Where an entry recorded in the register has been created unlawfully or does not correspond to the true state of rights, the resulting entry is termed a wrongful registration. A registration behind which there is no valid legal ground, which rests on an invalid transaction, or which has been made by a person without authority does not reflect the true position; in order to have such an entry corrected, recourse may be had to an action for annulment of title deed and registration on the ground of wrongful registration.
The practical aim of this action is to bring the register into line with the true legal position and to restore ownership to its real holder. Where the principle of reliance on the land registry comes into play, however, the presence of good-faith third parties may in some files produce the result that ownership remains with them.
Below we examine, from a practitioner’s perspective, the facts from which wrongful registration arises, the conditions of the action, its parties, the limitation regime and the conduct of the proceedings.
The Concept of Wrongful Registration
Wrongful registration describes the legal position arising where an entry recorded in the register is devoid of a lawful ground or does not show the true state of rights. So far as the Turkish Civil Code No. 4721 is concerned, ownership is as a rule acquired by a registration resting on a valid legal ground. By contrast, a registration made without a legal ground, following an invalid transaction, or by an unauthorised person does not give rise to a right in the true sense even though it appears in the register, and is treated as a wrongful registration.
The Legal Consequence of the Entry
A wrongful registration does not, as a rule, confer ownership validly. In other words, the person appearing as owner in the register and the true owner may not always be the same person. In that situation the true right holder may seek the annulment of the defective entry and the recording of the property in his own name.
There is a notable exception to that rule. Under the principle of reliance on the register, the ownership of a third party who acquires the property in good faith and in a lawful manner may be protected. In such a case the true owner’s claim for restitution may go unanswered; on the other hand, the possibility arises of seeking compensation for the loss he has suffered.
In What Cases Does Wrongful Registration Arise?
Wrongful registration arises in situations such as the entry recorded in the register being devoid of a valid legal ground, the transaction being carried out by unauthorised persons, or there being an error in the register. Even if the entry is the product of an official transaction, it is in the nature of a wrongful registration where it has no legal foundation or does not show the true state of rights.
In practice such entries most often stem from invalid contracts, forged documents, transactions of unauthorised representation or clerical errors in the register. In these cases the true right holder may claim annulment of the entry and registration of the property in his own name. Even so, since the acquisitions of good-faith third parties may be protected by reason of the principle of reliance on the register, each file must be assessed on its own facts.
Registration Made Without a Legal Ground
For a registration to become valid, there must be a legal ground behind it. Registrations effected without a valid transaction such as a sale, gift, inheritance or court decision are wrongful in character. For example, a transfer made without resting on any contract or legal transaction is not treated as valid in the legal order.
Registration Based on an Invalid Contract
A registration made on the basis of an invalid contract likewise constitutes a wrongful registration. Contracts of sale concluded without compliance with the official form, transactions carried out by a person lacking capacity, and simulated transfers fall within this scope. In addition, where there are defects of intention such as mistake, fraud or duress, the contract will be invalid and the registration therefore becomes wrongful as well. Entries created on the basis of contracts of that kind produce no legal effect.
Transfer Effected by an Unauthorised Person
Transfers effected by a person who is not the owner of the property or who has no valid power of representation give rise to wrongful registration. Sales made using a forged power of attorney, and transactions concluded by a person whose power of representation has ceased, are the examples most frequently encountered in practice.
Registration Contrary to a Court Decision
An entry arising because a different operation was carried out in the register notwithstanding a decision given by the court, or because the decision was applied erroneously, is likewise treated as wrongful. A transfer made in breach of an interim injunction over the property, or the property being recorded in the name of another person notwithstanding an order of annulment already given, are typical examples of what removes the register from the true state of rights.
The Presence of a Clerical Error in the Register
Typographical mistakes made in the register, the parcel number being recorded incorrectly, the surface area being shown wrongly, or the owner’s name and surname being entered erroneously are assessed within the scope of clerical error. Mistakes of this kind produce the result that the entry does not reflect reality. Where the error consists in a simple mistake in the register, it may be remedied by an application to the Land Registry Directorate under Article 75 of the Land Registry Regulation. Where no result can be obtained by administrative means, or where the error directly affects the right of ownership, recourse is had to an action for correction of the land registry entry or to annulment.
Registration Arising from a Forged Document or an Erroneous Transaction
Registrations made using a forged identity document or a forged power of attorney — that is, registrations based on a forged document — are without doubt treated as wrongful registrations. Entries arising from transactional errors occurring at the land registry directorate and from unlawful practices are dealt with within the same scope.
Transactions Carried Out After the Power of Representation Has Ended
Transactions concluded notwithstanding that the power of attorney has been revoked, has expired, or that the agent has been dismissed are invalid. Such transactions fall within the scope of abuse of the duties of an agent, and the registration created on that basis is likewise wrongful in character.
