Public Auction within the Scope of Partition of Joint Ownership

Regarding the subject of "Public Auction within the Scope of Partition of Joint Ownership";

In our legal system, when movable or immovable property is owned jointly or in common by multiple individuals, terminating this joint ownership may become a legal and practical necessity. In cases where agreement among the co-owners is not possible, the most fundamental legal remedy a Partition Lawsuit or Dissolution of Joint Ownership.

This lawsuit, regulated within the framework of the relevant provisions of the Turkish Civil Code, severs the co-ownership between partners, resulting in either the division of the property in kind or, if this is not possible, its sale and the distribution of the proceeds among the partners. In cases where division in kind is physically, legally, or economically impossible (which is quite common in practice), the magistrates' courts decide to sell the property through public auction

This article will cover all the details of the auction system, the most critical and technical stage of partition lawsuits ; its legal basis, integration with enforcement and bankruptcy law, electronic auction (Esatis) processes, and practical applications, while maintaining academic depth, all in a language easily understandable to everyone.

1. THE PROCESS OF MAKING THE DECISION FOR AN AUCTION AND THE SALES OFFICER'S APPOINTMENT

After the court decides on the dissolution of the partnership and the division of the property through sale, and this decision becomes final, the case file the Civil Court's Sales Department,. At this stage, the judge cannot directly conduct the sale; a sales officer (usually the court clerk or court staff) assigned within the court is authorized to handle the sale procedures.

The first task of the sales officer is to open a sales file in accordance with the final judgment and initiate the process ex officio (automatically). The sales officer sends notifications to the parties requesting payment of expenses. Once the necessary advance payment is made within the legal timeframe, the preparation phase begins for appraising the property and converting it into cash. During this phase, the legal and factual status of the property is determined, and any annotations, declarations, and mortgages in the land registry are examined. The aim is to create a complete and accurate inventory of the property to be auctioned.

2. VALUATION (APPRAISAL) STAGE

One of the most crucial steps in an auction system is valuation. It is illegal to put a property or movable asset up for auction without determining its true market value.

How is a property value determined?

The sales officer appoints a panel of expert appraisers (usually real estate appraisers, engineers, or architects) through the court. This panel prepares a comprehensive report examining the property's location, size, zoning status, building quality, accessibility, facade, depreciation, and current comparable sales prices.

Appeal Process Against Valuation

The prepared valuation report is communicated to all stakeholders (partners) and interested parties. The parties may object to the valuation by applying to the competent Enforcement Court within the legal period (usually within 7 days) from the date of notification of the report. If the value determined by the expert is significantly below or above the market rate, the partners should exercise their right to object at this stage to avoid losing their rights. If the court finds the objection justified, it will order a new on-site inspection and expert examination to determine the final value. The finalized valuation forms the basis for determining the base price to be used in the auction phase.

3. PREPARATION OF THE TERMS AND CONDITIONS FOR SALE

Once the valuation is finalized, a detailed Sales Agreement is drafted by the sales officer. This agreement serves as a formal contract that protects the rights of both bidders and property owners, essentially setting the rules of the game.

The sales agreement includes the following elements:

• The full address of the property, its title deed registration, characteristics, and zoning status,

• The finalized appraisal price,

• The start and end dates and times of the auction,

• Information on the electronic platform where the first and second auctions will be held (UYAP e-Sales),

• The amount of the security deposit (usually twenty percent of the appraised value) and the account details where it will be deposited,

• The fees to be paid by the broker, stamp duty, VAT and Value Added Tax rates, and who will pay the land registry fees,

• What will happen to rights such as mortgages, liens, or usufruct rights on the property?.

A copy of the specifications is distributed to all stakeholders. Parties may file a complaint with the Enforcement Court within the legal timeframe regarding any clauses in the specifications (e.g., if they contain incomplete or incorrect information). Once the specifications are finalized, the announcement phase begins.

4. ANNOUNCEMENT PHASE AND NOTICES

In our legal system, for auctions to take place in a fair, transparent, and competitive environment, it is essential that potential buyers are aware of the property. Therefore, the announcement procedure is subject to very strict rules.

