ELIMINATION OF PARTNERSHIP THROUGH SALE
I. INTRODUCTION
The subject of this memorandum is the dissolution of a partnership by way of sale. In this context, the place of dissolution of partnership by sale in the legislation, case law and doctrine will be discussed.
ELIMINATION OF PARTNERSHIP THROUGH SALE
A. GENERAL OVERVIEW
One of the ways to terminate the shared ownership is the request for partition. Namely, if the shared property is transferred or abandoned to one of the shareholders or to a third party, the shared ownership is terminated for all shareholders. Since the transfer and abandonment is an act of disposition, the unanimity of the shareholders is required for these transactions to be realized.
Article 698 of the Turkish Civil Code No. 4721 regulates the right to request sharing. (“TMK”) The provision of the said article reads as follows: “Unless there is an obligation to continue the shared ownership due to a legal transaction or due to the fact that the shared property is dedicated to a permanent purpose, each of the shareholders may request the sharing of the property. The right to request sharing may be limited by a legal transaction for a maximum period of ten years. Agreements regarding the continuation of shared ownership in immovable property are subject to official form and may be annotated in the land registry. A request for partition cannot be made at an inappropriate time.” provision of the law. Accordingly, in order to exercise the right to share, the shared property must not be dedicated to a permanent purpose, there must not have been an agreement between the shareholders to eliminate the right to request sharing for a maximum of 10 years, and the sharing must be requested at an appropriate time.
It is accepted that the right to request sharing is an innovative right granted to the shareholders for the termination of the shared ownership. However, this is a matter of debate in the doctrine. This right is a share-based right. Sharing does not necessarily have to be done through litigation[1].
In the event that one of the stakeholders exercises the right to demand partition, the other stakeholders are under the obligation to fulfill the partition. Sharing does not occur with the exercise of the right, but with the realization of the sharing. The exercise of this right only gives rise to the obligation to share[2]. In the decision of the 14th Civil Chamber of the Court of Cassation dated 27.05.2014 and numbered 2014/2111 E. 2014/6997 K. The partnership does not end with the finalization of the court decision on the elimination of the partnership through sale. The termination of shared ownership is specified in Article . 699of the TMK, and it is not possible to accept that the joint ownership has ended with the judgment on the elimination of the partnership by sale. Unless the judgment is executed, each shareholder can use his/her rights arising from shareholding. the provision has been established as follows.
2.HOW TO SHARE
Sharing can be realized in two ways: consensual and accidental. The method of sharing is regulated in Article 699 of the TCC. The said article reads as follows: “Sharing is realized by dividing the property in kind or by selling it through negotiation or auction and dividing the price. If there is no agreement on the method of division, upon the request of one of the shareholders, the judge decides to divide the property in kind, and if the values of the divided parts are not equal to each other, the judge decides to provide equalization by adding money to the part with the missing value. includes the provision.
In the event that one or more stakeholders exercise their right to share, the obligation to share may be fulfilled by the other stakeholders by consent. The parties may share the property in this way by dividing it into parts, if possible, and selling it to one of them or to a third party by negotiation or auction in order to share its value. In this case, since the division is made through a partition or partition agreement, the validity conditions of this agreement will vary depending on whether the subject of the shared ownership is movable or immovable, and for immovable property, it will require an official form in accordance with Article 701 of the TMK[3].
However, if one or more stakeholders refuse to share or if the parties cannot agree on the manner of sharing, a lawsuit can be filed to ensure sharing through the court. The lawsuit filed is called izale-i şüyu lawsuit. This situation is referred to as accidental partition. The lawsuit in question is governed by the Code of Civil Procedure No. 6100 (“HMK”) Pursuant to Article 4, it is an action for performance brought before the civil courts of peace. There is no statute of limitations or prescription period for filing this lawsuit. The lawsuit can be filed at any time during the duration of the shared ownership relationship[4].
As stated in Article 699 of the TCC, in this case, the judge decides to divide the property if it is possible to divide the property in kind. This is because this situation is mandatory. In a partition in kind, the property is divided into the number of shareholders and allocation is made to each shareholder in proportion to his/her share. If there is a difference in value between the allocated parts, this difference is compensated by the addition of a consideration (money). In addition, the settlement of the difference by way of consideration does not depend on the consent of the shareholders. However, at this point, it should be noted that it is not possible to give money to some of the shareholders and parts of the common property to others.[5].
However, if partition in kind is not possible, or if the judge finds that the request for partition in kind does not comply with the facts and circumstances, and especially if it is not possible to divide the shared property without significant loss of value, the sale by auction is decided.[6]. On the other hand, the auction can only be held between the shareholders or it can be held publicly. In order for the sale to be realized by auction among the shareholders, the consent of all shareholders is sought. If there is such an agreement, the judge will not be able to decide on the sale by negotiation. In this context, the 14th Civil Chamber of the Court of Cassation, in its decision dated 08.02.2017 and numbered 2015/7945 E. 2017/852 K. “Although the lawsuits for elimination of shareholding and disassociation from shareholding differ in terms of their purpose and result, they have similarities in terms of the way to be followed for the resolution of the dispute and the research and examination to be carried out. Indeed, the TMK regulates the subject matter 696. According to the method described in Article 626/a (CC 626/a), in the case of disassociation from shareholding, as in the case of elimination of shareholding, first of all, it is necessary to investigate whether it is possible to separate the part of the shareholder to be disassociated from the property, that is, whether it is possible to separate the share in kind. The path followed for the determination of this issue is the same as the path followed in the case of termination of shared ownership by means of full division of the property (full division). If it is understood that it is not possible to separate the share of the shareholder in kind, if there is no shareholder who wants this share, the judge sets a period of time for the defendant to transfer his/her share and decides on the sale of the share not transferred within this period by auction. In cases of disassociation from shareholding, as in cases for the elimination of shareholding, the decision on the sale of the share shall be executed in accordance with the provisions on foreclosure through forced execution. the provision has been established as follows.
