Co-Ownership by Shares Under Turkish Law

Co-Ownership by Shares
The first type of co-ownership that Turkish Civil Code regulates is “co-ownership by shares”. The Turkish Civil Code defines the co-ownership by shares in Article 688 as “where a certain things are in the ownership of several persons, each of whom owns a share of it and yet it is outwardly undivided, they are assumed to be co-owners by shares of it.” The Article also establishes the basics of co-ownership by shares. It provides “in the absence of a contrary arrangement all are held to have equal shares. In respect of his share, each co-owner has the rights and is under the obligations of an owner, he can alienate or pledge it and it can be seized by his creditors for debt”.

In the light of this Article, the components of co-ownership by shares ca be listed as:

-In co-ownership by shares, the land as a whole is the subject of one ownership.

-“The sole ownership” belongs to more than one person, who are called co-owners. Therefore, there is a union of co-ownership by shares between the persons owning the property.

-Each co-owner has an undivided share in the co-owned property.

In co-ownership by shares the division is about the division of rights and obligations concerning the property, bu not about the ownership itself. This view is based on the concept that some of the rights and the obligations in the content of ownership are divisible whilst others are not. Although, these divisible rights and obligations are capable of being exercised by any co-owner, the others need to be conducted by some or all of the co-owners acting together. For example, as the power of alienation can be divided in Turkish law, each co-owner can alienate his/her share without the other co-owners’ consent. However, some rights and obligations are not capable of being divided, such as the fundamental management tasks relating to the co-owned property. In such cases, the co-owners must make decisions by unanimity or by appropriate majority to conduct specified duties concerning the property.

This view constitutes the foundation of the management rules on the co-owned properties subject to co-ownership by shares in Turkish law. In accordance with this view, as the division in the concept of co-ownership is concerned with division of rights and obligations, management of a co-owned property can be divided into three categories: ordinary, important and fundamental management tasks. While the ordinary management tasks can be done by any co-owner, important tasks need to be agreed by a majority of the number of co-owners and a majority of the shares. In contrast, the fundamental tasks can only be carried out with the uniamoius agreement of the co-owners.

The division of management tasks accroding to this view does not rely on any logical fact as regards how a task is classified under a category, as the importance of a task may change depending on time, location and special circumstances of the property and co-owners. Moreover, as it is almost impossible to foresee, regulate and classify all the management tasks regarding a co-owned property there will always be a debate about the decision-making majorities.

The Establishment of Co-ownership by Shares

Turkish Civil Code provides that co-ownership by shares can be established by either a legal process, a public body process or as a result of an Act of Parliament. Hence there are three ways to set up co-ownership by shares.

Firstly, co-ownership by shares maybe established by a legal process such as sale and donation. The most common way to establish co-ownership by shares is by two or more persons purchasing a property together. As another example, a property may be donated to two or more persons at the same time to be owned jointly by them. As a rule, co-ownership by shares is the only type of co-ownership in Turkish law that the parties can establish of their volition.
Secondly, governmental bodies or courts may be empowered by an Act to create a co-ownership under some circumstances. For instance, in accordance with the Development Law local authorities are empowered to make land readjustments regarding the properties and as a result of this power, they can divide the properties into parcels and they can transfer these properties to more than one person in proportion to their rights. Hence they can create new co-owned properties and these properties will be subject to co-ownership by shares. In this case, it is a public body decision (local authority) that creates the co-ownership relationship between co-owners. Similarly, in accordance with the Turkish Civil Code, the court can determine the establishment of co-ownership by shares where the heirs can convert “co-ownership in common” of the inherited co-owned property into co-ownership by shares. For instance, Article 644 entitles each heir to a deceased estate request that co-ownership in common be converted into co-ownership by shares. Unless there is a legitimate reaseon fore requiring the continuity fo co-ownership in common and partition is not claimed the judge is allowed to decide on this conversion.

Finally, there are some articles of Turkish Civil Code, which give rise to co-ownership. For example, if the conditions stated by Article 721 occur co-ownership by shares emerges automatically by operation of law. Article 721 states “Erections of other things which purport to fix the boundary between two properties, such as walls, hedges or fences, and stand on the boundary line, are presumed to belong to the two neigbours jointly in co-ownership by shares”. The Code clearly states that the party walls in Turkish law are co-owned by the owners of the neighbouring land in co-ownership by shares.

Concept of Share in Co-Ownership by Shares

Similar to the tenancy in common, in co-ownership by shares, each co-owner has an undivided share in the co-owned property. Under Turkish law, this “share” determines the rights and obligations of co-owners. In co-ownership by shares, there is a virtual division of the property like 1/3, 1/5 and so on. Since this division regarding shares is not physical, no co-owner can claim any actual part of co-owned property as this share.

Each of the co-owners has an undivided share in the property. This share can be determined either by a title deed, by an administrative public body decision, or by provisions of an Act creating the co-ownership. If the shares of the co-owners are not stated by any of the documents mentioned above, the co-owners are presumed to hold equal shares in the property. The size of the share is of significance in respect to the determination of powers and obligations regarding co-owned properties, and the determination of the value that each co-owner would get after liquidation or proceeds of a sale.

Management of Share

Under Turkish law, each co-owner by shares is entitled to deal with his/her share in the co-owned property independently up to a certain extent. In accordance with Article 688/III, as regards his/her share in the co-owned property, each co-owner has the rights and is under the obligations of an absolute owner, and he can alienate or pledge the share, and the share can be seized by his creditors for debt. Therefore, a share in a co-owned property subject to co-ownership by shares may be transferred to a third party or another co-owner, mortgaged or pledged by a creditor.

Sale of Share

As with tenancy in common, Article 688 of Turkish Civil Code clearly provides that a share in a property subject to co-ownership by shares can be transferred to a third party or another co-owner. Each co-owner can conclude a contract such as sale and donation burdening the transfer of title regarding his/her share or a certain part of it. Where a share in a property is sold, the purchaser becomes a co-owner immediately and has the rights and is under the obligations of a co-owner.

By |2018-02-26T11:35:39+00:00February 26th, 2018|Real Estate|Comments Off on Co-Ownership by Shares Under Turkish Law