A shared title deed is an official document indicating that a piece of real property has multiple co-owners. Various disputes can arise among parties holding shared title deeds, particularly during the purchasing process, ongoing management, and construction activities on the property. To prevent these disputes and avoid both financial and emotional losses, we have researched everything you need to know about shared title deeds. Let us examine what a shared title deed means, how it is sold, and its potential risks.
What is a Shared Title Deed?
A shared title deed is a type of title where the names of all owners of the real property are explicitly listed. This type of deed is frequently encountered in inherited properties or jointly purchased real estate. Generally, this deed type does not specify which physical section of the property belongs to which partner, although the percentage of shares may be stated, as is the case in tenancy in common. Shared title deeds are implemented in two distinct ways. Now, we can delve into the details of these concepts, legally known as joint ownership and tenancy in common.
What is Joint Ownership (Elbirliği Mülkiyeti)?
The right of joint ownership is used to state that all rights over the property belong to the right holders without being divided. In joint ownership, shared title deed holders have the right to use the entire property. There is no specific ratio or share allocated to any individual right holder. If they wish, all partners can reach a mutual agreement regarding the usage of the property.
What is Tenancy in Common (Paylı Mülkiyet)?
According to this title, the property, which is not physically divided, is split among the owners according to specific percentages. Each shareholder is subject to rights and obligations proportionate to their share. Legally, there must be at least two individuals to establish a tenancy in common.
What Are the Risks of a Shared Title Deed?
A shared title deed carries several risks, primarily the high probability of causing various disputes among the shareholders. The risks associated with shared title deeds can generally be listed as follows:
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Even if the share percentages of the right holders are known, it may not be explicitly stated which physical part of the property they own. The resulting uncertainty can lead to severe disputes among the property owners.
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Since all right holders may not agree on transfers or leases intended for the utilisation of the property, trust issues may arise with third parties looking to enter into contracts.
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In the event of a shareholder’s passing, the number of right holders may increase due to the deceased’s potential heirs, making it increasingly difficult to partition and manage the shared asset.
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Stakeholders may sometimes file a right of pre-emption lawsuit or a partition lawsuit. In this scenario, other shareholders may suffer financial and emotional damage in addition to a significant loss of time.
How is a Shared Title Deed Managed? What Are the Usage Rights?
In the management of a shared title deed, right holders can reach a unanimous agreement among themselves and register the rules regarding the use and management of the property in the land registry. If this has not been done, the following two situations may arise:
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For major management tasks: Taking decisions such as leasing out the property, terminating a lease, or changing the operating procedure requires a majority vote in terms of both the number of individuals and the share percentage.
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For ordinary management tasks: For expenses arising from routine tasks like minor property repairs or paying property tax, the individual who incurs the cost can demand reimbursement from the other right holders.
The right of use in a shared title deed, often referred to as a usufruct right, grants specific usage rights over the real estate resulting from the division of the property among stakeholders. To achieve this, the parties can draw up a contract to clarify the transferability, duration, and conditions of the usufruct right.
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How to Subdivide a Shared Title Deed
The subdivision process, or the right of subdivision (ifraz), occurs by dividing a real property registered under a single plot into multiple parts based on cadastral maps and registering them individually in the land registry. In the event of a dispute, you can separate the property registered on a single plot by dividing it into different plots. However, by law, the property must not possess an indivisible legal status.
The costs arising during the shared title deed subdivision process are paid in two parts: the title deed registration fee and the revolving fund charge. While the title deed fee is determined by the relevant municipality, the revolving fund fee is set by the Revolving Fund Enterprise.
How is a Shared Title Deed Partitioned?
The partitioning of a shared title deed is executed by dividing the real estate among the stakeholders according to their specific share percentages. The crucial point to consider here is that the size and physical structure of the property must be suitable for division. Partitioning a shared title deed also requires the unanimous consent of all shareholders. If the parties cannot reach an agreement on this matter, they can file a Partition Lawsuit (İzale-i Şuyu).
How Long Does a Partition Lawsuit Take?
To dissolve the joint ownership of a property, one of the right holders can file a partition lawsuit. In this scenario, if the property can be physically divided, it is partitioned; if it cannot be divided, the proceeds from the sale of the property are distributed among the stakeholders. In partition lawsuits, the forced sale of the real estate below its true market value due to the dispute, coupled with the legal costs incurred during the litigation process, can cause severe financial and emotional damage to the parties involved.
Is it Possible to Remove a Problematic Shareholder?
In shared title deeds, it is legally possible to remove a shareholder from the joint ownership. If one of the stakeholders obstructs the process for the others and fails to fulfil their legal responsibilities towards the other stakeholders, they can be removed from the partnership through a court order. In this case, the individual being removed is presented with three options:
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One of the existing shareholders purchases the share.
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If the other shareholders decline to take over the share, the defendant transfers it to a third party.
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If neither of these options is possible, the share is sold via public auction.
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What is a Right of Pre-emption Lawsuit?
The right of pre-emption (or right of first refusal) grants existing shareholders the prerogative to purchase a share before it is offered to third parties when one of the property stakeholders wishes to sell their portion. When the right of pre-emption is exercised, the shareholder intending to sell is placed under a legal obligation towards the other stakeholders. A right of pre-emption lawsuit prevents third parties from acquiring shares in the property, thereby preserving harmony among the existing shareholders.
How is a Shared Title Deed Distributed in Inheritance?
The inheritance distribution of a shared title deed can be executed with the participation of all stakeholders holding rights over the inherited property. The division of inherited shares in a shared title deed is conducted either through physical partition or by drafting a written distribution agreement. Those who wish can safely complete this process by granting power of attorney to a solicitor.
How is a Shared Title Deed Sold?
The initial question that comes to mind for those looking to invest is: “Should one buy a shared title deed?” A shared title deed can be sold to third parties provided that no right of pre-emption lawsuit has been filed. If all shareholders reach a unanimous agreement to sell the entire property, all right holders must be physically present to approve the transaction. Alternatively, shareholders can effortlessly manage the process by granting a power of attorney to a solicitor.
Foreclosure Procedures on a Shared Title Deed
Following enforcement proceedings initiated against a debtor for failing to settle their debts, a lien or foreclosure order can be placed directly on their specific share within a shared title deed. If the debtor continues to default, that particular share is put up for sale and sold via public auction.
Değerse Simplifies the Process on Your Behalf with Legal Support for Shared Title Deeds
At Değerse, we provide expert legal support to our clients, protecting you against potential issues you may encounter during the shared title deed process. We safeguard your assets and create legal added value by guaranteeing actionable results regarding your shared title deed procedures.
In addition to our highly competent legal team, we manage the process meticulously alongside our expert collaborating partners. If you would like detailed information on what a shared title deed is and its associated risks, you can watch our “Gayrimenkulden Bi’ Haber” programme on Değerse TV, where we hosted Solicitor Afşin Hatipoğlu.
