Title Registration Cancellation and Registration Suits: Theoretical and Practical Issues

THEORETICAL AND PRACTICAL PROBLEMS IN LAND REGISTRY CANCELLATION AND REGISTRATION CASES

I. Introduction: Right to Property and the Principle of Reliability of the Land Registry

The right to property is the real right guaranteed by Article 35 of the Constitution that grants a person the broadest authority over a thing. In the Turkish legal system, the acquisition of immovable property ownership is, as a rule, possible through registration (TCC Article 705). The land registry is an official register maintained under the responsibility of the state that ensures the publicity of rights over real properties. Pursuant to TCC Article 1023, the acquisition of ownership or another real right by a third party who relies in good faith on the registration in the land registry is protected. This principle is referred to as the "principle of reliance on the land registry."

However, this principle of reliance is not absolute. In cases such as the registration not being based on a valid legal cause (the principle of causality), a deficiency in the constitutive elements of the transaction, lack of capacity, fraud, or defect of will, the formally existing registration does not produce legal effect in terms of substantive law. It is precisely at this point that the concept of "wrongful registration" emerges. Land registry cancellation and registration cases, filed for the purpose of correcting wrongful registration and bringing the registry into conformity with the true legal situation, are one of the areas where both substantive law rules and procedural law principles are most intensely debated. In this article, the most frequently encountered problems in practice will be examined in detail along the axes of testamentary fraud, abuse of agency authority, fiduciary transactions, and the family dwelling annotation.

II. Testamentary Fraud (Muris Muvazaası): Area of Conflict Between Inheritance Law and Property Law

The most frequently encountered type of land registry cancellation action in practice is actions based on testamentary fraud, known colloquially as "asset hiding from inheritance." The legal basis of these actions is the Court of Cassation Decision to Unify Case Law (İBK) dated 01.04.1974 numbered 1/2.

A. Legal Characterization and Elements

Testamentary fraud is by its nature a type of "relative fraud." Here, the testator, for the purpose of depriving their heir of inheritance rights, transfers the real property they actually intend to donate through an onerous transaction in the land registry such as a sale or a care-until-death agreement. In this situation, there are two transactions:

1. Apparent Transaction (Sale): This is invalid due to fraud because it does not conform to the true will of the parties (TCO Article 19).
2. Hidden Transaction (Gift): Although it conforms to the true will of the parties, it is invalid because it does not carry the formal requirements prescribed by law (official deed).

B. Problems of Proof Encountered in Practice

The biggest problem in testamentary fraud cases hinges on the determination of the testator's true will. The Court of Cassation has developed certain criteria for this determination:

• Country and Regional Customs: Sociological factors such as the tendency to leave property to male children in particular.
• Financial Situation of the Testator: Whether there was any need to sell the property.
• Relationship Between the Parties: Personal relationships, disagreements, or feelings of gratitude.
• Difference Between Sale Price and Actual Value: While not proof of fraud on its own, it is one of the strongest presumptions.

The frequently made error in practice is focusing solely on the price difference. However, the Court of Cassation may accept that even when the testator makes a sale at a symbolic price motivated by gratitude, the primary purpose is not to hide assets but to express gratitude. For this reason, each concrete case must be evaluated within its own dynamics.

C. Situation of Heirs Who Are Not Reserved Portion Holders

Pursuant to the 1974 İBK, all heirs whose inheritance rights are violated, whether or not they are reserved portion holders, may file this action. This, unlike a reduction action, provides heirs with broader protection. However, transfers made during the testator's lifetime for the purpose of equitable distribution (equalization) are not evaluated within the scope of fraud. In what the Court of Cassation refers to as the "distribution defense," it must be investigated whether the testator made an equitable distribution to all heirs.

III. Abuse of Agency Authority and the Problem of Protection of Good Faith Third Parties

An agency agreement is a contract based on mutual trust, regulated in TCO Articles 502 et seq. The agent is obligated to act in the interest and in accordance with the will of the principal (TCO Article 506).

A. Intent to Cause Harm and Collusion

The agent's intentional use of the agency authority in a manner that damages the principal (for example, selling the real property well below its value) constitutes "abuse of agency authority." However, for land registry cancellation, the agent's bad faith alone is not sufficient; it is also required that the third party who acquires the real property knows or is in a position to know this situation.

B. Balance Between TCC Articles 1023 and 1024

While TCC Article 1023 protects a third party who relies in good faith on the registration in the land registry, TCC Article 1024 provides that a person who knows or should know of the wrongful registration (bad faith) cannot rely on this registration.

TURKISH CIVIL CODE

Against third parties not in good faith Article 1024: If a real right has been wrongfully registered, a third party who knows or should know this cannot rely on this registration. A registration that is based on a non-binding legal transaction or that lacks a legal cause is wrongful. A person whose real right is damaged by such registration may directly assert the wrongfulness of the registration against third parties who are not in good faith.

(Source: Turkish Civil Code)

In practice, courts must investigate the following matters when determining the bad faith of a third party:

• Family or Business Relationship: Is there an organic connection between the agent and the buyer?
• Inadequacy of Consideration: Is there a grossly disproportionate difference between the market value of the real property and the sale price?
• Geographic Proximity: Are the buyer and agent from the same community?
• Ordinary Course of Life: Suspicious situations such as the buyer purchasing the real property without seeing it, or disposing of it within a very short period.

