In Turkish law, the legal pre-emption right is a legal mechanism that grants the right of first priority to other stakeholders to purchase a share of real estate subject to shared ownership in the event that a shareholder sells his/her share of the real estate to a third party. This right plays an important role in the shared ownership system as a security developed to protect ownership and keep real estate within the community. The legal pre-emption right, which minimizes disputes that arise in relations between stakeholders, also allows real estate ownership to remain within the family and be transferred through inheritance. In this blog post, we will examine the scope of the legal pre-emption right in the Turkish legal system, its historical development, use, limitations and termination, and the advantages that this right offers to stakeholders.
1. Concept and Definition
The legal pre-emption right is a right that grants the other stakeholders the right to purchase the real estates in which there is a joint ownership relationship in the Turkish Civil Code, in case a shareholder sells his/her share to a third party. This right was developed to protect the property relations between the stakeholders and to keep the real estate within the community. The legal pre-emption right, which is considered an innovative right in terms of its legal nature, provides the stakeholders with more control over property relations. Article 732 of the Turkish Civil Code secures this right, prevents the transfer of real estates to unwanted third parties and contributes to the preservation of property within the family.
2. Types of Pre-emption Rights
Legal pre-emption rights are generally divided into two basic types: pre-emption rights arising from legal transactions and pre-emption rights arising from laws. While pre-emption rights arising from legal transactions are based on agreements between the parties, legal pre-emption rights are rights determined by legal regulations such as the Civil Code. Pre-emption rights arising from legal transactions include pre-emption rights arising from contracts and wills. While the Turkish Civil Code highlights the legal pre-emption right within the scope of restrictions on real estate ownership, other laws also regulate special pre-emption rights for certain situations. For example, in legislation such as the Law on Land Production and Assessment and the Industrial Property Law, legal pre-emption rights are defined for different types of ownership. Each of these types is regulated to be valid for certain ownership structures and types of real estate.
3. Purpose and Subject of Pre-emption Right
The purpose of the legal pre-emption right is to protect the ownership of real estate and to ensure the sustainability of the integrity of ownership without any disruption. This right particularly contributes to the protection of real estates that remain within the family, their transfer through inheritance and the continuity of shared ownership relations. The subject of the pre-emption right is divided into various categories in terms of real estates: lands, real estates registered as independent and continuous rights in the land registry and independent sections within the scope of condominiums fall within the scope of this right. In addition, in some cases, the pre-emption right may also apply to movables; in this case, according to legal regulations, the pre-emption right may be granted to the shareholders on such types of property.
4. Legal Nature of the Pre-emption Right
There are two main views on the legal nature of the legal pre-emption right: the real right view and the innovative right view. According to the real right view, the legal pre-emption right is a real right that has a direct effect on the immovable property. In other words, if the shareholder exercises this right, the ownership of the immovable property automatically passes to him. The innovative right view argues that the legal pre-emption right is a right that creates innovation and creates a new legal situation with the exercise of the right. According to this view, when the pre-emption right holder exercises his right, the sale to a third party becomes invalid and the shareholder acquires the right to purchase directly. While both views evaluate the effect of the legal pre-emption right on ownership from different perspectives, both approaches are accepted in Turkish law.
5. Positive Conditions Required for the Use of the Legal Pre-emption Right
In order for the legal pre-emption right to be exercised, certain positive conditions must be present. These conditions are clearly stated in the Turkish Civil Code for the pre-emption right to be applied fairly. First of all, the pre-emption right only applies to real estates subject to shared ownership. In other words, there must be a common ownership relationship between the stakeholders. In addition, one of the stakeholders must sell his/her share to a third party or transfer it through a transaction that is economically equivalent to a sale. For example, if the real estate is transferred with a full and valid sales contract, the other stakeholders can exercise the pre-emption right. These conditions are regulated to ensure that the ownership relationship between the stakeholders is protected and that the pre-emption right is exercised within a fair framework.
