SITUATIONS WHERE THE RIGHT OF PRE-EMPTION CANNOT BE EXERCISED

In some cases, the right of pre-emption does not arise. These situations include;

Sales among co-owners

The right of pre-emption arises in the sale of a share to third parties, thus if a co-owner sells their share to another co-owner, the right of pre-emption does not arise.

Donations

For the right of pre-emption to arise, the property must be sold for a price, but since ownership is transferred gratuitously in donations, the right of pre-emption cannot be exercised.

Barter

Since barter is not a sale transaction, the right of pre-emption does not arise. However, if co-owners attempt to avoid the right of pre-emption by showing the transaction as barter in the land registry, this situation is not legally protected, and the right of pre-emption arises.

Contributing immovable property to a partnership as capital

Expropriation

Immovable properties without a title deed

EXERCISING THE RIGHT OF PRE-EMPTION

As a rule, the right of pre-emption is exercised by filing a pre-emption lawsuit against the buyer. The rights of pre-emption arising from a contract registered in the land registry can be exercised against any owner according to the duration and conditions specified in the registration.

To exercise both statutory and contractual rights of pre-emption in concrete cases, the share must be sold to a third party or be the subject of an economically equivalent transaction. This is referred to as the “pre-emption event” in practice. Examples of transactions equivalent to a sale include transfers in lieu of performance and the establishment of surface rights. However, this sale or similar transaction must be valid. In contractual situations, the establishment of the contract is sufficient to exercise the right of pre-emption.

NOTIFICATION OF THE RIGHT OF PRE-EMPTION

To eliminate the excuse of being unaware of the sale, the legislator has imposed the obligation to notify the right of pre-emption. The sale constituting the subject of the right of pre-emption must be notified to the holders of the right of pre-emption through a notary. However, notification is not a requirement for exercising the right of pre-emption. The holder of the right of pre-emption can also exercise their right if they have learned of the sale through another means. Although the duration of the notification is not clear, it must be done by the seller or the buyer through a notary. The date of notification is important for the commencement of the prescription period.

TIME LIMIT FOR EXERCISING THE RIGHT OF PRE-EMPTION

As a rule, the right of pre-emption must be exercised within three months from the date the sale is notified to the right holder and in any case within two years from the sale. The date of notification is taken as the starting point for the three-month period. Notification must be made through a notary in accordance with the procedure. A lawsuit must also be filed within the same periods. These periods are prescriptive. If there are multiple co-owners in statutory pre-emption, these periods run separately for each co-owner. In the case of joint ownership, this period runs from the last notification to the co-owner.

PRE-EMPTION LAWSUIT

The right of pre-emption can only be exercised through a lawsuit. While these rights, which create a new legal situation, can be exercised through unilateral declarations of intent, the legislator has made the exercise of some rights, such as the right of pre-emption, subject to legal action. While litigation was not required under the old law, it has become mandatory under the new law. Therefore, the holder of the right of pre-emption must apply to the court and file a lawsuit within three months from the notification made through a notary.

PLAINTIFF

In the case of immovable properties subject to co-ownership, if a co-owner sells their share to a third party, the other co-owners

will have the right of pre-emption. The plaintiff is the other co-owners. If one of the co-owners has died, their heirs can be plaintiffs as joint heirs. If more than one co-owner wishes to exercise the right of pre-emption, they do not need to file a lawsuit together; they can file separate lawsuits. This is because the prescriptive period that starts with the notification may vary for each co-owner. However, they can also file a lawsuit together as voluntary co-litigants if they wish.

In the case of contractual pre-emption, the plaintiff is the right holder who has been granted the right of pre-emption through the contract. If this person dies, their heirs are the plaintiffs.

DEFENDANT

The defendant is the third party who purchased the share, not the former co-owner who sold it. As a rule, the pre-emption lawsuit is filed against the person registered as the owner of the immovable property in the land registry. In this context, if the registration process has been completed in the name of the third party who purchased the immovable property, this new owner will be the defendant. However, if the registration process has not been completed, the lawsuit is filed against the seller. The unregistered right of pre-emption can be asserted against the obligor and their universal successors.

COMPETENT AND AUTHORIZED COURT IN THE PRE-EMPTION LAWSUIT

Lawsuits arising from the right of pre-emption must be filed in the civil court of first instance where the immovable property is located.

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