Real estate sales promise agreement

Real estate sales promise contract is a type of contract that has developed in parallel with the development of the construction industry and has significant effects in practice. Although there is a difference of opinion on the legal qualification of this type of contracts, the Supreme Court accepts the promise of sale contract as a preliminary contract. Moreover, the title of Article 29 of the Turkish Code of Obligations is regulated as "preliminary contract". This article forms the basis of this agreement. The 14th Civil Chamber of the Supreme Court of Appeals also states in many of its decisions; "Promise to sell real estate contracts, which derive their origin from Article 29 of the Turkish Code of Obligations, are a type of contract that must be drawn up ex officio before a notary public in accordance with the provisions of Article 237 of the Turkish Code of Obligations, Article 706 of the Turkish Civil Code and Article 89 of the Notary Law, in other words, their validity is subject to the condition of official form, imposes debts on both parties and provides personal rights." He used his expressions.

According to the legislation, it is not mandatory to make a preliminary contract to sell real estate. Real estate transfer transactions are carried out through the land registry office. The main use of real estate sales promise contracts is to ensure the sale of immovable properties that have not yet gained the ability to be transferred and that can be delivered in the future and to provide assurance for this. Based on this, it can be said that these contracts were made together with construction contracts, especially in exchange for land shares. Due to the convenience it provides to contractors, it is seen that immovable properties that have not yet been completed are frequently subject to real estate sales promise contracts. This agreement also paves the way for promissory creditors to acquire affordable real estate.

Based on our above explanations, we can define the real estate sales promise contract as a type of contract that is subject to official form, imposes obligations on both parties and provides personal rights. Expanding the personal right provided by this agreement will only be possible through annotation.

SUBJECT OF PROMISE OF SALES AGREEMENT

The subject of sales promise contracts consists of immovable properties registered as real estate in the land registry. Therefore, it is not possible for every real estate to be subject to this contract. For example, according to the Enforcement and Bankruptcy Law, ships are considered real estate. However, it is not possible to include a ship in a promise to sell real estate. According to Article 704 of the Turkish Civil Code, the subject of real estate ownership is; Land is independent and continuous rights recorded on a separate page in the land registry and independent sections registered in the condominium registry.

A- Promise of Real Estate Subject to Shared Ownership

It is possible for immovable properties subject to shared ownership to be subject to a promise of sale agreement. If the stakeholder has promised his share, the contract will be a valid contract. However, in cases where a shareholder transfers a share that does not belong to him/her, impossibility of performance will be encountered. In such cases, the promissory debtor may be liable to the promissory creditor.

B- Promise of Jointly Owned Real Estate

In joint ownership, partners do not have independent disposition powers. For this reason, although it is possible to promise a property subject to joint ownership, it will be impossible to perform in terms of disposition. In this case, the promisor may be held liable within the scope of TCO 112. The following statements were made in a decision of the 14th Civil Chamber of the Supreme Court of Appeals dated 2016:

"In order to decide on the acceptance of cases arising from the promise of sale contract, there must be a possibility of performance of the contract. In case one of the co-owners (in the case of a participation) of a real estate subject to joint ownership (TMK art. 701) promises to sell to a person outside the partnership, the contract is valid as a commitment transaction, but it cannot be said that there is a possibility of performance of the contract until the joint partnership is dissolved."

However, with the transformation of joint ownership into joint ownership, the obstacle to performance will be eliminated. A Supreme Court decision regarding this issue is as follows.

"The case is about the title deed cancellation and registration request based on a sales promise contract. The purpose of real estate sales promise contracts is to sell a real estate in the future. In this context, it is not necessary to be the owner of the real estate at the time the sales promise contract is drawn up, and it is possible to promise the future sale of shares from an inheritor, especially in the immovable properties subject to joint partnership, and such a sales promise contract is valid as a commitment transaction. As a matter of fact, the future inheritance shares from the defendants' heirs (in the subject real estate) "Their promise to sell the property is also valid. Since the deceased has died, the defendant's defenses that the rights from the deceased have not been transferred are invalid in the face of written documents. In this case, the court should decide to cancel the land registry records of all the inheritance shares transferred to the deceased's grandchildren and heirs in the real estate subject to the lawsuit and register them in equal shares on behalf of the plaintiffs." Y14HD. 2017/5149 K.