After the court decides to eliminate the shared ownership through sale, it must be clearly indicated in the judgment part of the decision that the sale will be made by auction. In this direction, the 14th Civil Chamber of the Court of Cassation, in its decision dated 30.10.2017 and numbered 2015/17190 E. 2017/7890 K. “Although these parts of the judgment were not deemed correct since it was not stated that the sale would be made by general auction as a result of the judgment, since these issues arise from material errors, they do not require the decision to be reversed and a retrial to be held, and therefore, the provisions of the HUMK 438/7. It was necessary to decide to approve the result of the judgment by correcting it as follows. as follows: In the decision of the 14th Civil Chamber of the Court of Cassation dated 09.01.2018 and numbered 2016/1330 E. 2018/127 K. “For the reasons explained above, the appellate objections of the defendant treasury's attorney are accepted and the phrase “through a general auction” is added after the phrase “to be resolved by sale” in the first paragraph of the judgment ...” and in the decision of the 14th Civil Chamber of the Court of Cassation dated 04.12.2017 and numbered 2016/134 E. 2017/9042 K. in the same direction “For the reasons explained in subparagraph (1) above, the phrase “the sale shall be made through a general auction” shall be added after the phrase “the dissolution of the partnership through public sale” in subparagraph one of the conclusion of the judgment, and...” the provision has been established as follows.
Shared ownership does not terminate until the actual division of the property is completed in accordance with the judge's decision, or until it is sold and ownership is transferred[7]. The aforementioned auction sale process is carried out within the framework of the provisions of the Execution and Bankruptcy Law No. 2004. The money obtained at the end of the sale is distributed among the shareholders in proportion to their shares[8]. In this respect, the 14th Civil Chamber of the Court of Cassation, in its decision dated 16.01.2018 and numbered 2016/13155 E. 2018/311 K. “The lawsuits for the elimination of shareholding (partnership) are bilateral lawsuits that end the existing co-ownership relationship between the shareholders (partners) in movable or immovable properties subject to shared ownership or joint ownership and enable the transition to individual ownership, and have similar consequences for the parties. In the event that it is decided to eliminate the shareholding by sale, it should be shown in the result of the judgment how the sale will be made, in what proportion the sale price will be distributed, in what proportion the fees and judicial expenses will be imposed on the shareholders.” the provision has been established as follows.
In such cases, the person who participated in the auction duly and bid the highest bid wins the ownership at that moment. His acquisition of ownership with the auction means that the shared ownership relationship is terminated[9].
III. CONCLUSION
Considering the above assessments, the results are as follows:
- One of the terminations of shared ownership is a request for partition.
- In order to exercise the right to request sharing, the shared property must not be dedicated to a permanent purpose, an agreement must not have been prepared between the shareholders for a maximum of 10 years to eliminate the right to request sharing, and the sharing must be requested at an appropriate time.
- In the event that one of the stakeholders exercises its right to demand sharing, the other stakeholders are under an obligation to fulfill the sharing.
- Sharing can be realized in two ways: consensual and accidental.
- In the event that one or more shareholders exercise their right to share, the obligation to share may be fulfilled consensually by the other shareholders.
- However, if one or more stakeholders are unwilling to share, or if the parties cannot agree on the manner of sharing, a court action may be brought to enforce the sharing through the court.
- The court in charge of the case to be filed is the civil courts of peace.
- There is no statute of limitations or prescription period for the lawsuit to be filed.
- As stated in Article 699 of the TCC, in this case, the judge decides to divide the property if it is possible to divide the property in kind. This situation is mandatory.
- However, if partition in kind is not possible, or if the judge finds that the request for partition in kind does not comply with the facts and circumstances, and especially if it is not possible to divide the shared property without significant loss of value, the sale by auction is decided.
- The auction may be held only between stakeholders or it may be held publicly.
- In order for an auction to be held only between stakeholders, unanimity of the stakeholders is required.
- The aforementioned auction sale process is carried out within the framework of the provisions of the Execution and Bankruptcy Law No. 2004.
- The money obtained at the end of the sale is distributed among the stakeholders in proportion to their shares.
[1] M. Kemal OĞUZMAN/Özer SELİÇİ/Saibe OKTAY ÖZDEMİR; Eşya Hukuku, 16. Bası, İstanbul 2013, s. 334
[2] OĞUZMAN/ SELİÇİ/ ÖZDEMİR; p.335
[3] OĞUZMAN/ SELİÇİ/ ÖZDEMİR; p.340
[4] Mehmet AYAN; Property Law II Property, 7th Edition, Konya 2014, p.93
[5] AYAN; p.96
[6] OĞUZMAN/ SELİÇİ/ ÖZDEMİR; p.342
[7] AYAN; p.97
[8] AYAN; p.98
[9] AYAN; p.103
