What is a Mortgage?
A mortgage is one of the types of real estate liens specified in the Turkish Civil Code. In practice, the most commonly used real estate lien, the mortgage, can be used to secure any debt that exists or is yet to arise, but is certain or likely to arise in the future (Turkish Civil Code, Article 881). For the mortgage to come into existence, a registration in the land registry is required (Turkish Civil Code, Article 856). The following conditions must be met for the registration to be valid: • A valid debt • A valid cause for acquisition (contract, testamentary disposition, legal provision/court decision) • Registration request/registration
A mortgage can be established in two ways:
- Fixed-Term Mortgage
- Unlimited Mortgage
Removal of Mortgage (Discharge)
A mortgage can only be placed on a property that is registered in the land registry. A mortgage is the use of real property as collateral for a debt. It is an accessory (secondary) right tied to the debt. Therefore, when the debt is extinguished, the mortgage must also be removed. Once the debt is terminated, the owner of the mortgaged property may request the creditor to remove the mortgage (Turkish Civil Code, Article 883).
Termination of a Time-Limited Mortgage
According to Article 883 of the Turkish Civil Code:
“If a mortgage is established for a specific period, and if within thirty days from the expiration of the period, the annotation specified in Article 150/c of the Enforcement and Bankruptcy Law No. 2004, dated 9/6/1932, is not made on the mortgaged property, the mortgage shall be discharged by the land registry office upon the request of the owner.”
Transfer of a Mortgage-Backed Debt
A debt secured by a mortgage can be transferred in accordance with the provisions of Article 183 and the following articles of the Turkish Code of Obligations (TBK). Article 891 of the Turkish Civil Code (TMK) does not prescribe any special conditions for the validity of this transfer. In fact, the validity of the transfer of this debt is not dependent on the registration of the transfer in the land registry. With the transfer of the debt, the holder of the mortgage right also changes. This change and the name of the new creditor are not shown in the registry.
Mortgage Removal (Cancellation) Lawsuit
The lawsuit known by names such as “removal of mortgage,” “cancellation of mortgage,” or “mortgage annulment” is actually related to the request to correct the registration of an unlawful mortgage right in the land registry. According to Article 1025 of the Turkish Civil Code:
“If a real right has been unlawfully registered, or a registration has been unlawfully cancelled or altered, the person whose real right is impaired due to this can file a lawsuit for the correction of the land registry.”
In this lawsuit, it is claimed that there is an unlawful registration.
As mentioned above, the termination of a debt does not automatically result in the termination of the mortgage. The property owner may file a lawsuit requesting the correction of the registration. This way, the removal of the mortgage is achieved. In practice, this is referred to as the removal of the mortgage.
Conditions and Process of the Lawsuit
The mortgage right registered in the land registry is invalid,
The property owner requests the correction of the land registry from the mortgage creditor whose registration is unlawful,
The mortgage creditor does not respond to the property owner’s request,
The owner of the affected real right applies to the court.
Who Can File a Lawsuit for the Cancellation of a Mortgage?
The lawsuit for the cancellation of a mortgage can be filed by the party (owner) who risks being harmed by an unlawful registration. If the owner passes away during the lawsuit, their heirs can continue the case. However, in the case of the transfer of the mortgaged property, the responsibility for the debt remains with the original creditor. The relevant legal provision is as follows:
TMK Article 888 – “The transfer of mortgaged property does not cause any change in the debtor’s responsibility and security unless otherwise agreed.
If the new owner assumes the debt, the creditor must notify the previous debtor in writing within one year that they reserve the right to approach them; otherwise, the debtor is relieved of their debt.”
When it comes to a property subject to joint ownership, all owners can file this lawsuit. Furthermore, according to the rulings of the Court of Cassation, a debtor who is not the owner can also file this lawsuit.
Competent and Authorized Court
A lawsuit for the cancellation of a mortgage must be filed in the civil court of first instance where the property is located.
Statute of Limitations and Time-Barred Period
A lawsuit for the cancellation of a mortgage is not subject to any statute of limitations or time-barred period; it can be filed at any time.