C- Promising Real Estate Belonging to Someone Else

The real estate sales promise contract is a contract that creates debt. As it is known, the validity of contracts that create debt does not depend on whether the parties have the power of disposition. For this reason, a real estate belonging to someone else can also be subject to a promise of sale contract.

If the promisee acquires ownership of the real estate later, a lawsuit for title deed cancellation and registration can be filed against him. However, if the property is not acquired, this case will not be filed this time. In such cases, the promisor will be subject to subjective liability due to breach of contract.

D- Promise of Real Estate Without Title Deed

It is not possible to make a promise to sell a property that is not registered in the land registry. However, what will happen if the parties make such a contract? Promise of sale contracts regarding immovable properties without title deeds should be interpreted as a sales contract aiming at the transfer of possession. The 8th Civil Chamber of the Supreme Court of Appeals explained this situation in its decision numbered 1997/4125 K.:

"The promise of sale of properties without title deed does not constitute a real estate sales promise contract. However, it does not prevent it from being valid. Because, the real legal nature of the sale of immovable property without title consists of a sale for the purpose of transfer of the right of possession. For this reason, the promise of sale deed, which is the basis of the plaintiff, should be interpreted as a deed of transfer of possession, the evidence should be evaluated in this way, and a decision should be made according to the result."

WHO MADE THE REAL ESTATE SALE PROMISE CONTRACT?

29. In the second paragraph of the article, it is stated that the validity of preliminary agreements depends on the form of the contract to be established in the future. With this statement, it is obligatory to make a sales promise contract formally. Again, Article 237/2 of the Code of Obligations. According to the article; Promise to sell real estate, repurchase and purchase agreements are not valid unless they are prepared officially.

What is meant by the official form is that real estate sales promise contracts will be drawn up through notaries. According to a decision of the 3rd Civil Chamber of the Supreme Court of Appeals dated 2019; "Agreements that give rise to the obligation to transfer real estate property are not valid unless they are made officially (TMK 634/1), and in Article 213 of the BK (TBK 237), the official form requirement for the sale of real estate to be valid is also stipulated for real estate sales promise contracts. In this context, Article 26 of the Land Registry Law No. 2644 requires land registry guards or officers for real estate sales. While it has been authorized, Articles 60/3 and 89 of the Notary Law No. 1512 have brought the rule that real estate sales promise contracts will be drawn up by notaries (ex officio). Therefore, real estate sales promises contracts, which take their origin from the 22nd article of the Code, are subject to the provisions of Article 213 of the UK, Article 706 of the TMK No. 4721 and the Notary Law. In accordance with the provision of Article 89, it is one of the contracts that create personal rights, which must be drawn up ex officio before a notary, in other words, its validity is subject to the condition of official form and imposes a debt on both parties.

If the contract is made without complying with this form, it will be invalid in accordance with Article 12 of the TCO. The invalidity here should be understood as absolute nullity. If the contract has not been made formally, the parties cannot demand the performance of the acts. Although asserting the invalidity of the contract does not constitute a violation of the rule of honesty, in some cases it may result in abuse of rights. Particular attention should be paid to this issue.

It is possible to change the real estate sales promise contract later. The change must also be made officially, that is, by being arranged through a notary.

REAL ESTATE SALES PROMISE CONTRACT PRICE REFUND

It is possible to request a refund in invalid sales promise contracts. Here, it is necessary to make an evaluation within the framework of unjust enrichment provisions. In all cases of irregularity and other invalidity, a refund may be requested based on the provisions of unjust enrichment. When determining the amount to be refunded, an evaluation should be made as emphasized in the following Supreme Court decision:

"Pursuant to the invalid sales contract, the return of the values transferred to the other's assets is based on the idea of "compensatory justice". The principle of compensatory justice states that the person who increases his own assets by taking advantage of someone else's assets without a justified reason is obliged to return the gains he has made and has an obligation to restore them.

In this regard, when deciding on the refund of the receivable subject to unjust enrichment, the purchasing power of the sale price of the immovable must be reached to the purchasing power on the first payment date and the refund must be decided in this way. While making this update, the concrete data on which the update is based should be applied one by one, and the value of the money should be calculated for each period from the date of payment to the date when performance becomes impossible, and then their average should be taken.