This picture is encountered particularly frequently in sales made after a power of attorney has been withdrawn.
The Conditions Required for the Action to Be Brought
The bringing of an action for annulment of title deed and registration founded on wrongful registration depends on the entry in the register being unlawful and on the claimant having a legal interest in the correction of that entry. As the action rests on a right in rem, it is brought in order to protect the claimant’s ownership or limited right in rem. Not every allegation of wrongful registration is therefore sufficient in itself to bring an action; the claimant is expected to establish both that he holds the right and that the entry is genuinely defective.
In practice, whether the action will be upheld generally turns on two points: whether the registration is wrongful in character, and whether the claimant has been able to prove that he holds a right in rem.
The Entry Being Wrongful in Character
For the action to be brought, it is first required that the entry in the register came into being unlawfully. Registrations devoid of a legal ground, transfers resting on invalid contracts, transactions concluded with a forged document and dispositions effected by unauthorised persons are of that character.
Not every unlawfulness is, however, automatically treated as a wrongful registration. For the entry to be regarded as wrongful, the registration must not rest on a valid legal ground or must not reflect the true state of rights. That matter constitutes the cornerstone of the action.
The Claimant Holding a Right in Rem
In order to bring the action, the claimant must hold the right of ownership or a limited right in rem over the property. In other words, the claimant must have an interest worthy of protection in seeking the correction of the entry.
In practice that capacity generally lies with the true owner, an heir or a co-owner; the holder of a usufruct and other holders of rights in rem are in the same position. If the claimant cannot establish that he holds a right in rem, the action is dismissed.
The Existence of a Legal Interest
As in every action, the claimant is required to have a legal interest in this action too. Legal interest means that, as a result of the action brought, the claimant’s legal position will improve or his right will be capable of protection.
If the correction of the entry in the register is not apt to protect the claimant’s right, or if the claimant is not in truth in the position of a right holder, it is accepted that there is no legal interest and the action is dismissed. In that respect legal interest is an important procedural requirement capable of producing dismissal without the merits being entered upon.
The Distinction Between Correction of the Entry and the Action for Annulment and Registration
The fact that an entry in the register is unlawful does not in every case require an action for annulment of title deed and registration to be brought. In some files there is merely a technical or typographical mistake in the entry and no dispute at all arises as to whom ownership belongs. In those cases correction of the land registry entry suffices. Where, by contrast, the entry rests on a legally invalid transaction or does not show the true right holder, an action for annulment of title deed and registration must be brought.
The most critical distinction in practice is therefore the accurate determination of whether the problem in the register is merely a clerical error or a genuine dispute as to rights. A clerical error consists in a technical mistake and creates no dispute as to the attribution of ownership. Wrongful registration, on the other hand, means that ownership has been passed to another unlawfully and can be set aside only by a court decision.
The general rule may be summarised in two sentences. Where there is a mistake of a technical nature or arising from the wording, an administrative application must first be made to the relevant Land Registry Directorate; if no result can be obtained by that route, recourse is had to correction of the land registry entry. Where ownership has been transferred unlawfully, an action for annulment of title deed and registration is brought.
Drawing the distinction correctly matters if one is to avoid a decision of dismissal on account of an action brought in the wrong form and to prevent the proceedings from being prolonged unnecessarily.
The Parties to the Action
In these actions the accurate identification of the parties is decisive for the sound conduct of the proceedings. As a rule the claimant is the person asserting that he holds a right in rem over the property; the respondent is the person appearing as owner in the register. Where the property has changed hands or there are several right holders, it may be necessary to direct the action against all those concerned.
Naming the parties incompletely is a serious procedural error capable in practice of leading to the dismissal of the action on procedural grounds or to the prolonging of the proceedings.
Who May Be the Claimant
The action may be brought by persons asserting that they hold a right in rem over the property. For the capacity of claimant to arise, the existence of a direct or indirect legal interest in the property is required.
Within that scope the true owner comes first among those who may be claimant. Alongside him, heirs and co-owners may also bring the action. Holders of limited rights in rem, such as the holder of a usufruct or of a right of superficies, and other persons having a legal interest in bringing the action, likewise bear that capacity.
In particular, it is open to persons who have acquired rights by way of inheritance to bring an action with a view to correcting a wrongful registration created in the name of the deceased.
Who Is to Be Named as Respondent
The action is as a rule directed against the person appearing as owner in the register, since the registration whose annulment is sought is in that person’s name.
Where the property has subsequently been transferred to others, the action must also be directed against the new owners.
In that framework the capacity of respondent may belong to the person appearing as owner in the register, to the owner or third parties who subsequently acquired the property, and to those holding rights in rem over the property.
