Right of Pre-emption
The right of pre-emption is a constitutive right that grants the co-owners of a property held under shared ownership the priority to purchase a co-owner’s share in the event that it is sold to a third party or subjected to a transaction equivalent to a sale. The law regulates two types of pre-emption rights: one arising from statute (legal pre-emption) and the other arising from contract (contractual pre-emption).
Legal Right of Pre-emption
The legal right of pre-emption, which constitutes one of the indirect limitations of immovable property ownership, is regulated under Articles 732 to 734 of the Turkish Civil Code.
Turkish Civil Code Article 732 – In cases of co-ownership, if a co-owner sells his/her share of the immovable property, in whole or in part, to a third party, the other co-owners may exercise their right of pre-emption.
As understood from the relevant legal provision, in order for the right of pre-emption to be exercised, there must first be an immovable property subject to co-ownership, and that property must be sold, either entirely or partially, to a third party. In other words, the existence of a co-owned immovable is a prerequisite for exercising the right of pre-emption. However, the right can only be exercised if the sale is made to a non-co-owner (i.e., a third party). Therefore, if a co-owner sells their share to another co-owner, a pre-emption claim cannot be brought.
Furthermore, as explicitly stated in the same article, the right of pre-emption can only be exercised by the co-owners of the immovable property subject to co-ownership; individuals who merely hold personal rights or limited real rights over the property cannot benefit from this right. The exercise of this right is only possible by filing a lawsuit against the buyer. A pre-emption lawsuit cannot be filed against the co-owner who sold the share; the defendant in a pre-emption case must be the third party who purchased the share. This is also clearly stipulated in Article 734 of the Turkish Civil Code.
Turkish Civil Code Article 734 – The right of pre-emption shall be exercised by filing a lawsuit against the buyer. Before a decision is made for the registration of the share in the name of the holder of the right, the holder must deposit, in cash, the purchase price and the title deed expenses incurred by the buyer to the place determined by the judge within the time set by the judge.
Therefore, in order to exercise the legal right of pre-emption, the following conditions, as mentioned above, must be met:
The share must be sold to a third party who is not a co-owner.
The immovable must be subject to co-ownership.
The holder of the pre-emption right must be a co-owner of the said immovable.
Waiver of the Right of Pre-emption
Another condition for exercising the right of pre-emption is that the legal holder of the right has not waived it. Waiver of the legal right of pre-emption is possible and is regulated under Article 733 of the Turkish Civil Code (TCC).
Turkish Civil Code Article 733 – The right of pre-emption cannot be exercised in forced auction sales. Waiver of the right of pre-emption must be executed in an official form and registered (annotated) in the land registry. Waiving the right of pre-emption regarding a specific sale must be in written form and may be executed either before or after the sale. The sale must be notified to the other co-owners by either the buyer or the seller through a notary. The right of pre-emption lapses three months after the date of notification to the entitled person and, in any case, two years after the date of the sale.
If the waiver does not relate to a specific legal transaction but to all future sales in general, it must be made in an official form and annotated in the land registry. However, if the waiver concerns only a specific sale transaction, then an ordinary written form will suffice, and the waiver may be executed either before or after the sale.
Time Limits, Competent and Authorized Court
According to Article 733 of the TCC, the co-owner who sells their share or the third party in the position of the buyer must notify the other co-owners of the sale via a notary. Notarial notification is an absolute obligation for the buyer. If the buyer fulfills this notification obligation in any manner other than through a notary, the notification is deemed invalid.
Although the time limits are preclusive (i.e., they extinguish the right), in order to exercise the right of pre-emption, the right holder must file a lawsuit within 3 months from the date the sale is notified by the buyer via notary; otherwise, if no notification is made, a lawsuit must be filed within 2 years from the date of the sale. Since these periods are of a preclusive nature, they are taken into account by the court ex officio, and it is not possible to file a pre-emption lawsuit after these periods have expired.
The court of first instance in charge of hearing the pre-emption lawsuit is the Civil Court of First Instance, and the competent court is the court in the location where the immovable property is situated.
Right of Pre-emption Arising from a Contract
The right of pre-emption arising from a contract is regulated under Article 735 of the Turkish Civil Code.