When determining the amount reached on the date of return of the sales price, the decreasing purchasing power of the paid money due to various economic factors, inflation, PPI-CPI increase rates, increases in interest, gold and foreign exchange rates, increases in civil servant salaries and workers' wages and similar economic indicators should be taken into consideration. Y3. HD.2018/11035 K.

LEGAL NATURE OF THE RIGHT ARISING FROM THE SALES PROMISE CONTRACT

As we mentioned above, the real estate sales promise contract is a preliminary contract made between the promise creditor and the promise debtor in order to secure the sale contract in the future. This contract gives the parties the right to request to conclude a sales contract in the future.

The right to claim brought by a promise contract is a personal right and can only be used against the other party of the contract and its legal successors. Since this right is not a right in rem, it cannot be used against third parties who are not parties to the contract. The existence of annotation is an exception and this issue will be explained below.

Transfer of Rights

It is possible to transfer the personal rights arising from the sales promise agreement to third parties. The transfer process is carried out in accordance with Article 183 of the Turkish Code of Obligations. The transfer must be made in writing. Here, general provisions regarding the assignment of receivables apply. Transfer is most commonly encountered in construction contracts in return for flats. In this type of contracts, the immovable properties promised to be transferred to the contractor are assigned to third parties by him.

ANNOTATION OF THE SALES PROMISE CONTRACT ON THE TITLE DEED

As stated in Article 1009 of the Turkish Civil Code, it is possible to annotate real estate sales promises in the title deed. The annotation does not turn a personal right into a real right, but it strengthens the effect of this right. Therefore, the contract annotated in the land registry can also be claimed against third parties. In other words, when the real estate sales promise contract is annotated in the title deed, even if the real estate is sold to a third party, the creditor of the sales promise contract can also claim the right to receivable from the third party who took over the real estate and file a lawsuit against him. As a matter of fact, TMK article 1009/2. According to the article; "These can be claimed against the owners of the rights acquired later on that real estate, by giving an annotation." It has been said.

According to Article 26/9 of the Land Registry Law No. 2644, sales, foreclosure, mortgage transactions cannot be made and similar easement rights cannot be registered in the land registry within five years from the annotation of the real estate sales promise contract in the land registry. The following statements are included in a detailed Supreme Court decision on the subject.

"Promise to sell contracts, which provide a personal right to the promise creditor, gain the opportunity to be asserted against the persons who have acquired real rights in the real estate after the date they are annotated in the land registry. Because by recording the personal right in the land registry, third parties who subsequently gain rights are warned about this. "If no sale is made within five years from the annotation or if the easement is not established and registered in the land registry, this annotation will be canceled ex officio by the land registry manager or officer." The Land Registry Law regulation should not be interpreted as the land registry officer having the authority to cancel the annotation ex officio, because there is a clear provision that only ordinary spelling errors can be corrected by the land registry officer in accordance with the provisions of the statute, and all other corrections can be made with the written permission or court decision. All these regulations together stipulate that the cancellation of personal rights based on the period annotated in the title deed can be made only upon the request of the immovable property owner or by court decision. When evaluated, it should be understood that the annotation can be canceled upon the request of the owner. Since the annotation is not requested by the real estate owner, the annotation that continues to exist in the land registry will continue to be effective. For this reason, the person who purchases the real estate by seeing the promise of sale annotation in the title deed will not be considered a bona fide third party and will not be able to benefit from good faith protection against the promise creditor. Because of the publicity of the land registry, it is assumed that everyone is aware of the rights in the registry, otherwise. cannot be claimed." YHGK 2016/1005

TERMINATION OF REAL ESTATE SALES PROMISE AGREEMENT

1- Performance of the Contract

With the execution of the contract, the parties are relieved of their debts. The parties may perform the performance with their own consent. However, execution is also possible by court decision.

2- Termination of the Contract

Like every contract, this contract can be terminated. The parties may mutually terminate the contract if they wish. The thing to consider here is the form of termination. The way of termination of a contract must be the same as the way it was made. Therefore, this contract can only be terminated through a notary.

