Issues of Joint Ownership and Contractual Relationships Among Shareholders in Yachts

Joint ownership and contractual issues among co-owners of yachtsare far more critical than commonly perceived in the application of maritime law. While the joint purchase of a yacht by multiple individuals may seem economically attractive at first glance, if not properly structured legally, it can lead to serious disputes in areas such as usage schedule, marina and personnel expenses, maintenance and repair decisions, charter income, share transfer, sale, mortgage, and even the complete disposal of the vessel. The Turkish Civil Code regulates joint ownership co-ownership and joint ownership ; the Turkish Commercial Code complements this structure in the maritime field with special institutions such as ship registration, transfer of ship shares, mortgages on ship shares, and joint ownership . Therefore, yacht partnerships should not be considered simply as "we will all use this boat," but rather as a multi-layered ownership and management relationship.

In joint yacht ownership, the main problem is often not the purchase of the boat itself, but how the relationship will be managed after the purchase. Who will use it for how long, who will pay the annual mooring fee and at what rate, who will choose the captain and crew, will unanimity or majority be required for major maintenance decisions such as engine overhaul, can one co-owner sell their share to a third party, will the other co-owner have a right of pre-emption or first offer, what will happen if one of the co-owners fails to pay their debts, will the yacht be sold if the partnership becomes unsustainable? The Turkish Civil Code provides general answers to these questions; however, what makes a concrete yachting relationship secure is clarifying these answers in a written co-ownership agreement.

The difference between co-ownership and joint ownership

According to Article 688 of the Turkish Civil Code co-ownershipis when several individuals own a physical, undivided thing in its entirety, with specific shares. The law explicitly states that, unless otherwise specified, shares shall be considered equal; furthermore, each co-owner has the rights and obligations of an owner with respect to their share, and that this share can be transferred, mortgaged, and seized by creditors. This provision indicates that, in the case of a jointly acquired yacht, each co-owner has a specific and independent share, and this share can be legally transacted independently. Therefore, a yacht purchased jointly by two or three people is, in most cases, considered within the framework of co-ownership.

In contrast, according to Articles 701-703 of the Turkish Civil Code, joint ownershipis the situation where property is jointly owned due to a community formed in accordance with the law or contracts stipulated by law. In joint ownership, the partners do not have defined shares; the right of each partner extends to the entirety of the property included in the partnership. Unless otherwise stipulated in the law or contract, the unanimous consent of the partners is required for management and disposal transactions; no division can be made and no disposition can be made over a share as long as the community continues. Joint ownership ends with the transfer of the property, the dissolution of the community, or the transition to co-ownership. This regime is most commonly encountered in practice with yachts inherited through inheritance.

Why is this difference important? Because in co-ownership, one partner can act more freely with their share, whereas in joint ownership, the uncertainty of the share and the requirement for unanimous consent for management and disposal make the partnership much more restricted. Joint yacht ownership often begins with a friendly relationship; however, if it is not correctly understood whether it is co-ownership or joint ownership, the legal basis for decisions such as "I'm selling my share," "I'll use it alone this summer," "Let's rent out the boat," or "Let's take it to the shipyard for repairs" becomes confused. Especially with inherited yachts, the joint ownership structure within the inheritance partnership creates a serious problem, as one partner cannot make economic decisions independently.

The issue of joint ownership in inherited yachts

Joint ownership of yachts often arises through inheritance, not purchase. Article 644 of the Turkish Civil Code stipulates that an heir may request the conversion of joint ownership of all or part of the assets included in the estate into co-ownership from the magistrate. If the other heirs do not raise a valid objection or a partition lawsuit is not filed within the specified period, a decision is made to convert the joint ownership of the asset in question into co-ownership. This provision shows that it is not mandatory for an inherited yacht to remain under unanimous lock for years; under certain conditions, a transition to co-ownership is possible.

This transformation is particularly important for assets like yachts, which require economic operation, maintenance, and decision-making. In a joint ownership regime, the need for unanimous consent for every decision can render the relationship completely inoperable if one partner is abroad, another doesn't want to use the boat, or another wants to sell it. Transitioning to co-ownership, however, at least allows for the determination of shares, the proportioning of expenses, and, if necessary, the possibility for each partner to dispose of their own share. Therefore, the first legal assessment regarding an inherited yacht should be: "Will this partnership continue as a joint ownership, or will it be converted to co-ownership?".

How are the rights of use and enjoyment determined in co-ownership?

