CASE OF DISSOLUTION OF PARTNERSHIP (CASE OF ANNULMENT OF PARTNERSHIP)
The case for the elimination of partnership, also known as İZALE-İ ŞÜYU case.
It is to ensure the termination of the shareholding on movable or immovable property dominated by shared or unified ownership.
What is İzale-i Şüyu?
İzaleyi şuyu, in other words, the elimination of partnership (shareholding), can be defined as "eliminating the partnership (shareholding) by dividing the price of any thing itself or by selling it".
Article 698 of the Turkish Civil Code No. 4721 reads as follows
"Unless there is an obligation to continue the shared ownership due to a legal transaction or because 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 sharing cannot be made at an inappropriate time."
This provision is also applicable to property subject to joint ownership in the same way.
"Joint ownership ends with the transfer of the property, dissolution of the community or transition to shared ownership.
Unless there is a provision to the contrary, the division shall be made according to the provisions of shared ownership." (TMK; Art. 703)
In which cases can the dissolution of the partnership not be requested?
If the shareholders have reached an agreement (legal transaction) among themselves not to eliminate the shareholding, the dissolution of the partnership cannot be requested during this period. This is called the "obligation of the continuation of shuyuun" (obligation to continue the partnership). According to the law, this period to be agreed by contract can be maximum 10 years and this contract is also subject to the condition of official written validity (TMK; Art. 698/II).
If the property subject to shared ownership is allocated for a permanent purpose, the partners cannot request sharing.
The request for sharing must be made at an appropriate time (TCC; Art. 698/III). Whether the time is appropriate or not shall be determined according to the rules of honesty regulated in Article 2 of the TCC.
If an immovable subject to condominium ownership or condominium easement is in question, the elimination of the commonality cannot be requested in these immovables. Article 7 of the Condominium Law No. 634 is as follows
"Elimination of the partnership cannot be requested in the real estate subject to condominium ownership or condominium easement.
Independent sections may be the subject of litigation and follow-up as an independent real estate, and the elimination of the partnership may be requested in them."
Unless otherwise agreed with the contract, the elimination of the partnership cannot be requested in immovables subject to timeshare. Article 63 of the Condominium Law No. 634 is as follows:
"The co-owners of the structure or independent section on which the timeshare right is established cannot request the elimination of the dispute, unless otherwise agreed by contract."
Who are the parties in the case of elimination of the partnership?
The parties in this case are all stakeholders. The result of the case has the same result for all stakeholders.
In which ways is the dissolution of partnership possible?
*Elimination of the partnership by means of equal division
*Elimination of partnership by sale
For which properties can the dissolution of partnership be filed?
There is no rule that the lawsuit for the elimination of the partnership will only be on immovable property. The action for dissolution of partnership can be filed for both movable and immovable properties.
The lawsuit must be filed against all partners together.
What Happens If One of the Partners Dies?
If one of the partners dies, the heirs of the deceased partner should be added to the lawsuit.
WHAT IS THE ELIMINATION OF PARTNERSHIP BY WAY OF DISTRIBUTION IN KIND?
The primary condition here is that the movable or immovable property must be divisible. The court first examines whether the movable or immovable property can be divided or not.
In the elimination of the partnership by division in kind, the movable or immovable property is divided by the number of shareholders. In cases where the shares of the property subject to the lawsuit cannot be equalised, it may also be possible to add money in the amount of its value in terms of the negative part.
As an example of the elimination of the partnership by division in kind, we can give the example of dividing a land with five stakeholders into five equal parts and leaving them to the stakeholders.
WHAT IS DISSOLUTION OF PARTNERSHIP BY SALE?
The dissolution of partnership by sale is the sale of movable or immovable property through the execution channel and the sale amount is divided among the partners in proportion to their shares. In cases where it is not possible to dissolve the partnership in kind, it is decided to dissolve the partnership by sale.
The elimination of the partnership by sale is realised by auction in accordance with the provisions of the Enforcement and Bankruptcy Law. It is also possible to realise the sale between the partners, but it should be noted that in this case, the consent of all partners is sought.
