An action for the dissolution of co-ownership (izale-i şuyu) is a type of action brought with a view to bringing to an end the bond of collective ownership established over movable or immovable property subject to co-ownership or to joint ownership.
As a rule no co-owner may be compelled to continue the co-ownership relationship; every co-owner may request that this relationship be dissolved. In the proceedings the court first investigates whether it is possible to divide the property in kind; if that course is not suitable, it orders the dissolution of the co-ownership by sale of the immovable property.
In this briefing note we examine in detail the conditions for an action for the dissolution of co-ownership, the methods of partition that may be applied, the conduct of the proceedings, the sale stage and the consequences produced by the judgment to be given.
What Is an Action for the Dissolution of Co-ownership?
An action for the dissolution of co-ownership is a type of action directed at bringing to an end the collective ownership relationship over property subject to co-ownership or to joint ownership. By means of this action the co-ownership between the co-owners is dissolved; the property is either divided in kind or sold and its price distributed among the co-owners.
As a rule, each of the co-owners is granted the power to request the dissolution of the co-ownership.
Legal Nature of the Action
An action for the dissolution of co-ownership is a fully bilateral action for performance. In these files the distinction between claimant and respondent carries limited importance in the classical sense, because all the co-owners joined to the proceedings are legally affected by the outcome.
The reason why the distinction between the positions of claimant and respondent is not decisive is that the ending of the co-ownership touches the sphere of rights of everyone concerned. For this reason the judgment given produces consequences for all the co-owners who are parties to the file.
Provisions on Which the Action Is Based
The principal basis of actions for the dissolution of co-ownership is formed by the Turkish Civil Code No. 4721. Article 698 of the Turkish Civil Code No. 4721 in particular grants each co-owner, as a rule, the power to request division.
Turkish Civil Code No. 4721, Art. 698
"Unless there is an obligation to maintain the co-ownership by virtue of a legal transaction or by reason of the co-owned property having been dedicated to a permanent purpose, each of the co-owners may request the division of the property."
Alongside this provision, the following rules also find application in the proceedings:
- The provisions of the Code of Civil Procedure No. 6100
- The provisions of the Condominium Ownership Act No. 634
- The provisions of the Turkish Civil Code No. 4721 on co-ownership and on joint ownership
Conditions Required for Bringing the Action
In order for an action for the dissolution of co-ownership to be brought, a relationship of collective ownership must exist and the legal conditions justifying the ending of the co-ownership must be satisfied. The procedural requirements and the conditions relating to the dissolution of the co-ownership are taken into account by the court of its own motion throughout the proceedings.
In practice the complete constitution of the parties, the continued existence of the bond of collective ownership and the absence of any impediment making the continuation of the co-ownership compulsory are of particular importance.
Existence of Co-ownership or Joint Ownership
In order for the action to be brought, a relationship of co-ownership or of joint ownership must first have been established over the immovable property.
In co-ownership each co-owner holds a determined share ratio; in joint ownership, by contrast, there is no separation of shares and the right of ownership is exercised collectively.
Since joint ownership arises between the heirs in respect of immovable property passing by inheritance, a significant proportion of actions for the dissolution of co-ownership arise in practice from communities of heirs.
Continuation of the Co-ownership Must Not Be Compulsory
In order for a request for division to be advanced, there must be no legal situation making the continuation of the co-ownership compulsory.
Under Art. 698 of the Turkish Civil Code No. 4721, the continuation of the co-ownership may be rendered compulsory by;
- a provision of statute,
- a legal transaction,
- the dedication of the immovable property to a permanent purpose
and where that is so, the request for division may be limited for certain periods. For example, where the co-owners have concluded a valid agreement that the co-ownership is to continue for a further specified period, it may not be possible to request division before that period expires.
The Property Must Be Subject to Collective Ownership
Actions for the dissolution of co-ownership are predominantly brought in respect of immovable property.
The immovable property forming the subject of the action must be registered in the land registry in the names of more than one person, or a relationship of collective ownership must have arisen by reason of a community of heirs. This action cannot be brought in respect of immovable property registered in the land registry in the name of a single person.
All Co-owners Must Be Joined to the Proceedings
In these actions it is compulsory for all the co-owners, without exception, to appear as parties, because the judgment to be given affects the whole of the collective ownership relationship.
For this reason everyone holding a share in the land registry, and in joint ownership all the heirs, must be joined to the file. No decision on the merits may be given before the constitution of the parties is complete.
If one of the co-owners dies while the proceedings are pending, their heirs must be enabled to join the action.