Relevant Court of Cassation Decisions
The plaintiff’s attorney claimed that the debt related to the mortgage placed on the plaintiff’s property in favor of the defendant bank had been paid, and despite sending a notice to the defendant requesting the removal of the mortgage, it had not been removed. Therefore, the attorney filed a lawsuit and requested a decision for the removal (fekki) of the mortgage.
The defendant’s attorney argued that, following the plaintiff’s notice, the mortgage had been removed, and that the plaintiff had no legal interest in filing the lawsuit as of the date of the case, asserting that the case was without subject. Thus, they requested the rejection of the case.
According to the trial and the evidence gathered, the court found that the plaintiff had sent a notice to the defendant for the removal of the mortgage, that despite the notice being delivered to the defendant, the mortgage had not been removed within the 3-day period given in the notice, nor had any information been provided to the plaintiff regarding the same. Furthermore, the defendant had only submitted the letter for the removal of the mortgage to the PTT after 9 days had passed since the 3-day period expired, and this letter was delivered to the relevant land registry on 11/08/2015. It was not proven that the plaintiff had filed the lawsuit knowing that the letter with the request for mortgage removal had reached the land registry on the date of the lawsuit. The court found that the defendant bank should have immediately ensured the removal of the mortgage once the debt was paid but did not do so, and instead, after receiving the notice, they allowed the period specified in the notice to pass before removing the mortgage. This caused the filing of the lawsuit. For this reason, the court decided that there was no reason to proceed with the case, which was without subject, and that the defendant should be held responsible for the attorney’s fees and court costs. The judgment was appealed by the defendant’s attorney in due time.
Upon reviewing the case file, the evidence, and the reasons for the decision, with no error in the evaluation of the evidence, the appellate court rejected all the defendant’s appeals, which were found to be without merit, and upheld the decision in accordance with the law and procedure. The court also decided to collect the appeal fee from the defendant, as listed below, on 23/10/2018, by unanimous decision. (Court of Cassation 19th Civil Chamber, 2017/5345 E., 2018/5177 K.)
The plaintiff’s attorney stated that the plaintiff is a compatriot and close acquaintance of one of the partners of the defendant company, and due to this relationship, the plaintiff provided a mortgage on their property in favor of the company to secure its financing. Subsequently, the defendant company changed its name, and a share transfer agreement was made on 30.11.2011. According to the share transfer agreement, the new partners agreed that the mortgages given by the old partners would be removed. As per the agreement, the plaintiff and the company agreed and committed that the mortgage provided by the plaintiff would be removed within 90 days from the share transfer date. Despite the agreement, the mortgage was not removed. Furthermore, due to the defendant company’s deteriorating business conditions, the plaintiff was concerned about the sale of the property and claimed to have suffered emotional distress. The plaintiff requested 30,000.00 TL for emotional damages and the removal of the mortgage.
The defendant’s attorney argued that the defendant was not involved in the contract referenced by the plaintiff and therefore could not be held liable for the provisions of that contract. Even if the defendant were to be held liable under the contract, the conditions specified in the agreement had not been met. The defendant requested the dismissal of the case.
As a result of the evidence gathered and the trial proceedings, it was determined that the mortgage removal was agreed to take place within 90 days after the share transfer date in the share transfer promise agreement dated 30.11.2011. According to the commercial registry file of the defendant company, as of the date of the lawsuit, the conditions for the removal of the mortgages mentioned in the agreement had not yet been fulfilled. Therefore, the defendant could not be held responsible for this matter. Since the mortgage was removed during the course of the trial, it was decided that there was no need to make a decision regarding the removal of the mortgage, and the claim for emotional damages was rejected. The judgment was appealed by the plaintiff’s attorney.
The mortgage in question was established as collateral for a loan provided by the bank to a third-party bank. During the litigation, the bank also removed the mortgage. In this specific case, since the defendant could not be held liable, the case regarding the removal of the mortgage and the compensation claim should have been rejected due to lack of standing. The decision made was incorrect, and therefore, the judgment should be overturned.
CONCLUSION: For the reasons explained above, the judgment is REVERSED, and the upfront fee shall be refunded upon request. The decision was made unanimously on 23/02/2016. (Court of Cassation 19th Civil Chamber 2015/10863 E., 2016/2944 K.)
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