6. Adverse Conditions for the Use of the Legal Pre-emption Right
There are also some situations where it is not possible to use the legal pre-emption right. First of all, the legal pre-emption right does not come into play in sales made between shareholders; in this case, shareholders can sell shares directly to each other. Sales made by forced auction, donation and mixed donation contracts, property exchange (barter) contracts and contracts of care until death are also excluded from the legal pre-emption right. In addition, the legal pre-emption right is not used in cases such as expropriation transactions and the contribution of real estate shares to the partnership as capital. These negative conditions were created to determine the limits of the pre-emption right, to keep the rights of the shareholders in balance and to ensure the diversity of transactions on real estate.
7. Compliance with the Time Limits Specified by Law in the Exercise of the Legal Pre-emption Right
In order to use the legal pre-emption right, it is mandatory to comply with certain periods. These periods are determined by the Turkish Civil Code as pre-emptive. If the pre-emption right is not used within 3 months of the sale notification after the sale to a third party, and within 2 years in cases where no notification is made, the right is deemed to have been lost. These periods protect the will of the stakeholders to use the pre-emption right, while ensuring that the sales transactions made to third parties are finalized within a fair period. Thanks to the pre-emptive periods, uncertainties regarding the real estate ownership are eliminated and legal security is provided in the transfer of ownership.
8. Adverse Conditions for the Use of the Legal Pre-emption Right
The legal pre-emption right is not a right that can be exercised in all cases, and some situations prevent this right from coming into play. The most important of these situations is sales between stakeholders. If a stakeholder wants to sell his real estate share to another stakeholder, the pre-emption right of the other stakeholders does not come into play. In addition, the pre-emption right does not apply in cases where real estate is sold by forced auction. Because forced auction is a form of sale carried out within the public order, and the law does not foresee that third parties are considered as priority buyers.
Apart from this, donation and mixed donation contracts are not included in the scope of the legal pre-emption right. Similarly, property exchange (barter) contracts, contracts for maintenance until death and expropriation transactions also exclude the legal pre-emption right. Since such transactions are not considered economically equivalent to a sale transaction, they draw the boundaries of the pre-emption right. In addition, the contribution of real estate shares to the partnership as capital or their transfer through inheritance are also excluded from the legal pre-emption right. These negative conditions limit the area in which the legal pre-emption right can be exercised and ensure the balancing of rights among the stakeholders.
9. Opinions on the Legal Situation Created by the Use of the Legal Pre-emption Right
The use of the legal pre-emption right has legal consequences on the ownership of the real estate, and different views attempt to explain this process. One of these views is known as the "succession view." According to the succession view, the pre-emption right holder replaces the third party and becomes a party to the contract. In other words, the ownership of the real estate is transferred to the right holder according to the agreement made, and the third party withdraws from the sale. Another view is the "in rem effect view." This view argues that the use of the pre-emption right directly creates in rem effect on the real estate ownership and the ownership passes to the right holder.
There is also a "property debt view" and according to this view, the right of pre-emption creates a debt on the real estate. In other words, the right holder has the right to purchase the real estate and the debt relationship comes into play. In line with these views in Turkish law, the ownership of the real estate is transferred to the right holder by the use of the right of pre-emption.
10. Parties' Obligations in the Sales Relationship Established by Using the Legal Pre-emption Right
When the legal pre-emption right is used, a new sales relationship is created between the right holder and the seller, and the parties undertake certain obligations. First of all, the person who uses the legal pre-emption right must agree to purchase the real estate for the price that the third party must pay. The payment transaction is made based on the price specified in the sales contract, and the right holder is obliged to pay this price in full and in full. The pre-emption right holder is also responsible for all taxes and expenses on the real estate.
The person responsible for selling is responsible for transferring the real estate. During this process, it is the responsibility of the person responsible to provide the necessary documents for the title deed transactions and to ensure that the transfer is completed completely. In the sales relationship, the obligations between the parties are fulfilled in accordance with the terms of the contract and the property relationship between the parties is established in a new order.