• Electronic Announcement: Sales announcements are made available to the public online through the Press Announcement Agency's official announcement portal and the UYAP e-Sales portal. The announcement is published electronically at least one month before the start date of the sale.

• Local Announcements and Newspapers: If deemed necessary or required by law, announcements may also be placed in local or national newspapers with high circulation. However, in today's digital legal system, electronic announcements are the primary medium.

• Notification: The date and terms of sale will be notified separately to all stakeholders and, if present at the address, to relevant third parties. The publication of this notice eliminates the right of stakeholders to later object on the grounds of "I was unaware."

5. ELECTRONIC AUCTION SYSTEM (UYAP E-SALES) AND TENDER PROCEDURE

The era of crowded and sometimes dubious physical auctions held in execution museums or courthouse corridors in past years has largely passed. Today, partition sales are conducted entirely an electronic auction system (via the UYAP e-Sales Portal). This system increases participation in auctions, prevents irregularities, and ensures that properties fetch their true value.

Stages and Rules of the Tender Process:

1. Deposit of Security: Everyone wishing to participate in the auction (including stakeholders) must deposit a security deposit equal to 20% of the appraised value into the specified bank account (Vakıfbank, etc., joint court accounts) via the e-Sales system. It is impossible to submit a bid without depositing the security deposit.

2. First Auction Period: The first auction period announced on the e-commerce portal begins (usually lasting a few days). For bids to be valid at this stage, the bid reach fifty percent (50%) of the appraised value of the property and also exceed the total amount of any preferential claims (and any priority mortgage debts) on the property. If this percentage (50%) and the claims are not exceeded in the first auction, the property cannot be sold, and the process moves to a second auction phase.

3. Second Auction Period: If no buyer emerges or the bids are insufficient in the first auction, a second auction period will be opened with the same specifications. The rule remains the same in the second auction: the bid must meet fifty percent (50%) of the appraised value and exceed the sales expenses. If no buyer emerges in the second auction, the sales request will be dropped.

4. Bidding Procedure: Bidders can log into the UYAP e-Sales system with their e-Government passwords and submit as many bids as they wish during the auction period. The system will instantly display the highest bidder's identity (using a pseudonym or system number) to other participants while keeping their identity confidential.

5. Last-Minute Bids (Extension): If a new bid is placed in the final minutes before the auction ends, the system automatically extends the bidding period in increments (e.g., 3-minute increments) to ensure fair competition. This is designed to prevent last-second manipulation.

6. PARTICIPATION OF PARTNERS (STAKEHOLDERS) IN THE TENDER AND SPECIAL CIRCUMSTANCES

One of the most frequently asked questions in partition lawsuits is whether the co-owners (stakeholders) whose property is located in the middle can participate in an auction among themselves.

• Shareholder Participation in the Auction: Shareholders can participate directly in the auction, just like any other foreign buyer. There may even be exceptions regarding the requirement to deposit collateral for shareholders; if a shareholder's stake exceeds 20% of the appraised value, they may be allowed to bid without collateral (or with a deduction) by a decision of the sales officer. However, to avoid practical problems, it is safest for shareholders to also deposit collateral.

• Rights of Partners During Sale: In a lawsuit for the dissolution of the partnership, the partners may agree among themselves to submit a joint bid to prevent the property from passing to outsiders, or they may win the auction and acquire sole ownership of the property.

• Blocking the Sale by Unanimous Agreement of All Stakeholders: If all stakeholders (all partners coming together) reach a joint decision at any stage of the bidding process and wish to stop the sale, this is only possible through the complete amicable termination of the case and the sale (waiver or settlement of the case). Once the sales process has begun, if even one partner wishes for the sale to proceed, the auction cannot be stopped despite the objections of the others.

7. CASE FOR ANNULMENT OF THE TENDER

As a result of the auction, the tender is officially awarded to the highest bidder. However, this process may not always proceed flawlessly. In our legal system, of Tender Annulment is provided to monitor irregularities in the tender process and prevent grievances.

Who can request the termination of the tender?

The cancellation of the auction may be requested by those who submitted bids at the time of sale, all stakeholders, buyers, and rights holders with an interest in the land registry.