Is It Possible to Eliminate the Partnership without Filing a Case for Elimination of the Partnership?
If the partnership on movable or immovable property is desired to be eliminated, the parties can eliminate the partnership by agreeing among themselves. In this case, the stakeholders must agree on how to share the property among themselves. If the parties cannot agree, a lawsuit for the elimination of the partnership may be filed.
Who are the Parties in the Case for Elimination of Partnership?
The lawsuit for the elimination of the partnership is filed by the stakeholder who wants to eliminate the partnership on movable or immovable property against all stakeholders who are partners. Elimination of the partnership can be requested by any stakeholder. In case of the death of one of the partners, the heirs of the deceased partner should be added to the case.
In which court is the lawsuit for the elimination of the partnership filed?
Regardless of whether the property for which the dissolution of the partnership is requested is movable or immovable, the competent court is the Civil Courts of Peace.
If the property for which the dissolution of the partnership is requested is immovable property, then the competent court will be the civil court of peace where the immovable property is located. If it is requested to eliminate the partnership on more than one immovable, the lawsuit may be filed in the court where any of the immovables is located.
If the property for which the dissolution of the partnership is requested is movable property, the competent court is the court of the defendant's domicile.
Who pays the trial expenses and attorney fee in the case of dissolution of partnership?
While filing a lawsuit for the elimination of the partnership, the plaintiff must pay the lawsuit fee and court expenses. The litigation fee is a lump sum fee, that is, it will not vary according to the value of the immovable.
As a result of the lawsuit, the judicial expenses and attorney fees, if any, are divided in proportion to the shares of the shareholders and charged to the shareholders.
What happens if there is a dispute about the ownership of the encumbrance in the case for the elimination of the partnership?
Encumbrances are the structures of another person or persons other than the owner of the immovable property on the immovable property. For example, it is the presence of cultivated trees on the land or a building on the land to a person other than the landowner.
In the event that there is a dispute about the encumbrances on the immovable property, a separate lawsuit will have to be filed separately from the lawsuit for the elimination of the partnership. The lawsuit to be filed in this regard is the "Lawsuit for the Determination of the Ownership of the Encumbrance".
What are the Stages in the Case for the Elimination of the Partnership?
Article 699 of the Turkish Civil Code No. 4721 is as follows:
"Sharing is carried out in the form of dividing the property in kind or selling it by bargaining 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 equalisation by adding money to the part with the missing value.
If the request for division is not deemed appropriate to the circumstances and conditions, and especially if it is not possible to divide the shared property without a significant loss of value, a sale by auction shall be ordered. The decision to order the sale by auction among the shareholders is subject to the consent of all shareholders."
The court is bound by the content of the shareholders' requests regarding the division procedure within the framework of the principle of adherence to the request. Accordingly, if the partners have requested the division of the immovable property in kind, the court will proceed to divide the property in kind, even if only one of the partners makes a request in this direction, it is sufficient for the court to be binding. In this case, the court is obliged to proceed with the division in kind. If the part that falls to one of the shareholders as a result of the division is more valuable than the others, the court will proceed to equalisation by adding money to the part of the missing value. If the stakeholders cannot agree on the shares, the judge may also draw lots.
If the property is divided in kind, each parcel of land must be registered on a separate page of the land registry on one shareholder.
However, if the division in kind is not in accordance with the circumstances and conditions, and especially if the shared property will suffer a significant loss of value due to the division, a sale by auction will be ruled. In this case, if the shareholders take a unanimous decision, the auction can only be held between the shareholders without the participation of a third party.
How is the Sale Procedure After the Lawsuit?
6100 numbered Code of Civil Procedure, the relevant provision of the titled article is as follows:
"In cases where a sale is required for partition and dissolution of partnership, the judge shall appoint an officer for the sale. The sale of movable and immovable property shall be made according to the provisions of the Enforcement and Bankruptcy Law." (CCP; art. 322/2)
"... decisions regarding real rights related to immovable property cannot be executed until finalised." (CCP; art. 367/2)
Following the finalisation of the decision, an annotation of offer for sale is put on the title deed record, the current title deed, diameter and zoning status are summoned, then a valuation is made by the sales officer through an expert, the report on the valuation is notified to the shareholders, if the complaint is not realised, the valuation is finalised and the sale phase is started, the sale is made by auction. As stated before, upon the unanimous decision of the shareholders, it may be decided to make the sale only with the participation of the shareholders.