With termination, the debt relationship ends with future effect. Therefore, in case of termination, the parties are obliged to return their obligations. No justifiable reason is required to terminate the contract.

3- Withdrawing from the Contract

If one of the parties does not fulfill its obligation, the other party may withdraw from the contract. In order for one party to withdraw from the contract, the other party must be in default. As clearly stated in Article 110 of the Turkish Code of Obligations; If the subject of the debt does not require the delivery of anything, in case of default of the creditor, the debtor may withdraw from the contract according to the provisions regarding the debtor's default.

In case of withdrawal from the contract, the parties are mutually relieved of the obligation to perform and may request back the previously performed acts. In this case, if the debtor cannot prove that he has no fault in default, the creditor may also request compensation for the damage he suffered due to the invalidity of the contract.

In case of default, articles 123-125 of the BK. Its substances find application areas.

4- Statute of Limitations

Prescription is an institution that eliminates the right to sue if a right is not exercised within the specified periods. As we stated, the right does not expire, but it loses its claimability.

The statute of limitations for the right arising from sales promise agreements is 10 years. This period starts from the date the receivable becomes due.

When calculating the statute of limitations, it is taken into consideration whether the contract can be performed or not. The period begins to run from the date when the possibility of performance arises. If the immovable property whose sale is promised is actually delivered to the creditor, the statute of limitations cannot be invoked.

5- Expropriation

If the promised real estate is expropriated, the performance of the debt will become impossible. However, this impossibility is not an impossibility that can be attributed to the debtor. Therefore, in accordance with Article 136 of the Turkish Code of Obligations in case of expropriationthe debt will end. The promissory creditor can only demand back the price he paid from the promissory debtor.

DEED CANCELLATION AND REGISTRATION CASE DUE TO PROMISE TO SALE PROPERTY

With the conclusion of a sales promise contract, each party may request the other to fulfill its obligation. The subject of our analysis here is the situation where the promisor does not fulfill his obligation, that is, does not transfer the immovable property.

If the promissory debtor refrains from transferring the immovable property, a title deed cancellation and registration lawsuit may be filed against him. With this lawsuit, the creditor demands that the ownership of the immovable property be transferred to him, that is, exact performance. In addition, delay compensation may also be requested. The basis of this case is Article 716 of the TMK. According to the relevant article; A person who has the personal right to request the owner to register the property in his/her name, based on a legal reason that will be the basis for the acquisition of the property, may request the judge to foreclose the property if the owner refrains.

Again, in cases where the immovable property is not transferred, the promised creditor has the right to withdraw from the contract and therefore demand compensation. If the promissory creditor wishes, he can waive the exact performance and delay compensation and demand compensation for positive damages. In addition, the creditor has the right to renege on the contract and claim negative damages.

Duty and Authority

The Civil Court of First Instance, which is the court with general jurisdiction, has jurisdiction in title deed cancellation and registration cases filed based on a real estate sales promise agreement. In cases of commercial sale, the Commercial Court of First Instance will have jurisdiction. If the promise creditor is a consumer, it is necessary to file a lawsuit in Consumer Courts.

The case is filed in the court where the real estate is located. This authority is absolute.

Can It Be Opened Delayedly?

The plaintiff may file his case in a delayed manner. In other words, first of all, he may request that the title deed be annulled and registered, and if this is not possible, he may request that compensation be paid. The following statements are included in a sample decision on the subject.

"The case is about the title deed cancellation and registration, and the request for the collection of the current price if it is not possible. In accordance with the contract, it was decided to give the specified independent section to the plaintiff, this section was sold to a person outside the lawsuit and the plaintiff's possibility of owning this real estate was eliminated, in this case, the plaintiff had the right to demand the current price as of the date the flat was sold, this situation was overlooked by the court, and although it was mandatory to make a separate judgment on all the cases filed by the court, the court made a judgment from the main case file, but one of the combined case file was In the trial held in accordance with the reversal order, the court decided to collect the value of the specified independent section from the defendants who are the heirs of the flat on the date of sale and the combined file defendants, together with the legal interest that will accrue from the date of sale, and to consider the case against the other defendants as not being filed, considering that the plaintiff's request was delayed, considering that the plaintiff's request was delayed. "The decision not to award trial expenses was appealed and approved by the defendants' attorney in the main and merged case and the defendants mentioned in the main case. In the combined case, the defendants' attorney and the defendants mentioned in the main case requested correction of the decision. According to the articles in the file and the necessary reasons stated in the court decision and adopted in the Supreme Court decision, the request for correction of the decision, which does not comply with any of the situations listed in Article 440 of the Code of Civil Procedure, had to be rejected."

