New Sale Rules In Partition Actions Under Turkey’s 12th Judicial Reform Package

The 12th Judicial Reform Package was published in the Official Gazette No. 33326 dated July 31, 2026. The amendment introduced to Article 114 of the Enforcement and Bankruptcy Law by Law No. 7589 changes the procedure applicable to the sale of inherited real estate through a partition action. Rather than requiring heirs to compete directly with third-party bidders from the outset, the new rules give them an initial opportunity to acquire the property among themselves. Accordingly, where all owners acquired title by inheritance and no person other than the heirs holds an ownership interest in the property, the first auction will be conducted exclusively among the heirs who hold title. This gives the heirs a special opportunity to acquire full ownership before the property is opened to bidding by third parties.

The new system does more than merely change who may participate in the first auction. It also introduces specific rules regarding the minimum auction price, the security requirements applicable to co-owners, and the consequences of failing to pay the auction price within the prescribed period. The amendment therefore directly affects both the expectations of parties considering a partition action and the financial preparations required of heirs intending to participate in the sale process. This article examines the principal differences between the previous system and the new auction procedure, together with their likely practical implications.

How Were Partition Sales Conducted Before the 12th Judicial Reform Package?

Before the amendment, Article 114 of the Enforcement and Bankruptcy Law did not provide for a separate first-auction procedure specifically for inherited real estate. Once a court ordered the partition of jointly owned property by sale, the auction was conducted under the general provisions, and both the heirs holding title and third parties were entitled to participate in the same auction. An heir seeking to keep the property within the family was therefore required to compete against outside bidders and submit the highest bid from the very first auction. There was no statutory or automatically applicable priority mechanism under which the property would first be offered exclusively to the heirs.

Under the previous rules, a successful bid was generally required to exceed the higher of 50% of the appraised value and the aggregate amount of any claims having priority over the property, together with the costs of sale. This threshold applied to partition sales without any special distinction for inherited real estate. In addition, a co-owner who applied to the sales office within the prescribed period was not required to provide separate security to the extent that the value of that co-owner’s interest was sufficient to cover the required security. The system introduced by the 12th Judicial Reform Package differs from the previous framework in terms of the participants permitted in the first auction, the minimum auction price, and the applicable security requirements.

Why Will the First Auction for Inherited Real Estate Be Limited to Heirs?

The amendment does not establish a general priority right for heirs in every partition sale. The special auction procedure applies only where all owners acquired their ownership interests through inheritance and no third party other than the heirs holds an ownership interest in the property. Where these conditions are satisfied, the first auction will be conducted exclusively among the heirs who hold title.

According to the explanatory memorandum to the legislative proposal, the amendment is intended to prevent abuses encountered in partition sales and to protect the legal interests of heirs to the greatest extent possible. By giving the heirs an opportunity to acquire full ownership before the property is opened to third-party bidders, the new system seeks, where possible, to preserve the property within the family.

This opportunity is not unlimited. The heirs-only auction procedure will apply on a one-time basis. If no buyer emerges from the first auction, the second auction will be conducted under the general provisions and will be open to all bidders. The amendment therefore does not guarantee that the property will ultimately be acquired by one of the heirs.

Although third parties are excluded from the first auction, the minimum bid threshold has been set by reference to the full appraised value of the property in order to preserve its value. The legislature has therefore sought to balance the priority granted to heirs against the need to prevent the property from being transferred at an unduly low price.

New Auction Conditions: Appraised Value, Security, and Non-Payment of the Auction Price

While granting heirs priority in the first auction, the amendment also strengthens the financial safeguards intended to ensure that the auction proceeds on the basis of genuine and financially credible bids. In this respect, the minimum bid required in the first auction has been increased, the security exemption previously available to co-owners has been abolished, and the sanctions applicable to bidders who fail to pay the auction price have been strengthened.

The explanatory memorandum states that these amendments are intended to prevent the sale process from being obstructed through bad-faith bids and to avoid situations in which an auction is deliberately left inconclusive following lengthy judicial proceedings. The first auction among heirs therefore constitutes more than a priority mechanism; it is also a sale process requiring substantial financial preparation.