Methods of Dissolving Co-ownership
The court determines the procedure by which the co-ownership is to be brought to an end by assessing the characteristics of the immovable property, the position of the co-owners and whether division in kind is suitable.
In Turkish law partition is as a rule achieved by the following means:
- The establishment of condominium ownership
- Partition in kind
- Partition by way of sale
The court first investigates whether partition in kind is possible; where that method is not applicable, it orders the dissolution of the co-ownership by way of sale.
Partition in Kind
Partition in kind is the division of the immovable property held in collective ownership, its separate allocation to the co-owners and the ending of the co-ownership in that manner.
Under this method the immovable property is not sold; each co-owner becomes, so far as possible, the owner of the part corresponding to their share. However, recourse to partition in kind is conditional upon the immovable property:
- being in conformity with the zoning legislation,
- being technically suitable for division,
- not suffering a serious loss in its economic value as a result of the division
satisfying these requirements. Where the immovable property cannot be divided either in fact or in law, this course cannot be taken.
Partition by Way of Sale
Where division in kind is not possible, the dissolution of the co-ownership by way of sale is ordered.
Under this method the immovable property is sold by public auction and the price obtained is divided among the co-owners according to their share ratios. Partition by way of sale is among the methods most frequently resorted to in practice.
The sale is as a rule carried out by way of an auction open to all. That said, where all the co-owners make a request to that effect, it may be ordered that the auction be held between the co-owners alone.
Partition by Establishing Condominium Ownership
In immovable property on which there stands a building suitable for the creation of more than one independent section, the co-ownership may be dissolved by establishing condominium ownership.
Under this method too the immovable property is not sold; independent sections are created and allocated to the co-owners. The co-owners therefore do not lose their rights over the immovable property altogether, but come to hold the position of owners of independent sections.
This course serves an important function in practice, particularly in the case of family apartment buildings and multi-storey structures.
The Principle of the Priority of Partition in Kind
In proceedings for the dissolution of co-ownership the possibility of partition in kind must be investigated first.
The court may not order a sale directly without examining whether the immovable property is suitable for division or for the establishment of condominium ownership. For this reason the possibility of partition in kind is assessed by means of on-site examination and expert examination.
If it is concluded that partition in kind is not possible or that it would cause a serious loss in the economic value of the immovable property, partition by way of sale may be ordered.
Equalisation Payment (Ivaz)
In partition by way of division in kind or by the establishment of condominium ownership, the values of the sections allocated to the co-owners may differ from one another.
In such a case the court establishes the economic balance between the co-owners by ordering an equalisation payment (ivaz). For example, where a more valuable section is left to one co-owner, it may be ordered that the difference be paid to the other co-owners.
The practice of equalisation payments comes to the fore particularly in co-ownerships dissolved by the establishment of condominium ownership.
Determining Which Co-owner the Improvements Belong To
One of the disputes most frequently encountered in these actions concerns which co-owner the buildings, trees or other appurtenances on the immovable property are to be regarded as belonging to. Particularly where one of the co-owners has erected a building, planted trees or created some other element carrying economic value by their own means, the question arises how that value is to be reflected in the sale price.
Disputes as to ownership may directly affect the outcome of the action and the distribution of the price.
The Concept of Improvements
Improvements (muhdesat) means the structures, buildings, trees, installations or other appurtenances carrying economic value subsequently created on immovable property held in collective ownership. For example:
- A greenhouse,
- A warehouse,
- Planted trees,
- A shop,
- A flat,
- A building
may be assessed within this scope. Where it is asserted that the improvements were created by one co-owner through their own labour and expenditure, a dispute as to ownership arises.
Effect of the Improvements on the Sale Price
If at the conclusion of the action the sale of the immovable property is ordered, the improvements are accepted as having increased the total value of the immovable property.
For this reason the determination of which co-owner the improvements belong to becomes critical at the stage of dividing the price. Otherwise, distributing the price to all the co-owners without regard to the labour and the expenditure of the co-owner who created the improvements would lead to a picture contrary to equity.
Action for the Determination of Ownership of Improvements
Where one of the co-owners asserts that the improvements belong to them and that assertion is not accepted by the other co-owners, an action for the determination of ownership of the improvements must be brought.
By means of this action it is established by court judgment which co-owner the building or the other elements on the immovable property belong to. Such actions are in practice mostly heard in connection with files for the dissolution of co-ownership.
Treatment as a Preliminary Issue
Where there is a dispute as to ownership, the court hearing the action for the dissolution of co-ownership frequently treats the outcome of the action for a declaration as a preliminary issue.
In that case the steps relating to the sale of the immovable property or to the division of the price are not completed before it has been finally settled to whom the improvements belong. The aim is thereby to ensure that the price is correctly distributed.