Who can be filed against?

Deed cancellation cases are filed against the person who appears as the owner in the title deed. In the decision numbered 2018/400 of the Supreme Court of Appeals 1st HD, "The case is about the request for title deed cancellation and registration. It is essential that such cases be directed to the registered owner and if the case is proven, the decision should be made in terms of the registered owner. This being the case, it is not correct to make a decision in writing from the side of the intermediate owner, while the title deed cancellation and registration decision should be made on the part of the defendant, the last registered owner." It is stated as follows. Therefore, if the owner and the promisor are the same person, the lawsuit is filed against that person. However, if the promisor is not the owner, the annulment action will not be accepted. In case of shared ownership, the promising stakeholder is shown as the defendant.

If the promised immovable property is jointly owned, the lawsuit must be filed together against all stakeholders.

In construction contracts in exchange for flats, the lawsuit is filed against the contractor. However, in some cases, the landowner must also be named as the defendant. Especially in cases where the promised real estate is not given to the contractor, it will be necessary to file a lawsuit against the land owner. An example of this situation is stated in a Supreme Court decision: "The contractor may request the title deeds of the independent sections to which he/she will be entitled, directly from the land owners, or may also transfer his personal rights to third parties. Unless it is prohibited in the contract pursuant to Article 162 of the repealed Code of Obligations No. 818, which was in force at the date of the contract, or unless otherwise understood from the nature of the work, the contractor may transfer his personal rights to third parties, provided that it is written in accordance with Article 163 of the law.

In such disputes arising from construction contracts in return for land share, the third party who has assigned his personal rights from the contractor must prove his claim regarding the sale against the contractor, and his claim that the personal right has been acquired against the land owners. Because registration can only be decided if the contractor fully fulfills its obligations towards the land owners.

Ultimately, in these cases, which are called registration by assignment, it is necessary for the contractor and all land owners to take part in the case, as it must be determined that the contractor has the right to demand independent sections by fulfilling his obligations in accordance with the construction contract in return for the land share. Expressions were used.

If it is understood that there is an obstacle to performance during the case, the case will be rejected.

Selling the Real Estate While the Case Is Ongoing

If the immovable property is sold while the case is ongoing, the creditor is asked about his/her optional rights in accordance with HMK 125. If the plaintiff wishes, he can direct his case to the new owner. The second option of the plaintiff who does not want this is to turn his case against the first defendant into a compensation case. However, it should not be forgotten that the good will of the new owner will save him from liability. In such cases, the consequences should be carefully considered and help should be sought from a lawyer who handles real estate cases.

SALE OF THE PROMISED PROPERTY TO A THIRD PARTY

There is no legal obstacle to the transfer of the real estate to a third party after it is promised. Since the promise of sale contract only provides personal rights to the person concerned, this right cannot, as a rule, be asserted against the owner of the property right who became the owner after him through the title deed. If a personal right competes with a real right, the real right is valued. If the promise of sale is not annotated in the title deed, as a rule, the gains of the person who acquires the right in kind in good faith by relying on the land registry are protected. However, whether the sale promise is annotated or not, the creditor of the sale promise can always claim that the person who acquired property rights with the title deed was in bad faith. YHGK's opinion on the subject is as follows:

"The case is about the title deed cancellation and registration request based on the real estate sales promise contract. Since the right arising from the real estate sales promise contract is a personal right, the promisor buyer cannot assert this right to other people who are not parties to the contract through a lawsuit. In case the real estate is sold to other people by the owner, he cannot claim any rights against the new owner. The real estate sales promise does not bind the persons outside this contract, the right arising from this contract cannot be asserted against them and the real estate sales promise cannot be claimed against the title deed. Since it is understood that it has not been annotated in the registry, it is not possible to direct hostility against the defendant, who is the third party to the sales promise contract that creates personal rights and has gained real rights with the sale contract in the land registry." YHGK 2016/7910 K.