Cases Giving Rise to Mandatory Joinder of Parties
In some situations the action must be directed against several persons jointly. Where a mortgage or a limited right in rem has been created over the property, where the property is held in shared ownership, or where it has been transferred to several persons, all those concerned must be joined to the proceedings. Otherwise the action may be dismissed on the ground that a necessary respondent is missing.
The Position of the Good-Faith Third Party
The ownership of third parties who acquire the property in good faith in reliance on the register may be protected under Article 1023 of the Turkish Civil Code No. 4721. In such a case it may not be possible to order annulment of the entry, and the claim may turn into one for damages.
Whether the third party may be regarded as acting in good faith is therefore foremost among the elements directly determining the outcome of actions founded on wrongful registration.
The Position as Regards the Statute of Limitations
As actions for annulment of title deed and registration founded on wrongful registration rest on a right in rem, they are as a rule not subject to any limitation period. Since the right of property is treated in our law as an absolute right that does not come to an end with the passage of time, this action may be brought even after many years have elapsed.
The rule is not absolute, however. Matters such as the principle of reliance on the register, the provisions on the cadastre, or the protection of good-faith third parties may alter the outcome of the action. In every file the character of the wrongful registration and the identity of the person who acquired the property must therefore be examined carefully.
The Rule: No Time Limit
The fundamental principle in these actions is that no limitation period runs, because the claim rests not on a personal claim but directly on a right in rem.
Accordingly, where the property has been registered in the name of the wrong person, where the registration has been founded on a forged document, or where the entry has been created on the basis of an invalid legal transaction, the bringing of an action is not limited by any period. That principle constitutes a fundamental guarantee for the protection of ownership.
Exceptions Arising from the Principle of Reliance on the Register
The principle of reliance on the land registry is regulated in Article 1023 of the Turkish Civil Code No. 4721 and is intended to protect the ownership of third parties who acquire the property in good faith in reliance on the register.
In that situation, even though there is a wrongful registration, the ownership of the third party who acquired the property in good faith may be protected. In such a file annulment of the entry may not be possible and the claimant’s claim may turn into one for damages.
The point that must not be overlooked here is this: that result does not stem from a limitation period; it is the product of a special legal provision on the protection of the right in rem in favour of the good-faith third party. That is to say, the right of action falls away not because a period has expired but because the right in rem has passed validly to the third party.
Time Limits in Actions Directed Against a Good-Faith Third Party
No special limitation period has been provided for actions to be brought against a good-faith third party. Nevertheless, where the property has been acquired by a good-faith third party, annulment of the entry may not be possible and the possibility of bringing an action may in practice fall away.
Whether the property passed to third parties following the wrongful registration, and whether those persons may be regarded as acting in good faith, is therefore of a character that determines the outcome.
The Effect of the Date of Discovery on the Period
In these actions the date of discovery is as a rule not decisive so far as the statute of limitations is concerned, since no general period has been provided.
In certain special cases, however, the date of discovery may acquire importance. In actions founded on rights predating the cadastre, in transactions in which the intention was defective, and in claims for damages, the date of discovery may be taken into account as regards the commencement of the period for bringing the action. Time limits must accordingly be assessed separately according to the character of the wrongful registration.
The Course of the Proceedings
Actions for annulment of title deed and registration founded on wrongful registration rest on a right in rem relating to the ownership of immovable property and are conducted within a particular procedural framework.
The Court with Subject-Matter and Territorial Jurisdiction
In these actions subject-matter jurisdiction belongs as a rule to the Civil Court of First Instance.
As to territorial jurisdiction, the action is brought before the court of the place where the property is situated. As the jurisdiction of that court is mandatory, a decision declining jurisdiction is given if the action is brought elsewhere.
Application for an Interim Injunction
One of the most critical procedural steps in wrongful registration actions is preventing the property in dispute from being transferred to third parties. It is therefore of great importance that an interim injunction be sought from the court when the action is brought or while the proceedings are pending.
Where the claimant establishes his case to the standard of prima facie proof, the court may order the entry of an annotation prohibiting transfer and sale on the land registry record. That measure is an effective instrument of protection preventing the decision to be given from being rendered nugatory.
Proof and Evidence
In these actions the burden of proof lies on the claimant; it falls to the claimant to establish that the entry in the register was created unlawfully. Proof is generally conducted through technical examination and official documents.
Among the evidence most frequently relied on in practice, land registry records together with official documents and contracts come first. To these are added court decisions, witness statements, examination by a court-appointed expert and on-site examination.
In files in which forgery of a signature, a power of attorney or a document is alleged in particular, expert examination and technical reports play a decisive role in the outcome.
Court Fees and Litigation Costs
Actions for annulment of title deed and registration founded on wrongful registration are as a rule among the actions subject to a proportional court fee. When the action is brought, the fee calculated on the basis of the value of the property must therefore be paid.
