Right of Pre-emption (Shuf'a Right)

The right of pre-emption (or right of first refusal ), also known as the right of first refusal, is a frequently encountered concept in Turkish Civil Law, but often misunderstood in practice. Particularly prevalent in co-ownership relationships , this right arises during the sale of immovable property and grants the right holder the priority to purchase the property under certain conditions

With the development of social life and economic relations, real estate ownership and partnership relations have become complex. In this context, the right of pre-emption, created to protect the rights of stakeholders, has significant consequences both in theory and practice.

This article will discuss the definition, types, legal basis, litigation process, practical problems, precedents, and comparative legal evaluation of the right of pre-emption

1. Definition of the Right of Pre-emption

The right of pre-emption is a right that grants certain individuals a priority right to purchase real estate under the same conditions in a sale transaction made by the owner to a third party . The holder of this right can exercise it by filing a lawsuit within a specified period after the sale transaction has taken place

In terms of definition

According to Article 732 of the Turkish Civil Code:

"In co-ownership, if one co-owner sells their share to a third party, the other co-owners can exercise their right of pre-emption."

This right not to interfere with the division of ownership in immovable property, but to protect the interests of the co-owners.

2. Types of Pre-emption Rights

The right of pre-emption is examined under two main headings:

2.1. Legal Right of Pre-emption

arising from the law, especially to co-owners in jointly owned properties . It is regulated in accordance with Articles 732-733 of the Turkish Civil Code.

Features:

• only sales transactions.

• a shared ownership relationship .

• No registration is required in the land registry.

• after the sale is completed .

• It is used by filing a lawsuit in the Civil Court of First Instance

2.2. Contractual Right of Pre-emption

It is a right granted by a pre-emption agreement between the parties .

Features:

• It can be established on any type of property.

• When an annotation is made on the title deed, it is also valid against third parties.

• It can be time-limited (e.g., 5 years).

• It is subject to the terms of the contract.

3. Conditions of the Right of Pre-emption

There are certain basic conditions that must be met in order to exercise a right of pre-emption:

• There must be a valid sales transaction.

• The sale must be genuine and undisclosed

• The rights holder be informed .

• the specified time period.

Note: Transactions such as donations, barter, and the establishment of usufruct rights are not considered sales. Such transactions do not give rise to a right of pre-emption.

4. Pre-emption Right Case

4.1. Time Limit for Filing a Lawsuit

According to Article 733 of the Turkish Civil Code:

• Within 3 months from the date the sale is notified ,

• In any case, a pre-emption lawsuit must be filed within 2 years from the date of sale .
  

4.2. Competent and Authorized Court

• Competent Court: Civil Court of First Instance

• Competent Court: The court of the place

4.3. Subject of the Case

The lawsuit concerns the acquisition of the share in question from a third party and its registration in the plaintiff's name. The rights holder wishes to transfer ownership by undertaking to pay the sale price.

4.4. Parties to the Case

• Plaintiff: Right of first refusal holder (stakeholder)

• Defendants: The person making the sale (shareholder) and the buyer (third party)

5. Problems Encountered in Practice

5.1. Concealing Sales

In some cases, the seller and buyer may declare a false price to prevent a third party from exercising their right of pre-emption. In such cases, the court will investigate the actual sale price.

5.2. Breach of Contract

A contractual right of pre-emption that is not registered in the land registry cannot be asserted against bona fide third parties. Therefore, this can lead to serious loss of rights in practice.

5.3. Missing the Deadline

If the aforementioned periods of 3 months and 2 years have passed, it is not possible. These periods forfeiture periods .

6. The Right of Pre-emption in Light of Supreme Court Decisions

According to the precedents of the Supreme Court:

• Whether the sale price is genuine by an expert .

• Even if the sale transaction is formally presented as a donation, if there is a sales relationship , the right of pre-emption can be exercised.

• A precautionary measure can prevent the transfer of the property during the litigation period.

Supreme Court 14th Civil Chamber, Decision No. 2015/2143 E., 2015/6989 K.:

"Making a decision without investigating the allegation that the sale price was understated constitutes an incomplete examination."

7. The Right of Pre-emption in International Law

Similar practices exist in different legal systems:

In Germany

• It is known as "pre-sale law".

• Organized by BGB.

• It is only applied in specific circumstances on grounds of public interest.

In France

• "Droit de préemption" can be used by public institutions for urban planning purposes.

• It grants local governments priority rights of purchase over real estate.

In England

• It is known as the "Right of First Refusal".

• It is frequently used, especially in commercial lease agreements.

8. Termination of the Right of Pre-emption

The right of pre-emption expires in certain circumstances:

• Expiration of the statute of limitations (3 months / 2 years)

• Explicit waiver of rights

• Termination of the right by mutual agreement of the parties

• Abuse of rights

• Sale of the real estate through forced execution

9. Examples Related to the Right of Pre-emption

Example 1:

Ahmet secretly sells his share of a plot of land, which he owns jointly with his brother Mehmet, to a third party, Ayşe. Mehmet learns of the sale 5 months later. By then, the pre-emption period has expired, and he cannot file a lawsuit.

Example 2:

A property has three co-owners. One of them sells their share to someone else. Both of the other two co-owners have a right of pre-emption. Whichever one files the lawsuit first has priority.

Conclusion and Evaluation

The right of pre-emption is a crucial right for protecting partnership relationships and providing co-owners with a fair opportunity in the transfer of real estate. However, exercising this right requires full compliance with legal deadlines , procedures , and conditions

There are many factors to consider for both stakeholders and property buyers. Therefore, it is strongly recommended to seek legal advice before any real estate transaction, especially in cases of co-ownership

                                                                                                                                      Law Faculty Student Feride Sıla HELVACI