The Turkish Constitutional Court recently considered sale of a property to pay public debts, in circumstances where the property was allegedly owned by another party ("Applicant"). The court ruled that if a restriction is registered on the title deed registry and observable, later transactions for the property should carry the restriction's consequences. Therefore, the court ruled that the Applicant's property right was not violated and a fair balance existed between property rights and public interest.
The Applicant signed a preliminary sale contract to purchase a property in 1998. At this time, the property had two attachment annotations in favour of a Tax Office. The preliminary sale contract was registered on the title deed in 1999.
The purchase transaction failed and in 2001 the Applicant filed a declaratory lawsuit, seeking to assert his ownership of the property. The First Instance Court ruled that the property belonged to the Applicant.
In 2009, the Tax Office notified the Applicant that the property had been put up for sale. The Applicant filed a lawsuit before Tax Court alleging that the Tax Office's notice was incorrect and illegal, pointing to the 2001 declaratory judgment which established that the Applicant owned the property.
The Tax Court cancelled the sales transaction, but the Council of State later reversed the cancellation. The higher court stated that immovable property can be sold to collect public debts because seizure of the property had not been removed and nor was the attachment cancelled by judicial decision.
The Applicant applied to the Constitutional Court, claiming that selling the property despite the 2001 declaratory judgment breached his property rights.
The Constitutional Court noted that given the 2001 declaratory judgment, the Applicant held a reasonable expectation of ownership.
The Constitutional Court also noted that property rights are not unlimited though. Rather, these can be restricted by law and for purposes of public good.
The Constitutional Court ruled that if a restriction is registered with the title deed registry and could be observed:
- Any transaction by a third-party regarding the property should carry the restriction's consequences.
- The third-party cannot be deemed as acting with goodwill.
In the case at hand, the Constitutional Court found that a fair balance existed between property rights and the public good had not deteriorated. Therefore, the court ruled that the Applicant's property right was not violated.
Please see this link for full text of the Constitutional Court's decision (only available in Turkish).
Information first published in the MA | Gazette, a fortnightly legal update newsletter produced by Moroğlu Arseven.
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