Full Appraised Value Required at the First Auction

At the first auction, which will be conducted exclusively among the heirs holding title, the bid must exceed the higher of:

• 100% of the appraised value of the property; and
• the aggregate amount of any claims having priority over the property.

The bid must also cover the costs of sale and distribution.

If no buyer emerges from the first auction, the second auction will be open to all bidders and will be conducted on the basis of 50% of the appraised value. The new system therefore gives heirs priority while preventing the property from being sold below its appraised value at the first auction. However, the higher minimum bid threshold also requires an heir seeking to acquire the property to arrange the necessary financing before the auction begins.

The Security Exemption for Co-Owners Has Been Abolished

Under the previous rules, a co-owner participating in a partition auction was not required to provide separate security to the extent that the value of the co-owner’s interest in the property was sufficient to cover the security requirement.

The amendment abolishes this privilege. As a general rule, persons holding an interest in property subject to fractional co-ownership or joint ownership must now provide security equal to 10% of the appraised value in order to participate in the auction.

The explanatory memorandum notes that certain co-owners had submitted exceptionally high bids without providing security and subsequently failed to pay the auction price, causing the sale to be cancelled and the proceedings to be prolonged in bad faith. Requiring co-owners to provide security is intended to ensure that bids are supported by the bidder’s financial capacity and to make it more difficult to frustrate the sale process. The Treasury remains exempt from the security requirement in public auctions.

New Sanctions for Failure to Pay the Auction Price

The successful bidder must pay the full auction price within seven days following publication of the auction record on the electronic sales portal. In a partition sale, if the auction price is not paid within this period, the security deposit will not be refunded. Where the successful bidder is not a co-owner, the amount remaining after deduction of the sale expenses will be distributed among the co-owners in proportion to their ownership interests. Where the successful bidder is a co-owner, the entire security deposit will be distributed among the other co-owners in proportion to their respective interests.

In addition, a successful bidder who fails to pay the auction price within the prescribed period will be subject to an administrative fine equal to 5% of the amount bid. The amendment therefore attaches a significant financial consequence to high bids that are not supported by the bidder’s ability or intention to pay.

How Will the New Rules Affect Partition Proceedings?

The new rules provide greater protection to heirs during the sale stage of partition proceedings, but they also make participation in the auction more financially demanding. By limiting the first auction to heirs who hold title, the amendment gives them an opportunity to acquire the property before it is offered to third parties. However, since the successful bid must exceed the full appraised value, the property cannot be acquired at a substantially discounted price.

In practice, an heir wishing to purchase the property must prepare for the auction in advance. This includes reviewing the appraised value, calculating the economic value of the heir’s existing share, arranging the required security deposit, and ensuring that the balance of the auction price can be paid within the seven-day payment period. The removal of the security exemption for co-owners, combined with the forfeiture of the deposit and the administrative fine of 5% of the bid amount, makes unsupported or speculative bidding considerably more costly.

The amendment does not, however, guarantee that the property will remain within the family. If no valid bid is submitted at the first auction, the second auction will be open to third parties and will proceed on the basis of 50% of the appraised value. The protection afforded to heirs is therefore limited to the first auction and can only be used effectively by heirs who have secured the necessary financing. The new rules will also not apply to auctions announced before the amendment entered into force, which will remain subject to the previous provisions.

Conclusion

The amendment to Article 114 of the Enforcement and Bankruptcy Law introduces a new procedure for partition sales involving inherited real estate. Where all owners acquired title by inheritance and no third party holds an ownership interest, the first auction will be conducted exclusively among the heirs. If no buyer emerges, the second auction will be open to third parties under the general rules.

The new procedure seeks to give heirs a meaningful opportunity to retain the property within the family while protecting its value by requiring bids at the first auction to exceed the full appraised value. At the same time, the removal of the security exemption and the new sanctions for non-payment are intended to prevent co-owners from delaying or frustrating the sale through bids they are unable or unwilling to honor.

For heirs considering participation in the auction, advance financial planning is now essential. The manner in which the property was acquired, the identity and legal status of the owners, the appraised value, the required security, and the date of the auction notice should all be reviewed before any decision is made.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.