According to Article 693 of the Turkish Civil Code, each co-owner may benefit from and use the jointly owned property to the extent that it is compatible with the rights of the others; in case of a dispute, the judge determines the manner of benefit and use, and this determination may be in the form of divided use in terms of time or place. This provision is very important in terms of joint ownership of yachts. Because each co-owner cannot say, "I have a share, I can use it whenever I want"; use compatible with the rights of the other co-owners is required. When a dispute arises, the court can even determine the usage schedule.

Therefore, one of the most vital contractual clauses in jointly owned yachts the usage schedule. Who will use the yacht during which weeks in the summer, how will public holidays be shared, how will weekend and extended voyage plans be organized, how will last-minute bookings be handled, can a co-owner allow third parties to use their share, what will the guest limit be, and will there be a difference between captained use and bareboat-like use? The law doesn't specify these details; it only establishes the framework. What ensures practical security is the clear wording of the annual or seasonal usage mechanism in the co-ownership agreement. Without this, de facto disputes such as "my share is larger, I'll use it more" or "you used it more last year" quickly escalate into legal crises.

Why is expense sharing the biggest area of ​​disagreement in jointly owned yachts?

Article 694 of the Turkish Civil Code stipulates that, unless otherwise provided, management expenses, taxes, and other obligations arising from or relating to jointly owned property shall be borne by the co-owners in proportion to their shares; and that a co-owner who pays more than their share may seek recourse from the others. This provision is of direct and applicable importance in joint yacht ownership, as items such as marina fees, insurance premiums, annual maintenance, hauling ashore, classification/certification, captain and crew wages, fuel, provisions, cleaning, electronic updates, safety equipment, and emergency repairs require continuous financial investment.

The biggest problem in practice is this: Partners enthusiastically agree on acquiring the boat, but they don't plan the annual operating budget in detail. After a while, one partner makes regular payments while the other doesn't; one wants to cover expenses with charter income while the other insists on private use; one wants a luxury refit while the other only advocates for mandatory maintenance. The law states that unless otherwise stipulated, expenses should be shared proportionally; however, it doesn't specifically regulate how expenses that vary depending on usage intensity, extra costs arising from private use, or luxury upgrades requested by a single partner should be shared. Therefore, one of the most critical aspects of jointly owned yachts mandatory expenses, operating expenses, and expenses related to personal requests .

Do maintenance, repair, and refit decisions require a majority vote or a unanimous vote?

The Turkish Civil Code categorizes the management of jointly owned property. Article 690 states that each co-owner is authorized to handle ordinary management tasks and minor repairs. Article 691 requires a majority of all co-owners for significant management tasks; it explicitly states that the same majority is required for maintenance, repair, and construction work exceeding the limits of ordinary management and necessary for preserving the value or usability of the property. Article 692 requires the consent of all co-owners, unless otherwise decided, for changing the intended purpose of the property, undertaking construction work exceeding the extent required for ordinary use, or for transactions involving the entire jointly owned property.

In jointly owned yachts, this distinction is extremely vital. For example, annual servicing, antifouling, routine minor electronic maintenance, and similar operations can often be considered within the scope of normal management. In contrast, engine overhaul, major paint jobs, complete interior renovation, hull modification, extensive conversion to suit commercial charter, or a project that changes the intended use of the boat approach the nature of significant or extraordinary management work. Although the legal framework is general, considering the technical and economic realities of the yacht, it is essential that major projects such as refits be separately stipulated in the contract with a majority rule. Otherwise, one partner will call it "necessary maintenance" while another calls it a "luxury investment.".

Chartering a shared yacht requires special arrangements

One of the most frequent disagreements among co-owners is whether the yacht should be used for commercial chartering or marine tourism activities. Article 691 of the Turkish Civil Code stipulates that decisions regarding important management matters, such as the conclusion or termination of ordinary lease or product lease agreements, must be made by a majority of shares and shareholders. This provision shows that the decision to open a jointly owned yacht to regular chartering operations cannot be viewed like a decision for ordinary daily use. This is because chartering fundamentally changes the yacht's wear and tear level, income structure, insurance risk, crew requirements, and third-party relationships.

The Maritime Tourism Regulation also strengthens this commercial aspect. According to the regulation, operators of maritime tourism vessels are natural or legal persons with licenses from the Ministry who rent and market maritime tourism vessels, with or without crew, that they have leased from owners or own; furthermore, the operating licenses issued by the Ministry belong to the persons whose names are written on the license and cannot be transferred to third parties without the permission of the Ministry. For yachts flying the Turkish flag and with a passenger capacity not exceeding twelve, at least one of the charterers must possess the necessary qualifications in order to be chartered without a crew. Therefore, when one of the co-owners says, "Let's charter the boat," this is not just a matter of revenue sharing; it also involves legislation, operating licenses, personnel, and insurance.

