Entitlement Procedure under Article 97 of the Enforcement and Bankruptcy Law

If a third party claims rights to goods seized by an enforcement officer during seizure proceedings, the ownership procedure comes into play. During seizures, movable property belonging to the debtor is seized first, followed by immovable property. Seizure of disputed goods claimed to belong to third parties is left until last.

The main purpose of the claim of ownership is to clarify the claims made by a third party that prevent the creditor from interfering with the enforcement of the property subject to attachment and that may lead to the lifting/restriction of the attachment.[1] The procedure followed in the claim of ownership differs depending on whether the property is in the possession of the debtor or the creditor. In the continuation of the article, the scope of Articles 96-97 of the Enforcement and Bankruptcy Law, i.e., the case where the property is in the possession of the debtor, will be examined.

Diagram 1[2]

• What could be the subject of a claim for entitlement?

Claims of ownership, pledge, easement, usufruct, or registered personal rights may be asserted by a third party or by the debtor on the grounds that they belong to the third party. Even if the third party, who is the debtor of the debtor in the enforcement proceedings, acknowledges the claim, a claim for ownership will be filed if another third party asserts that the claim belongs to them.[3]

Preparatory Procedure: A claim of ownership may be filed by the debtor or a third party asserting a right to the seized property within 7 days of learning of the seizure. This claim, made during the seizure proceedings, is recorded in the minutes. The claimant must file the claim within 7 days of learning of the seizure; the creditor and debtor have 3 days to object. If no objection is filed, the claim is deemed accepted.

Claim for Entitlement: According to Article 97 of the Enforcement Law, in case of an objection, the file is sent to the enforcement court; a decision is made to suspend or continue the enforcement proceedings. According to the third paragraph, upon a decision to postpone the enforcement proceedings, security is obtained from the third party who is the plaintiff to protect against potential losses for the creditor. The third party must file the lawsuit within 7 days of receiving notification of the decision.

• What happens if a claim for entitlement is not filed?

Since the debtor is deemed to have waived their claim against the creditor (Article 97/5 of the Enforcement and Bankruptcy Law), the creditor may request a sale at a later stage; however, it cannot be said that the debtor has waived their claim against the debtor; the creditor may resort to unjust enrichment provisions against the debtor.[4]

• What happens if a claim for entitlement is filed?

According to Article 97/8 of the Enforcement and Bankruptcy Law, a third party who has not been able to obtain the opportunity to file a claim of ownership may file a claim of ownership lawsuit in the enforcement court regarding the seized property or, if the property has been sold but the proceeds have not been given to the creditor, regarding the proceeds, from the date of learning of the seizure.

Claims of ownership are heard in the enforcement court under the general provisions of the simplified trial procedure.

[1] Mehmet Kâmil Yıldırım/Nevhis Deren Yıldırım, Enforcement and Bankruptcy Law, 8th Edition, Istanbul: Beta Publishing, 2021, p. 224.

[2] Age, p. 226.

[3] Age, p.226.

[4] Hakan Pekcanıtez/Muhammet Özekes, Practical Studies in Enforcement and Bankruptcy Law, 20th Edition, Istanbul: Onikilevha Publishing, 2021, p.82.