While the proceedings are pending, items such as the fees of court-appointed experts, the cost of the on-site examination, service costs and witness expenses also arise. These costs are as a rule borne, at the end of the action, by the party who loses the case.
Attorney’s Fees
In actions for annulment of title deed and registration brought on the ground of concealing assets from the estate, attorney’s fees are awarded on a proportional basis by reference to the value established as a result of the valuation carried out by the court during the proceedings. The successful party is awarded attorney’s fees to be recovered from the opposing party under the Minimum Attorney Fee Tariff.
Apart from that, attorney’s fees resting on the agreement concluded between the party and the attorney may also be in issue; those fees may be claimed separately depending on the outcome of the action.
Appellate Remedies
The decisions given in actions for annulment of title deed and registration are not final in character but are open to review by the higher courts.
- Appeal: An application may be made to the Regional Court of Appeal within 2 weeks of service of the reasoned decision of the court of first instance.
- Appeal on points of law: An application may be made to the Court of Cassation within 2 weeks of service against the decision of the appellate chamber. The threshold for an appeal on points of law depends on the monetary limit determined each year according to the revaluation rate.
Enforceability: Under the Code of Civil Procedure No. 6100 these decisions cannot be enforced before becoming final. Even where an order of annulment has been obtained from the court, the registration cannot therefore be effected at the land registry unless the appeal stages have been completed and the decision has become final.
The Consequences of the Action
The court examines first whether the entry in the register was created unlawfully and what right the claimant holds over the property. Where the existence of a wrongful registration is established, the annulment of the entry created unlawfully and the registration of the property in the name of the true right holder may be ordered.
Not every file reaches the same result, however. In some situations correction of the entry alone may suffice instead of its annulment in full. Moreover, where the property has passed to good-faith third parties, annulment may not be possible and the action may turn into a claim for damages.
Annulment of the Entry
Where it is established that the entry in the register was created unlawfully, the court orders the annulment of the entry. With the annulment, the transfer of ownership effected unlawfully is set aside.
Annulment of the entry arises in particular in the following cases: transactions concluded by a person without authority; registrations made on the basis of a forged document; transfers founded on an invalid contract; and entries arising from a legally ineffective transaction.
In that situation the entry in the register is removed and the unlawful position over the property is brought to an end.
Registration of the Property in the Name of the True Owner
Where annulment is ordered, the court orders the re-registration of the property in the name of the true right holder. With that decision ownership returns in law to the true owner.
Where the property is held in shared ownership, registration is effected having regard to the proportions of the claimants’ shares. Each co-owner thus acquires the capacity of owner to the extent of his own share.
Correction of the Registration
In some files there is no need for the entry to be annulled in full; correction alone suffices. In those cases the court may order the correction of the erroneous or incomplete information in the register.
For example, where the proportion of a share has been shown incorrectly, where name or identity details have been entered wrongly, or where there is a clerical error in the boundary or surface area details, recourse is had to correction of the registration rather than to annulment.
Claim for Damages
In some cases it is not possible for annulment of the entry to be ordered. Where the property has passed to a third party acting in good faith in reliance on the register in particular, ownership is protected and no annulment results.
In such a situation the claimant may seek damages with a view to compensation for the loss he has suffered. The claim is generally founded on the value of the property, the loss of use and the pecuniary loss suffered. The result reached in wrongful registration actions may therefore differ according to the circumstances of each particular case.
The Independent Legal View
In wrongful registration files the legal characterisation is often more decisive than it appears. The same set of facts may in one case be a register error capable of being remedied by an administrative application and in another a dispute as to rights that can be resolved only by a judicial decision. Choosing the wrong route causes a loss of both time and court fees; the first step is therefore always to determine whether the problem is technical or goes to the merits.
The second heading determining the fate of the action is the subsequent acquirers of the property. Even where no limitation period is running, the property passing to a good-faith third party may render the claim for annulment ineffective in practice. Faced with that risk, speed and protective measures become the two most valuable elements of the file.
In a particular dispute the following matters should be addressed as a priority:
- Characterising from the outset whether the defect in the register is a clerical error or a dispute as to rights
- Obtaining the land registry transaction file in full, together with the underlying documents
- Applying for an annotation prohibiting transfer at the same time as the action
- Assessing whether the subsequent acquirers of the property may be regarded as acting in good faith within the scope of Turkish Civil Code No. 4721, Art. 1023
- Asserting a claim for damages in the alternative against the possibility that annulment is not available
- Drawing up the list of respondents in full in cases giving rise to mandatory joinder of parties
Independent Legal provides advisory services and litigation representation throughout the whole of the process, from the examination of the register to the registration stage following the finalisation of the decision, in disputes over immovable property arising from wrongful registration.