Introduction

This article has been prepared to answer the question, “I believe a simulated transaction has been made in the land registry, can I file an annulment lawsuit? What legal actions can be taken against simulated transactions in the land registry?” The article has been developed through the analysis of numerous decisions from the Court of Cassation and first instance courts. The aim is to present, from a holistic perspective, the legal rights individuals have against simulated land title transfers, the conditions for filing a lawsuit, the burdens of proof, procedural requirements, and the possible outcomes of the lawsuit. The study consists of main findings, a detailed examination of these findings, and conclusion sections.

A. Conditions for Filing a Lawsuit Against Simulated Transactions in the Land Registry and Legal Interest

The fundamental condition for filing a simulated transaction lawsuit is that the plaintiff must have a legal interest in bringing this case. The Court of Cassation defines this legal interest as “suffering harm from the collusive transaction.”

For Creditors: For a creditor to file a lawsuit, they must have a receivable from the debtor, and the fraudulent transfer must aim to prevent the collection of this receivable. This situation was clearly stated in a decision by the 17th Civil Chamber of the Court of Cassation: “For a third party’s right to be deemed harmed by a collusive transaction, that party must have a receivable from the party involved in the collusive transaction, and a collusive transaction must have been carried out to prevent the payment of this receivable.” (2016/18256 E., 2019/4779 K.). An important detail is that it is not mandatory for the creditor to have initiated enforcement proceedings or obtained a certificate of insolvency to file this lawsuit. This is one of the most fundamental differences distinguishing a collusive lawsuit based on Article 19 of the TCO from an action for annulment of disposition under Article 277 of the EIFL.

For Heirs (Collusion by the Deceased): The situation is different in lawsuits filed by heirs. When the testator (deceased), with the intent to prevent their heirs’ inheritance rights, shows a property they actually intended to donate as a sale in the title deed, this is considered “collusion by the deceased”. According to the established jurisprudence of the General Assembly of Civil Chambers of the Court of Cassation, “all heirs whose inheritance rights are violated, regardless of whether they have a reserved portion, can file a lawsuit to determine the invalidity of the official contract due to collusion and request the annulment of the title deed record created based on it.” (2012/492 E., 2012/696 K.).

B. Burden of Proof and Evidence Evaluated

Simulation (collusion), being a secret agreement, is usually difficult to prove. Therefore, the Court of Cassation has adopted an approach of evaluation based on the ordinary course of life and the specific characteristics of the concrete case, rather than strict rules of proof. Courts consider the following elements when evaluating an allegation of simulation (collusion):

Price Difference: The exorbitant difference between the sale price and the real value of the immovable property is an important presumption. However, it is not sufficient on its own. The 11th Civil Chamber of the Court of Cassation emphasized this point by stating, “…it has not been found correct to accept the existence of simulation (collusion) and the bad faith of the defendants merely by considering the difference between the value of the immovable property determined by the court and the price declared during the official sale transaction.” (2014/12397 E., 2014/17765 K.).

Relationship Between Parties: The kinship, friendship, or commercial relationship between the seller and the buyer strengthens the suspicion of simulation (collusion).

Buyer’s Financial Situation: The buyer’s lack of financial capacity to pay the sale price is strong evidence.

Timing of the Transaction: The transfer being made immediately after an event giving rise to a debt (e.g., divorce lawsuit, enforcement proceeding) may indicate an intent to conceal assets.

Special Criteria for Simulated Inheritance Transactions: In cases of simulated inheritance transactions, the Court of Appeals (Yargıtay) seeks a broader range of evidence evaluation, such as “the customs and traditions of the country and region, social trends, the ordinary course of events, whether the testator had a just and reasonable cause for entering into the contract, whether the defendant had the purchasing power…” (General Assembly of Civil Chambers, 2012/492 E., 2012/696 K.).

C. Points to Consider in the Procedural Process

Compliance with procedural rules is of vital importance to delve into the merits of the case and prevent loss of rights:

Formation of Parties: The lawsuit must be filed against the last owner of the immovable property. If the immovable property has changed hands several times after the simulated transaction, as stated by the 4th Civil Chamber of the Court of Appeals, “a decision must be rendered by including all registered owners of the immovable property subject to the lawsuit” is necessary (2020/1222 E., 2021/396 K.). Otherwise, the decision may be overturned on procedural grounds.

Fees: The lawsuit is subject to proportional fees based on the value of the immovable property. If the fees are paid incompletely, the court will demand their completion, and if not completed, the file may be removed from proceedings (17th Civil Chamber of the Court of Appeals, 2015/17737 E., 2018/4244 K.).

Competent Court: In cases of collusion (simulated transactions), the generally competent court is the Civil Court of First Instance. However, if the dispute arises from family law (e.g., liquidation of the matrimonial property regime), the competent court may be the Family Court (17th Civil Chamber of the Court of Appeals, 2018/1808 E., 2019/11472 K.).