Turkish Civil Code Article 735 – The right of pre-emption arising from a contract and annotated in the land registry may be exercised against any owner within the period and under the conditions specified in the annotation. If no conditions are specified in the registry, the conditions of the sale of the immovable to the third party shall apply. The effect of the annotation expires in any case ten years after the date of registration. The provisions regarding the exercise and waiver of the statutory right of pre-emption shall also apply to the contractual right of pre-emption.
A pre-emption contract, although subject to a written form requirement, is an agreement made between the owner of an immovable property and the person to whom the right of pre-emption is granted. It gives the right holder the priority to purchase the immovable if it is to be sold.
The right of pre-emption arising from a contract comes into effect upon the sale of the immovable that is the subject of the contract. In order for the right of pre-emption to be annotated in the land registry, the parties must execute a written agreement that includes the annotation of the pre-emption right in the registry along with the pre-emption contract. If the right of pre-emption is annotated in the registry and a specific condition related to the right is indicated, this constitutes a qualified right of pre-emption. If no specific condition is indicated in the annotation, it is considered an ordinary right of pre-emption.
Under a qualified right of pre-emption, the right holder may request the registration of the immovable in their name only by fulfilling the special conditions annotated in the registry. In the case of an ordinary right of pre-emption, the right holder can exercise their right by meeting the same conditions under which the property was transferred to the third party.
The right of pre-emption annotated in the land registry can be exercised against any owner within the period and under the conditions specified in the annotation. Its effect ends in any case ten years after the date the annotation was entered. If the right of pre-emption has not been annotated in the registry, the right holder may claim compensation from the obligor of the pre-emption right for any damages suffered as a result of the property being transferred to a third party.
Supreme Court Decisions Regarding the Right of Pre-emption (Shufa Right)
Supreme Court, 6th Civil Chamber, Decision dated 04.04.2012, Case No. 2012/1226 E., 2012/5313 K.
Right of Pre-emption (Shufa) Lawsuit
The right of pre-emption, which is one of the legal restrictions on immovable property ownership, is a right that grants the other co-owners the priority to purchase the share if one of the co-owners sells their share wholly or partially to a third party. As understood from this definition of the pre-emption right, the right to file a lawsuit belongs to the co-owner. The pre-emption right arising from co-ownership exists only as long as the co-ownership continues. The pre-emption right can be exercised on immovable properties subject to co-ownership. If the co-ownership status of the property ends for any reason, the pre-emption right ceases to exist.
Supreme Court 14th Civil Chamber, Decision dated 05.12.2016, Case No. 2015/5781, Decision No. 2016/10044
Pre-emption Case (Shufa Case)
The pre-emption right is a right that gives the other co-owners the priority to purchase the share sold, either partially or entirely, by one co-owner to a third party in an immovable property subject to joint ownership provisions. This right arises at the moment the joint ownership relationship is established and becomes exercisable upon the sale. Article 732 of the Turkish Civil Code No. 4721 states: “In joint ownership, if one co-owner sells their share in the immovable property completely or partially to a third party, the other co-owners may exercise their pre-emption right.” Article 733 regulates the prohibition on exercising the pre-emption right, waiver, and statute of limitations. Accordingly, the sale must be notified to the other co-owners via a notary by the buyer or seller. The pre-emption right expires if three months pass from the date the sale is notified to the right holder, or in any case, two years pass from the sale date. As stated in the Supreme Court General Assembly of Civil Chambers’ decision numbered 2005/6-358-470 dated 21.09.2005, the law subjects the exercise of the pre-emption right to statute of limitations. The three-month statute of limitations starts “from the date the share sale is notified to the right holder,” as explicitly stated in the article text, the reasoning, and the 1984 draft law’s rationale. This notification is subject to a special form prescribed by law and must be made through a notary. The three-month statute of limitations begins the day after the date the notary notification is served to the co-owner. The two-year period starts the day following the share sale date. If the co-owner does not exercise the pre-emption right within the prescribed period, the right is lost only for that particular share sale; the pre-emption right for other share sales remains intact. In short, the rule concerning the start of the period necessary for exercising the legal pre-emption right is based on “notification,” not “knowledge.” This notification must be made through a notary, not by any other means. The wording “is notified” in the article text is definitive, and the following clause clearly and explicitly states that the period starts from the notification. Given this explicit regulation, the period must necessarily start from the notification; it is not possible to initiate the statute of limitations by claiming the right holder learned of the sale by other means, nor does such knowledge start the limitation period.