What is the Time Period for Requesting Sale in the Case for Elimination of Partnership?
The execution of the sale decision can be requested within the 10-year limitation period from the finalisation of the judgement established by the court.
"If the obligation is acknowledged by a deed or is bound by a court or arbitral award, the new period is always ten years." (TCO No. 6098; Art. 156/2)
A decision of the Court of Cassation on the subject is as follows
"....As a result of the dissolution of partnership lawsuit filed regarding the immovables subject to the lawsuit, it was decided to dissolve the partnership through sale, and this decision became final on 10.4.1984. Such announcements are subject to a 10-year statute of limitations as of the date of finalisation." (6th Court of Cassation; 22.10.1984 dated, E. 1984/8585, K.1984/9898 numbered decision)
Is it Possible to Sell a Share While the Case for Elimination of Partnership is Pending?
There is no legal obstacle to the sale of one of the shares while the action for the elimination of the partnership regarding a property subject to shared ownership is ongoing. Only the shareholders have the right of pre-purchase.
How long does a lawsuit for dissolution of partnership last?
The issue of how long the case for the elimination of the partnership will be completed refers to a multivariable process such as the number of parties, the nature of the immovable property, the demands expressed during the litigation process, the submission of the expert report to be prepared for valuation, complaint, finalisation. For this reason, it is difficult to answer this question by giving a definite date.
However, in a valuable article prepared by a comprehensive statistical analysis of the case files related to the auctions finalised between 2011 and 2017 by the Civil Peace Sales Office in Istanbul Çağlayan Palace of Justice, the following conclusions were reached:
"Looking at the data obtained, the first thing that catches the eye is that a dissolution of partnership case was concluded in an average of 5.33 (±3.25) hearings. On the other hand, it can be seen from the analysed case files that there are cases that were concluded in (at least) 2 hearings or extended to (at most) 14 hearings. Similarly, the average duration of a case, including the appeal phase, is 32.44 (±12.17) months, but this duration varies between 8 and 56 months. It is observed that there is an average period of 18.89 (±10.48) months between the expert's first report on the immovable subject to the lawsuit and the time of the sale. There is a difference of at least 2 and at most 49 months between these two periods." (Erdem ATEŞAĞAOĞLU-Ceyhun ELGİN; İzale-i Şüyu Cases: A Statistical Analysis for Immovable Property Sales, Journal of TBB, 2018 (139), pp. 231-232)
How to Prevent a Lawsuit for Dissolution of Partnership?
As a rule, each of the partners has the right to file a lawsuit for dissolution of partnership (izaleyi şuyu) by applying to the Civil Court of Peace. There is no institution to prevent this. However, according to the law, the partners must file this lawsuit at an appropriate time (TMK; art. 698/III). In other words, if the other partners are in such a difficult situation that they cannot follow the lawsuit due to their personal circumstances, or if a clearly inconvenient time is turned into an opportunity for them, it may be argued that the request in question is not in accordance with the rules of good faith (Art. 2 of the TCC).
Apart from this, if the partners agree among themselves to continue the partnership up to a maximum of 10 years within the framework of a contract to be prepared before a notary public, no partner will be able to file a lawsuit for dissolution of the partnership during this period.
Since the partners cannot demand a share of the property subject to shared ownership, which is allocated to a permanent purpose in accordance with the law, allocation to such a purpose (road, well, etc. between two immovables) can be considered.