What are the reasons that necessitate the termination of the tender?

• Procedural Errors: Failure to publish the announcement in accordance with the law or specifications, failure to comply with announcement deadlines.

• Specification Errors: Incorrect or incomplete descriptions of essential characteristics of the property in the specifications (for example, deliberately omitting information about the number of floors in the building or its zoning status).

• Irregularities During the Auction: Technical malfunctions preventing bidding in the electronic system, fraudulent transactions, or the prevention of participation in the auction.

• Price Being Excessively Low: The claim that the goods were auctioned off at a price far below their market value (however, in legally compliant auctions, it is quite difficult to terminate the contract simply because the price is low).

Procedure for Termination Actions:

A lawsuit to annul an auction must be filed with the competent Enforcement Court within the legal time limit (usually 7 days) from the date the auction is completed. When this lawsuit is filed, the land registration process is suspended until the conclusion of the lawsuit. If the court finds the annulment request justified, it cancels the auction; in this case, the process does not start over, and the sales office renews the auction from where it left off (by setting a new auction date). If the request is found unfounded, the lawsuit is dismissed, and the auction becomes final.

8. FINALIZATION OF THE TENDER AND THE TITLE DEED REGISTRATION PROCESS

If no lawsuit is filed within the 7-day legal period for appealing the termination of the tender, or if a lawsuit is dismissed and the decision becomes final, the tender becomes final (definitive tender). After this stage, the financial and legal liquidation steps of the process are completed.

1. Payment: The winning bidder (the highest bidder) must pay the full bid price within the time specified in the tender documents (usually within a few days of the tender being finalized). The payment is deposited into the official account of the sales office.

2. Collection of Taxes and Fees: Value Added Tax (VAT) calculated on the sale price, stamp duty, land registry fees, and brokerage fees are paid by the auction buyer or co-owners/debtors in accordance with the relevant legislation and the provisions of the tender document. Generally, VAT and land registry fees are the responsibility of the buyer.

3. Registration Decision: After the payments are completed, the sales officer sends an official memorandum to the relevant Land Registry Office requesting that the property be registered in the name of the auction buyer. Upon this court order, the land registry removes the names of the former co-owners and transfers ownership to the new buyer. At this stage, all liens, mortgages, and encumbrances on the property (unless otherwise specified in the sales agreement) are cleared; the buyer acquires the property with a clean title deed.

9. DISTRIBUTION OF THE PROCEEDS (PARTITION) AND CLOSING OF THE CASE

After the auction is completed and the title deed is transferred, one final step remains for the sales office: distributing the proceeds of the cash among the co-owners.

• Deduction of Expenses: From the total amount obtained from the sale, all litigation costs, expert witness fees, advertising costs, brokerage fees, and tax debts incurred for the purpose of conducting the auction will be deducted first.

• Distribution According to Shares: The remaining net amount is meticulously calculated according to the share ratios (portions) recorded in the land registry. The amount due to each partner is transferred to their respective bank accounts.

• Joint Ownership Situation: If the property was sold as joint ownership (inheritance partnership, etc.), the money is not directly distributed to the co-owners; instructions are awaited from the civil court or probate office regarding "payment according to the shares in the inheritance certificate," or the money is held in a common pool, allowing the co-owners to apply for payment together.

• Pledge and Attachment Creditors: If one of the partners has a lien or mortgage on their share due to a personal debt, the creditor's claim is paid first from the money allocated to that partner, and the remainder is given to the partner.

Once all these procedures are completed in full, the sales office considers the file executed (fulfilled) and closes it.

CONCLUSION

The auction system applied in partition lawsuits is a strict, systematic, and transparent process that guarantees fairness and the conversion of property rights into cash when reconciliation between co-owners becomes impossible. This chain, starting from valuation and extending to digital competition on the UYAP e-Sales portal, the annulment of the auction, title registration, and the distribution of the proceeds, is subject to rigorous legal formalities to prevent loss of rights. Understanding each stage of this process is crucial for both co-owners and external investors participating in the auction, ensuring effective protection of rights and the flawless execution of the process.