Reflection in the Distribution of the Price
Where it is established by court judgment that the improvements belong to a particular co-owner, the price is distributed accordingly. In practice the following are determined at the outset by means of an expert examination:
- the contribution of the improvements to the total value,
- the value of the land alone,
- the total value of the immovable property including the improvements
The portion of the price attributable to the improvements is paid to the co-owner who created them; the remaining sum is distributed to the co-owners according to their share ratios. The aim is thereby to protect the economic contribution of the co-owner concerned.
The Conduct of the Proceedings
Actions for the dissolution of co-ownership are among the files in which the technical and procedural aspects predominate. Throughout the proceedings the court examines in detail whether the immovable property is suitable for partition in kind, whether a sale is required, the disputes as to improvements and the position of the co-owners’ rights.
For this reason the constitution of the parties, the on-site examination, the expert examination and the sale stage are of decisive importance in these actions.
Mandatory Mediation
Following the amendment made by Act No. 7445, recourse to mediation in actions for the dissolution of co-ownership has become a procedural requirement. It is therefore compulsory for the mediation process to be completed before the action is brought.
Where the meetings end without agreement, the final record drawn up must be annexed to the statement of claim. In files brought without this procedural requirement having been satisfied, the action may be dismissed on procedural grounds.
Courts With Subject-Matter and Territorial Jurisdiction
In these actions subject-matter jurisdiction lies as a rule with the Civil Court of Peace.
As regards territorial jurisdiction, the court of the place where the immovable property is situated has exclusive jurisdiction. The action must therefore be brought before the Civil Court of Peace of the place where the immovable property is situated.
Bringing the Action and Constitution of the Parties
It is compulsory for all the co-owners to be present in the file in the capacity of parties, since the judgment produces consequences affecting the whole of the collective ownership relationship.
For this reason all persons holding a share in the land registry, and in joint ownership all the heirs, must be joined to the action. No decision on the merits may be given before the constitution of the parties is secured.
In the event of the death of one of the co-owners during the proceedings, their heirs must join the file.
Proof and Evidence
The court assesses the legal and factual position of the immovable property by means of various items of evidence. The items of evidence most frequently relied on in practice are as follows:
- Records and findings of the on-site examination,
- Expert reports,
- Architectural projects,
- Municipal and zoning records,
- Population registry records,
- Certificate of inheritance,
- Title deed records
Expert examinations are decisive in particular as regards the suitability of the immovable property for partition in kind and the disputes concerning improvements.
Court Fees and Expenses
In these files the costs of the proceedings consist of the on-site examination, the expert examination, the sale transactions and other expenses.
Fees and expenses are as a rule imposed on the parties according to the co-owners’ share ratios. That said, the court may also make a different assessment according to the features of the particular case.
Attorney Fees
Since actions for the dissolution of co-ownership are of a fully bilateral character, in practice a fixed attorney fee is awarded in favour of the parties represented by a lawyer, pursuant to the Minimum Attorney Fee Tariff.
Nevertheless, it is possible for the court to make different assessments having regard to the features of the case, the requests of the parties and their conduct during the proceedings.
Appeal Routes
An appeal may be lodged against the judgment of the Civil Court of Peace within two weeks of the date of service.
Against the decisions of the Regional Court of Appeal, an appeal on points of law lies where the monetary threshold laid down by law is exceeded.
Once the judgment has become final, the stages relating to partition in kind, to the establishment of condominium ownership or to the sale transactions become capable of implementation.
Consequences of the Action
With the upholding of the action the collective ownership relationship over the immovable property comes to an end. The court determines the method by which the co-ownership is to be dissolved by assessing the characteristics of the immovable property, the possibility of partition in kind and the position of the co-owners.
Ending of the Co-ownership
With the judgment given becoming final, the collective ownership relationship between the co-owners ceases to exist.
The position of joint entitlement over the immovable property thereby comes to an end and, according to the form of the partition, the parties acquire an independent right of ownership.
Division of the Property in Kind
If the court reaches the conclusion that the immovable property is technically and legally suitable for division, it may order that the co-ownership be dissolved by partition in kind.
In that case the immovable property is divided, or condominium ownership is established and the independent sections are allocated to the co-owners. Each co-owner thereby becomes the owner of their own section without any sale taking place.
In the course of the partition the co-owners’ share ratios are taken into account; if it is considered necessary, an equalisation payment (ivaz) may also be ordered.
Ordering a Sale
Where partition in kind is not possible or would cause a serious loss in economic value, the court orders the dissolution of the co-ownership by way of sale.