JUDGEMENTS OF THE COURT OF JUDICATURE ON THE CASE OF DISSOLUTION OF PARTNERSHIP
-THE ESSENCE OF THE MATTER CANNOT BE ENTERED INTO UNTIL THE ORGANISATION OF THE PARTIES HAS BEEN ACHIEVED
T.C YARGITAY 8th Civil Chamber
Esas: 2016/ 20950 Decision: 2019 / 341 Decision Date: 15.01.2019
SUMMARY: While the court should decide on the merits of the dispute according to the content of the file and the evidence to be collected after the completion of the formation of the parties and the collection of the evidence of the parties, it has not been deemed correct to establish a judgement by entering into the merits of the matter without ensuring the formation of the parties, which is considered a public order. As such, while the judgement should be reversed for the reasons explained above, it is understood that the approval of the judgement based on the grounds in the corrected judgement is based on a material error. For this reason, it has been decided to accept the request of the plaintiffs' attorney for correction of the judgement and to revoke the judgement by removing the decision of approval.
-IT IS NECESSARY TO DECIDE ON THE SALE OF THE PARCEL SUBJECT TO THE LAWSUIT. SALE OF THE SHARE CANNOT BE DECIDED
T.C YARGITAY 14th Civil Chamber
Esas: 2018/ 2439 Decision: 2018 / 9117 Decision Date: 17.12.2018
SUMMARY: As for the concrete case; in cases for the elimination of partnership, the sale of the parcel subject to the lawsuit is decided. It cannot be decided to eliminate the commonality of the share. For this reason, it is not correct to decide on the sale of the 1/4 share in the immovable property numbered 466 parcel subject to the lawsuit. Since it is not correct for the court to make a decision with incomplete examination without considering the mentioned issue, the judgement should be reversed.
-IF A CREDITOR OF A SHAREHOLDER HAS FILED A LAWSUIT FOR DISSOLUTION OF PARTNERSHIP, IT IS NOT SUFFICIENT FOR THE SHAREHOLDERS TO CONSENT TO THE SALE AMONG THEMSELVES
T.C YARGITAY 14th Civil Chamber
Esas: 2016/ 3726 Decision: 2018/8982 Decision Date: 12.12.2018
SUMMARY: The court decided for sale "among the shareholders" with the consent of all of the defendants; the judgement was appealed by the plaintiff's attorney. Although the sale between the shareholders can be decided with the consent of all shareholders in the cases for the elimination of the partnership filed between the shareholders, this case is a case for the elimination of the partnership filed by the creditor ... in order to obtain its receivables based on the relevant article of the EBL. Therefore, the consent of the shareholders to the sale among themselves is not sufficient. Since this situation would prejudice the creditor's right and the creditor's consent to such a sale was not duly obtained, it was necessary to revoke it.
-IT IS NECESSARY TO DETERMINE HOW MUCH OF THE TOTAL VALUE OF THE IMMOVABLES CORRESPONDS TO THE LAND AND HOW MUCH OF THE TOTAL VALUE OF THE IMMOVABLES CORRESPONDS TO THE LAND IMPROVEMENTS BY ESTABLISHING A PERCENTAGE RATIO
T.C YARGITAY 14th Civil Chamber
Esas: 2018/ 2682 Decision: 2018 / 8505 Decision Date: 03.12.2018
SUMMARY: As for the concrete case; the plaintiffs and the defendant have claimed that they are the right holders of the enclosures on the immovable property subject to the lawsuit, and in accordance with the above-mentioned principles, the court did not focus on whether the parties agree on this issue, and if they do not agree, the parties were not given time to file a lawsuit on this issue. In that case, by considering the above-mentioned principles, even if the plaintiffs' attorney has stated that the encumbrances belong to his client, considering that the plaintiffs are 3 people, it should be explained which part of the encumbrances belongs to which plaintiff, and according to these explanations, if there is a dispute regarding the encumbrance claims of the parties claiming encumbrances, to give time to file a lawsuit on this issue, If there is no dispute about the ownership of the immovable property, if necessary, by obtaining an additional report from the expert, it is necessary to determine how much of the total value of the immovable property corresponds to the land and how much to the immovable property by establishing a percentage ratio and distribute the sale price to the shareholders in accordance with this ratio, but it was not deemed correct to establish a judgement by being satisfied with incomplete investigation.