Therefore, if a charter decision is to be made for jointly owned yachts, the following questions must be answered in writing: how will the income be shared, who will cover the cleaning and maintenance costs before and after the charter, who will manage damages/deposits, who will select the crew, how will private use weeks and commercial use weeks not overlap, and how will additional wear and tear caused by commercial use be compensated? The law provides a general framework; however, without a contract, commercial income often becomes a disruptive element rather than a strengthening factor in the partnership.

Can one of the stakeholders sell their share?

One of the most important characteristics of co-ownership is that the share is transferable. Article 688 of the Turkish Civil Code explicitly states this. Therefore, one of the co-owners of a yacht may, as a rule, wish to transfer their share. However, the process doesn't end there. If the yacht is registered in the ship registry, the transfer of the share falls under the specific formal requirements of maritime commercial law. According to Article 1007 of the Turkish Commercial Code, the ownership of a registered ship share passes to the transferee upon agreement between the owner and the acquirer; this agreement must be in writing and the signatures must be notarized, or it can be made at the ship registry office. The same provision also states that the transfer of the ship share is completed upon registration in the registry.

Therefore, the freedom to transfer shares in jointly owned yachts and a shareholder agreement should be considered together. Yes, the law allows for the transfer of shares; however, partners can agree on provisions among themselves priority purchase rights, first-served rights, approval requirements, prohibitions on sales to certain competitors , or valuation procedures . Without such an agreement, it's possible for an unwanted third party to become a partner in the yacht. This makes the actual management of the jointly owned yacht difficult. Especially in family partnerships or group investments, the fact that someone "sells their share to whomever they want" is often only discovered later, creating a crisis.

Mortgage and lien risk on ship shares

One of the most dangerous aspects of joint ownership is that a co-owner's personal financial problems can indirectly affect the jointly owned yacht. Article 688 of the Turkish Civil Code explicitly stipulates that a share can be mortgaged and seized by creditors. Article 1014 of the Turkish Commercial Code states that a share in a ship can only be restricted by a ship mortgage if it consists solely of the share of one of the co-owners who own the ship according to the principles of joint ownership. When these two provisions are considered together, it becomes clear that in jointly owned yachts, a co-owner's share may be subject to independent security or compulsory enforcement pressure.

In practice, this risk results in the following: One partner's share may be seized, sold, or mortgaged due to debts. In such a case, the other partners may find themselves partnering with someone they didn't want, or face financial pressure. Therefore, the partnership agreement must clearly define what the other partners should do in the event of forced execution or security pressure on the share, whether they have the right to acquire the share, the notification obligation, and the mechanism for exiting the partnership. In jointly owned yachts, the legal risk stems not only from the yacht itself but also from the personal financial structure of each partner.

Transformation of a partnership into a commercial enterprise: Equipment partnership

If a jointly owned yacht is not merely a privately owned vessel, but is used on the water for the benefit of all owners, of joint ownership may come into play. According to Article 1064 of the Turkish Commercial Code, joint ownership arises when several individuals jointly own a vessel and use it on the water for the benefit of all owners, in accordance with an agreement they have made among themselves. Article 1067 of the same code stipulates that the affairs of the joint ownership shall be conducted according to decisions made by a majority vote of the co-owners; and that voting rights shall be calculated according to the share ratio.

This regime is crucial for jointly owned yachts that are chartered or commercially operated. This is because the relationship now approaches a more intensive commercial partnership than ordinary co-ownership. Article 1073 of the Turkish Commercial Code states that the ship's manager must exercise the diligence of a prudent shipowner when conducting the joint venture's affairs; Article 1080 stipulates that co-owners are personally liable to third parties for the joint venture's debts in proportion to their shareholding. Therefore, the transformation of a jointly owned yacht into a commercial enterprise not only creates the possibility of income but also increases the risk of personal liability to third parties. For this reason, in commercially used jointly owned yachts, the "we're already friends/family" approach is insufficient; a comprehensive operating agreement that understands the logic of joint ownership is necessary.

The Turkish Commercial Code (TTK) also establishes important rules regarding the transfer and termination of shares. A person acquiring a share in a partnership becomes liable as a co-owner in their relations with other co-owners from the moment of acquisition; the partnership can be dissolved by a majority decision, and the decision regarding the transfer of the vessel is also considered a decision to dissolve the partnership. There is also the possibility of withdrawing from the partnership or requesting its dissolution for just cause. These provisions show that in the case of the commercial operation of a jointly owned yacht, disputes no longer arise from classic co-ownership issues but transform into issues of a private maritime trade partnership.