In that case the immovable property is sold by public auction and converted into money. The sale is as a rule carried out by way of an auction open to all; however, where all the co-owners so request, it may also be ordered that the auction be held between the co-owners alone.
Division of the Price Obtained
The sum obtained from the sale is distributed among the co-owners according to their share ratios in the land registry.
That said, where there are improvements on the immovable property established as belonging to a particular co-owner, the price corresponding to them is paid to that co-owner first. The remaining sum is distributed to the other co-owners in proportion to their shares.
In this way the collective ownership relationship is brought to an end and the economic rights of the co-owners are at the same time protected.
How the Sale Stage Operates
In files in which the immovable property cannot be divided in kind, the court orders the dissolution of the co-ownership by way of sale. In that case the immovable property is sold by public auction and the price is divided among the co-owners.
The sale stage is the most technical part of files for the dissolution of co-ownership and the part giving rise to the greatest number of disputes. The conduct of the auction, the conditions of sale, the payment of the price and the annulment of the auction come to the fore in practice.
The Order for Sale
If the court reaches the conclusion that the immovable property is not suitable for partition in kind or for the establishment of condominium ownership, it orders the dissolution of the co-ownership by way of sale.
The judgment provides for the sale of the immovable property and the file is transmitted to the sales office for the transactions to be carried out.
The Sales Office Stage
Once the order for sale has become final, the file is transferred to the sales office; the subsequent transactions are conducted by that unit.
Within this framework:
- the date of the auction is fixed,
- the notices of sale are prepared,
- the valuation is carried out,
- the electronic sale transactions are conducted
The transactions of the sales office are carried out within the framework of the provisions of the Enforcement and Bankruptcy Act No. 2004.
The Public Auction Procedure
In these actions the sale is as a rule carried out by way of public auction.
Today the transactions are predominantly conducted through the electronic auction system. The person submitting the highest bid at the auction acquires the right to purchase the immovable property.
The Auction Being Open to All
As a rule the auctions held in sales for the dissolution of co-ownership are open to all; third parties who are not co-owners may therefore also take part in the bidding.
The purpose of keeping the auction open to all is to ensure that the immovable property is sold at the highest price attainable.
Sale Restricted to the Co-owners
Where the co-owners make a request to that effect unanimously, it may be ordered that the sale be carried out between the co-owners alone.
In that case only the co-owners may take part in the auction and the acquisition of the immovable property by third parties is prevented. This method is frequently resorted to in practice with a view to preventing family immovable property from passing out of the family.
Payment of the Auction Price
The person who succeeds at the auction is obliged to deposit the price within the period laid down by law.
Where the price is not paid within the period, the auction may be annulled and the immovable property may be put up for sale again. In addition, various legal and financial liabilities may arise in respect of a purchaser who fails to fulfil the conditions of the auction.
Distribution of the Price Obtained From the Sale
The sum obtained as a result of the sale is distributed according to the co-owners’ share ratios in the land registry.
Where there are improvements on the immovable property established as belonging to a particular co-owner, the price attributable to them is paid to that co-owner first. The remaining sum is divided among the co-owners according to their share ratios.
Annulment of the Auction
Where there is an irregularity in the sale transactions, those concerned may request the annulment of the auction. This request arises in particular in cases of:
- breach of the conditions of sale,
- collusion at the auction,
- serious errors in the valuation,
- irregularity in the notice of auction
Requests for the annulment of an auction are examined by the enforcement court concerned; if the request is upheld, the auction is set aside and the sale may be carried out again.
Independent Legal Assessment
In files for the dissolution of co-ownership the element determining the outcome is most often not the argument on the merits but procedure. Omitting the mediation requirement, failing to join one of the co-owners to the file or failing to identify the heirs of a deceased co-owner may cause proceedings lasting months to be concluded without the merits being reached. A request for partition in kind, for its part, must be reasoned at the pleadings stage and supported technically at the on-site examination; otherwise the file evolves of its own accord towards a sale.
In a particular dispute it is appropriate to give priority to the following headings:
- Ensuring that the final record of the mediation is annexed to the statement of claim
- Drawing up an up-to-date list of the co-owners from the land registry and population registry records
- Founding the request for partition in kind or for the establishment of condominium ownership on technical data
- Advancing the assertion as to improvements together with its evidence before a peremptory time limit is imposed
- Having the question whether an equalisation payment is required debated in the expert examination
- Objecting in time to the valuation and to the notice of auction at the sale stage
Independent Legal provides advisory services and conducts litigation in disputes arising from collective ownership, from the bringing of the action for the dissolution of co-ownership through to the supervision of the auction process.