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In case of Expiration of a Hypothec Established for a Limited Period, How Does Its Deletion Take Place?

2020, Erdemir&Özmen Attorney Partnership

In case of Expiration of a Hypothec Established for a Limited Period, How Does Its Deletion Take Place?

It is possible establish lien on a movable or an immovable as a collateral for a receivable. Establishment of lien on a movable or an immovable is a transaction which ensures in favor of the lien creditor the right to convert this movable or immovable into cash by sale and to cover the receivable from this amount in case the receivable is not paid. A real estate pledge can only be established in the form of hypothec, mortgage bonds or annuity charge bond. [1]

With regard to time, hypothec has two types: Hypothec established for a limited period and hypothec established for an unlimited period. This distinction made with regard to time is of importance for deletion of the expired hypothecs from the registers of title deeds. This is because; legal disputes were experienced by the reason that there is no explicit legal arrangement in respect of whether or not the owner might request for deletion of the hypothec at the end of the period. Such that, when the owners applied to the Land Registry Offices for deletion of the hypothecs, the Land Registry Offices sought the lien creditor’s consent even if the hypothecs were expired or the debts were satisfied, on the ground that the expiration did not create the right to request for deletion; and the Land Registry Offices decided to reject these applications in case the consent was not obtained. Following the rejection, it was necessary to request the deletion of the hypothec through litigation.   

However; the paragraph, which has been added into the article 883 of the Turkish Civil Code by the article 19 of the Law numbered 7181 on Making Amendments to the Land Registry Law and Certain Laws, introduces a legal arrangement which will put an end to the debates in this regard.  

The following explicit provision has been added into the article 883 of the Turkish Civil Code:  

“If the hypothec is established for a limited period; however, in case the annotation referred to in the article 150/c of the Enforcement and Bankruptcy Law numbered 2004 and dated 9/6/1932 is not put onto the title deed for the hypothecary real estate within thirty days as from the expiry of the period, the hypothec shall be deleted by the land registry office at the owner’s request.”[2]

With this legal arrangement that has entered into force as of 01.01.2020, a 30 days’ term is prescribed for the creditor to initiate enforcement proceedings and for the insertion of the annotation into the title deed registry; and the right to submit the request for deletion directly to the Land Registry Office is granted to the real estate owner, provided that the enforcement proceedings have not been initiated and the 150/c annotation has not been inserted within this term. The article 150/c of the Enforcement and Bankruptcy Law is a legal arrangement indicating that the annotation regarding the initiation of the foreclosure proceedings shall be put onto the title deed.  

The article 150/c of the Enforcement and Bankruptcy Law is as follows:

“The enforcement officer has to inform the land registry office that the foreclosure proceedings have been initiated. The deed officer shall put the annotation regarding this circumstance onto the title deed of the real estate. The execution order with judgment or the payment order shall not be served on those that have acquired the real estate after the annotation date.”

With the legal arrangement we have mentioned above, in case the 150/c annotation has been inserted into the title deed registry of the real estate within 30 days following the expiry of the hypothec, the deletion of the hypothec will not be possible by the mere reason that it has expired, since the enforcement proceedings have been initiated and since the receivable shall be deemed to survive. Therefore, the compliance with the prescribed term is of importance in order to prevent the creditor from losing his right.  

Upon the above legal arrangement has entered into force on 01.01.2020, the letter numbered 010.07.02-E.5001906 and dated 21.01.2020 has been forwarded to the Land Registry Regional Directorates by the Land Registry Presidency of the General Directorate of Land Registry and Cadastre affiliated with the Ministry of Environment and Urbanization. In this letter, the Presidency has notified the following matters:  

“The land registry offices shall, at the owners’ request and after collecting the deletion fee, delete the hypothecs established for a limited period, provided that the annotation referred to in the article 150/c of the Enforcement and Bankruptcy Law numbered 2004 and dated 9/6/1932 has not been put onto the title deeds the hypothecary real estates:

1-  within thirty days following the expiry of the period, pursuant to the second paragraph added into the article 883 of the Turkish Civil Code numbered 7421 by the Law numbered 7181,  

2-  at the end of the thirty days’ term as of 01.01.2020, for the hypothecs which were established for a limited period, prior to 01.01.2020 namely the effective date of the article 3 of the Law numbered 7181 and have expired,” [3]

Given the information furnished above; the lawmaker has eliminated all kinds of hesitations and problems encountered in practice due to the absence of the statutory provision in respect of deletion, from the registers of title deeds, of the hypothecs established for a limited period in case these hypothecs are expired. At this point, it is of importance that the 150/c annotation has been put onto the titled deed and the foreclosure proceedings have been initiated within the 30 days’ term starting from the expiry of the hypothec. The matter of whether or not these proceedings have been initiated in compliance with the laws and whether or not the proceedings should be annulled are therefore of importance in the same degree as well. This is because; even if the hypothec has expired, the deletion of the hypothec would not be possible by reason of the 150/c annotation inserted due to the enforcement proceedings not initiated in compliance with the laws. In such case, it would be necessary to apply for the deletion of the hypothec after ensuring the deletion of the 150/c annotation put onto the title deed registry, by taking

the relevant legal action for the annulment of the proceedings. By taking into consideration the legal situation of the hypothec and of the enforcement proceedings initiated, it is of importance to assess this matter very carefully and to conduct the process properly and correctly within this framework.

[1] Text of the article 850 contained in the Turkish Civil Code.

[2] https://www.resmigazete.gov.tr/eskiler/2019/07/20190710-1.htm

[3] https://www.tkgm.gov.tr/tr/icerik/sureli-ipoteklerin-terkini-hakkinda-duyurur.

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