The Court of Cassation General Assembly states that a person transacting with an agent is under the obligation to "act like a prudent person," and in suspicious situations must call and verify with the principal.

IV. Fiduciary Transactions and the Formal Requirement Dilemma

A fiduciary transaction is the transfer by the trustor of a right or property to the trustee for a specific purpose (security, administration, etc.) and the trustee's commitment to return the property when this purpose is fulfilled. Fiduciary transactions in Turkish law are recognized by the Court of Cassation Decision to Unify Case Law dated 05.02.1947 numbered 20/6.

A. Written Evidence Requirement

The biggest obstacle in these cases is the form of proof. Pursuant to the 1947 İBK, the existence of a fiduciary transaction can only be proven by written evidence. Hearing witnesses is as a rule not possible. The written evidence must be a document bearing the signatures of the parties and containing the elements of the fiduciary transaction (purpose of transfer, condition of return).

B. Exception of Commencement of Written Evidence

Pursuant to CCP Article 202, if there is a document provided or sent by the other party (letter, bank receipt, message transcript, etc.) that makes the claimed legal transaction probable, this is considered a "commencement of written evidence" and witnesses may be heard. In practice, the failure to prepare documents due to the trust relationship between the parties is the fundamental cause of loss of rights. Lawyers must direct their clients to always make a "trust agreement" in such transfers.

V. Family Dwelling and Absence of Consent

TCC Article 194 has made dispositions over the family dwelling subject to the consent of the other spouse. The owner spouse cannot transfer the family dwelling or restrict rights over it without the explicit consent of the other spouse.

A. Debate on the Constitutive Effect of the Annotation

Pursuant to TCC Article 194/3, it is possible to enter a family dwelling annotation in the land registry. However, according to recent decisions of the Court of Cassation General Assembly, even without an annotation, the real property being a family dwelling by its very nature is sufficient to benefit from the protection.

B. Good Faith of the Third Party

If there is no family dwelling annotation in the land registry, is the good faith of the third party who purchases the real property protected (TCC Article 1023)? The current approach of the Constitutional Court and the Court of Cassation is that the family dwelling status is a "factual situation" and that the buyer, by exercising the required care (visiting the property, asking neighbors), could know this situation. Therefore, even without an annotation, if it is proven that the buyer was in bad faith (knew that it was a family dwelling), land registry cancellation is possible.

VI. Preclusive Periods Arising from Zoning and Cadastral Legislation

Article 12/3 of Cadastral Law No. 3402 regulates that after 10 years from the finalization of the cadastral records, no action may be filed based on pre-cadastral grounds.

CADASTRAL LAW

Article 12 — 30: ... After ten years from the date of finalization of the records concerning the rights, restrictions, and determinations stated in these records, no objection may be raised and no action may be filed based on legal grounds prior to the cadastral survey.

(Source: Cadastral Law)

This period is not a statute of limitations but a preclusive period and is taken into account ex officio by the judge. Although the ECtHR considers this type of restriction on the right to property as a violation in certain cases, this rule is applied strictly in our domestic law. Legal practitioners must meticulously track this period in places where cadastral determination has been made.

VII. Conclusion and Recommendations

Land registry cancellation and registration cases are an area where the revelation of material truth conflicts with the principle of reliance on the land registry. Judicial authorities are obliged to establish a balance between the strict rules of formal law and equity (TCC Article 2).

Our recommendations for law practitioners (Judges, Prosecutors, Lawyers, and Notaries) in this context are as follows:

1. Role of Notaries: When drafting real property sale promises or powers of attorney, they must question the true will of the parties and be particularly sensitive about mental capacity reports in transactions of elderly persons.
2. Role of Lawyers: Before filing an action, they must complete evidence preservation (particularly witness and financial situation research in testamentary fraud cases) without deficiency, and must effectively utilize the alternative relief route (compensation if cancellation is not possible).
3. Role of Judges: They must go beyond formal reality and investigate in depth the presumption of the ordinary course of life and the will of the parties (TCO Article 19). Particularly in actions for abuse of agency authority, they must interpret broadly whether the third party was in the position of "should have known."

In conclusion, the sanctity of the right to property and the reliability of the land registry can only be protected through a meticulous judicial process and a legal practice in accordance with the principle of good faith.

Bibliography

1. Oğuzman, M. K., & Seliçi, Ö. (2023). Property Law. Istanbul: Filiz Kitabevi.
2. Eren, F. (2022). Law of Obligations General Provisions. Ankara: Yetkin Publications.
3. Court of Cassation Decision to Unify Case Law, dated 01.04.1974 numbered 1/2.
4. Court of Cassation Decision to Unify Case Law, dated 05.02.1947 numbered 20/6.
5. Court of Cassation General Assembly, 2022/747 Case, 2023/1080 Decision.
6. Court of Cassation 1st Civil Chamber, 2021/1584 Case, 2022/882 Decision.
7. Turkish Civil Code No. 4721.
8. Turkish Code of Obligations No. 6098.
9. Cadastral Law No. 3402.