11. Termination of Legal Pre-emption Right
The legal pre-emption right ends in certain cases. The reasons for this termination include the expiration of the limitation period, the waiver of the pre-emption right by the owner of the right, loss of the real estate or changes in the ownership structure. First of all, the pre-emption right expires if it is not exercised within 3 months after the notification of sale or within 2 years in cases where no notification is made. These periods are of a limitation nature and the right is lost if the specified periods are exceeded.
The waiver of the pre-emption right by the owner of this right also causes the right to end. The waiver is subject to the will of the owner of the right and is considered valid if it is made in writing and is protected against third parties by being annotated to the title deed. In this case, the person who waived can no longer use the pre-emption right and his/her right on the real estate is terminated. In addition, the complete and permanent destruction of the real estate, its expropriation or the termination of the shared ownership also terminates the pre-emption right.
12. Waiver of Pre-emption Right and Consequences of This Right
Waiver of the legal pre-emption right means that the right holder voluntarily gives up exercising this right. Waiver can be made in accordance with the agreement of the parties and this provides assurance to other stakeholders that the pre-emption right will not be exercised. In order for the waiver to be considered valid, it must be in writing and recorded in the land registry. With the annotation in the land registry, the waiver becomes valid against third parties and it becomes certain that the right holder will not be able to exercise the waived right again.
The waived pre-emption right does not re-emerge even in future sales and results in the owner completely giving up this right. This waiver process contributes to the resolution of disputes between the stakeholders and the regulation of property relations. In short, the waiver process removes all restrictions within the scope of the legal pre-emption right and makes the stakeholders' rights over the real estate more flexible.
13. Reasons That Terminate the Pre-emption Right and Legal Consequences
The reasons that terminate the legal pre-emption right lead to the restructuring of the property rights on the real estate. Situations such as the expiration of the limitation periods, waiver, loss of the real estate, cancellation of the land registry records, expropriation transactions or destruction of the real estate terminate this right. In addition, the pre-emption right also terminates in the event that the pre-emption right holder and the obligor titles merge. Such situations lead to the reorganization of the property relations on the real estate.
For example, if the limitation period expires or is waived, the pre-emption right ends and the right holder gives up this right on the real estate. Similarly, situations such as the complete destruction of the real estate or its deletion from the land registry also end the pre-emption right and the restrictions on ownership are removed. These reasons that end the pre-emption right contribute to the protection of property relations and increase the flexibility of transactions on the real estate.
14. The Importance and Future of the Legal Pre-emption Right in Turkish Law
In the Turkish legal system, the legal pre-emption right has a very important place in terms of regulating and protecting property relations between stakeholders. The legal pre-emption right was developed specifically to protect real estates that remain within the family and to prevent the transfer of ownership to foreigners. This right ensures the continuity of real estate ownership by allowing real estates to remain within the community or family. In practice, this right, which plays an important role in resolving property disputes between stakeholders, provides a reliable protection mechanism during the transfer of real estates.
The legal pre-emption right is particularly important for the protection of real estate inherited and for the maintenance of joint ownership between heirs. In cases where real estate is inherited, the legal pre-emption right grants the heirs the right of first purchase in the event of the real estate being sold to an outside party. This facilitates the sharing of real estate between heirs and contributes to the continuation of family ownership across generations.
In the future, the role of the legal pre-emption right in practice is expected to become even more important. In particular, the increase in real estate prices and the increasing need for the protection of family property will further increase the importance of this right. With the updates to be made in the legal regulations, the scope of the legal pre-emption right can be expanded and regulations that protect the rights of the stakeholders more effectively can be introduced. This right will continue to be a fundamental guarantee in the protection of property relations in Turkish law.
The legal pre-emption right is an important tool in the regulation and protection of co-ownership relations in Turkish law. This right, which is secured by the Turkish Civil Code, was developed to protect the property rights of the stakeholders and to ensure that the real estate remains within the community. The legal pre-emption right, which regulates the property relations between the stakeholders on the real estate, is of great importance especially in the protection of intra-family property and in preventing the transfer of the real estate to third parties. It protects the property relations by ensuring the sustainability of the property between the stakeholders without disrupting its integrity.