Exclusion from the partnership and the partnership becoming unbearable

Article 696 of the Turkish Civil Code stipulates that a co-owner who, through their conduct and behavior, severely violates their obligations to other co-owners and thus makes the continuation of the co-ownership relationship unbearable, may be expelled from co-ownership by a court decision. The initiation of a lawsuit is, as a rule, dependent on the share and the majority of co-owners. If the judge deems it appropriate, they may separate the expelled co-owner's share in kind; if this is not possible, they may give the other co-owners the opportunity to acquire that share by paying its value; and if that is also not possible, they may decide on a sale by auction.

Why is this provision important for jointly owned yachts? Because in some cases, the problem isn't just a disagreement; it might involve one partner consistently failing to pay expenses, using the boat improperly, clashing with the captain and crew and thus paralyzing the operation, jeopardizing insurance and marina liabilities, or making the relationship virtually unbearable for the other partners. In such situations, the partnership is not a structure that must be tolerated forever. However, for such a serious intervention, it is crucial to have written rules and records of breaches from the outset. Because a lawsuit for expulsion from co-ownership requires significant evidence and weight. Therefore, the breach conditions and the tiered sanctions mechanism should be written into the co-ownership agreement from the beginning.

Dissolution of partnership and sale of the yacht

Article 698 of the Turkish Civil Code stipulates that each co-owner may request partition unless there is an obligation to maintain co-ownership due to a legal transaction or because the property has been permanently dedicated to a specific purpose. The same article also states that this right may be limited by contract for a maximum period of ten years. Article 699 specifies that partition shall take the form of division in kind or sale by negotiation/auction and division of the proceeds; if the property cannot be divided without significant loss of value, sale by auction may be ordered.

These provisions have striking consequences regarding yachts. Because physically dividing a yacht is practically impossible in most cases, the process of dissolving a partnership is often expected to lead to sale and the sharing of the proceeds. This is a practical consequence of the law. Precisely for this reason, when purchasing a yacht jointly, the question of "how will we use it?" as well as "how will we separate if we ever break up?" must be answered in writing. If the co-ownership agreement does not regulate voluntary sale procedures, valuation mechanisms, independent appraisals, the right of first refusal, third-party sale procedures, and mediation/conciliation steps before resorting to court, the partnership can easily turn into a sale lawsuit.

What sections must be included in a joint ownership agreement?

For a secure joint ownership relationship in yachts, a purchase agreement alone is insufficient; a usage and management agreement between the co-owners necessary. This agreement should clearly state the type of partnership and the share percentages. It should then regulate the usage schedule, summer-winter divisions, special occasion and high season sharing, guest limits, conditions for allowing use by third parties, and rules for use with or without a captain and crew. Expense items should be separated into mandatory fixed expenses, usage-based variable expenses, and luxury/extra expenses. Furthermore, it should be clarified whether a joint management account will be maintained at the bank, the annual budget approval, and the consequences for non-paying co-owners, such as late payment interest or usage restrictions.

Secondly, the management and decision-making regime must be written down. The person(s) authorized for routine maintenance and minor repairs, the majority required for major maintenance and refitting, the majority required for charter decisions, the selection of captain and crew, marina changes, insurance company selection, the purchase of new equipment, and borrowing authority must be defined separately. Thirdly, the transfer of shares, priority right of purchase, valuation method, the procedure to be followed in case of a partner's risk of foreclosure or bankruptcy, exit from the partnership, and the procedure for dissolution of the partnership must be detailed. Fourthly, if it is a commercial enterprise, operating rules consistent with the provisions of the shipowning partnership must also be written down. The law provides a general framework for all these headings; however, what truly prevents disputes is a detailed contract tailored to the specific use of the yacht.

Conclusion

Issues of joint ownership and contractual disputes among co-owners of yachtsare not solely a matter of civil law; they are also intertwined with maritime trade, registration, mortgage, operation, and even tourism legislation. The Turkish Civil Code regulates joint ownership and co-ownership in detail, including majority management, usage rights, expense sharing, exclusion from co-ownership, and dissolution of partnerships. The Turkish Commercial Code, on the other hand, adds a maritime dimension to joint yacht ownership with rules such as the transfer of ship shares, mortgages on ship shares, and joint ownership in cases of commercial use. The Maritime Tourism Regulation also introduces additional documents and operating regimes when a jointly owned yacht is opened for charter or commercial operation.

In short, joint yacht ownership isn't as simple as "let's share the expenses, let's divide it arbitrarily." A poorly established partnership creates more problems than the boat itself. In contrast, a well-prepared co-ownership agreement protects both friendship and investment by defining usage, expenses, maintenance, chartering, share transfer, exit, and crisis management from the outset. True security in yacht partnerships doesn't begin with buying the yacht together; it begins with rewriting the rules of co-ownership from the ground up.