In case of existence of annotation, the promissory creditor may file a lawsuit for title deed cancellation and registration against the third party.

Although the contract has not been annotated, a lawsuit can be filed against the third party in cases where he/she is not in good faith. The bad faith here can be proven with all kinds of evidence. In the presence of collusion, a lawsuit can be filed against the new owner. But this proof is quite difficult. As a matter of fact, in a decision of the Supreme Court dated 2020, "The sales promise contract signed between the plaintiff and the defendant has not been annotated to the title deed. There is no legal consequence for the plaintiff witnesses to inform the defendant of the existence of the sales promise contract. Since it cannot be proven beyond doubt that the sales transaction between the parties was carried out in cooperation and cooperation in order to neutralize the sales promise contract, it cannot be said that the relevant party is in bad faith." It is stated as follows.

However, the promissory creditor may file a lawsuit against the promissory debtor for compensation due to the transfer. In a decision of the 3rd Civil Chamber of the Supreme Court of Appeals dated 2019, this situation was stated as follows:

"The promise of sale contract dated 13.11.2000 drawn up between the parties is a valid contract drawn up by a notary in accordance with the conditions of legal validity, and the creditor will suffer losses as a result of the contract not being executed for any reason, and since the defendant has made the execution of the contract impossible with his own fault, the plaintiff is obliged to compensate the positive damage arising from the contract in accordance with Article 96 of the Code of Obligations (TBK 112), the plaintiff claims that the immovable property in question is transferred to the third party." Considering that the court learned that the property was transferred to the third party in 2008, this date should be considered as the date when the performance became impossible; and considering that the defendant did not object to the reason that the plaintiff's defenses were not accepted during the discovery, the place that the plaintiff claimed to be the promised place was observed to have the dimensions specified in the contract, the fair value of the property in 2008, when the plaintiff learned that this real estate was transferred to the third party, should be determined by the expert expert board and a decision should be made in accordance with the result to be achieved. "Issuing a judgment without considering it is grounds for reversal."

MAKING MULTIPLE SALES PROMISE CONTRACTS ABOUT THE SAME PROPERTY

In our explanations above, we stated that the promise to sell real estate is a loan-bearing transaction. For this reason, it is possible to promise the same real estate to more than one person. In this case, the Supreme Court ruled that priority should be given to the promised creditor of the previous contract. This decision is as follows:

"In practice, it is a common situation that the contractor assigns the same independent section to one or more third parties on different dates, either through the assignment of receivables or by making a promise to sell contract, and one or more assignees claim rights on the same independent part. Similarly, it is also possible for the owner to promise to sell a real estate, which is the subject of a promise to sell contract, to another person. In such cases, there is a competition of personal rights. As a rule, unless the contract is invalid or the contract is terminated, the competing rights are the same. "As emphasized above, it is not important whether the sale transaction is made by the contractor to one or more of the third parties officially (with a notary sales contract) or to the others with an ordinary written contract. The important issue is the date of the assignment to the third parties who claim personal rights."

In another Supreme Court decision, it was ruled that the unofficial earlier contract is superior to the later official contract. Accordingly; "The case is about the title deed cancellation and registration request based on a promise to sell contract. It is possible for the owner to later promise to sell to another person regarding the immovable property that is the subject of the promise to sell contract. In such cases, there is a competition of personal rights. As a rule, unless the contract is invalid or terminated, the principle of antiquity is valid in competing personal rights, so the earlier one is valued. Considering that the parties are the same villagers and close relatives, it is understood that the plaintiff should have known that the immovable properties were purchased by the deceased of the defendants. "While priority should be given to the dated personal right, it was not deemed appropriate to decide to accept the case on the grounds that the property would be acquired before registration due to the previously finalized court decision, and therefore the verdict had to be reversed." Y14HD 2013/12094 K.

Here, the promissory creditor who made the first contract must have the contract annotated in the title deed in order to avoid loss of rights. Otherwise, in case of transfer of the immovable property, the possibility of the same performance will cease.