Statute of Limitations: In absolute simulated lawsuits based on Article 19 of the Turkish Code of Obligations (TBK), no statute of limitations or peremptory period applies. However, if the lawsuit is an annulment of disposition based on the Enforcement and Bankruptcy Law (İİK), a 5-year peremptory period may apply (General Assembly of Civil Chambers, 2017/2249 E., 2021/146 K.).

D. Possible Outcomes of the Lawsuit

When simulation is proven, the court’s decision may vary depending on the nature of the lawsuit:

Annulment and Registration of Title Deed: The most common outcome is the annulment of the simulated transaction and the registration of the immovable property in the name of the previous owner or in the names of the plaintiff heirs, proportional to their shares.

Recognition of the Right to Seizure and Sale: Especially in lawsuits filed by creditors, the Supreme Court, as a practical solution, adopts the recognition of a right for the creditor to collect their receivable without requiring the annulment of the title deed. In this case, “a judgment will need to be rendered for the plaintiff to be able to request seizure and sale, without the need for annulment and registration, by analogy to Article 283/1 of the EBL (Enforcement and Bankruptcy Law).” (Supreme Court 17th Civil Chamber, 2014/10003 E., 2016/944 K.).

Transformation of the Lawsuit into a Claim for Damages: If the immovable property has been transferred to a bona fide third party during the lawsuit, the annulment of the title deed is not possible. In this case, the lawsuit transforms into a claim for damages for the collection of the property’s value from the defendants who carried out the simulated transaction.

4. Conclusion

When the reviewed judicial decisions are evaluated as a whole, it is clearly seen that legal avenues are open against simulated transactions made in the title deed. Right holders can file a “title deed annulment and registration lawsuit” based on Article 19 of the Turkish Code of Obligations.

However, the success of this process;

To prove the claim of collusion with concrete and convincing evidence,

To develop appropriate legal arguments according to the type of case (creditor, heir, etc.),

It depends on strictly adhering to procedural rules such as fees, party formation, and the competent court.

DRight to File a Lawsuit: Yes, individuals who believe that a collusive transaction has been made in the land registry and whose rights have been harmed due to this transaction have the right to file a lawsuit for annulment and registration of the title deed. This right is consistently recognized by all relevant chambers of the Court of Cassation.

Legal Basis: The fundamental legal basis for such lawsuits is Article 19 of the Turkish Code of Obligations (TBK). This article regulates the invalidity of contracts that do not conform to the true intentions of the parties and aim to deceive third parties.

Parties to the Lawsuit: The lawsuit can be filed by third parties (creditors, heirs, etc.) whose rights have been harmed due to the collusive transaction. As a rule, the lawsuit must be filed against the person appearing as the owner in the land registry and, if there is a chain of transfer, against all intermediate owners.

Burden of Proof: The burden of proving the claim of collusion lies with the party filing the lawsuit. The existence of collusion can be proven by all kinds of evidence (witnesses, bank records, relationship between the parties, difference between the sale price and the real value, etc.).

Different Types of Collusion: Especially two types of collusion stand out in decisions: collusion aimed at avoiding creditors and collusion aimed at avoiding heirs (collusion by the deceased). In both cases, a lawsuit can be filed, but the proof criteria may differ.

Procedural Requirements: For the success of the lawsuit, strict adherence to procedural rules (filing the lawsuit in the correct court, full payment of fees, inclusion of all defendants in the lawsuit) is critically important.

Outcomes of the Lawsuit: If the lawsuit is accepted, the outcome may not only be the cancellation and registration of the title deed. The court, depending on the situation, may permit the seizure and sale of the immovable property without the need for title deed cancellation to allow the plaintiff to collect their receivable (analogous application of Article 283 of the EBL). If the immovable property has been transferred to a bona fide third party, the lawsuit may turn into a claim for compensation.

Sham lawsuits, due to involving evidentiary difficulties and complex procedural issues, require careful preparation. A lawsuit filed solely based on the low sale price has a high risk of being rejected. Therefore, individuals who believe they have encountered a sham transaction are strongly advised to seek legal support from a specialized lawyer in the field to avoid losing rights and to manage the process correctly. A paper suggestion.

Why is Tuzla Lawyer Support Necessary?

Sham lawsuits are extremely complex, both in terms of proving the claim and procedural processes. Errors such as incorrect party designation, insufficient evidence, non-compliance with deadlines, or the wrong selection of the lawsuit type can lead to the dismissal of the case and difficult-to-remedy loss of rights. An experienced lawyer operating in Tuzla, with expertise in this field, ensures that strategic steps are taken correctly, both in pre-litigation preparation and during the court process. Especially, the support of a lawyer familiar with local court practices in regions such as Istanbul, Tuzla, Pendik, Kartal, Maltepe, Gebze, Aydınlı, Orhanlı, Tepeören, Darıca, Bayramoğlu, Çayırova, Şekerpınar, or Güzelyalı, significantly increases the case’s chance of success and contributes to managing the process most efficiently.