What is a Fraudulent Title Deed Transfer Lawsuit?
A fraudulent title deed transfer lawsuit is a type of lawsuit in which a creditor who is unable to collect a debt from a debtor initiates enforcement proceedings against the debtor and third parties who have acquired the property, with the aim of invalidating title deed transfers made by the debtor within the last five years for the purpose of concealing their assets.
The avoidance action is regulated in Articles 277 et seq. of the Enforcement and Bankruptcy Law (EBL).
Who Are the Parties in Avoidance Actions?
Article 277 of the EBL regulates “who can file” the avoidance action, while Article 282 regulates “against whom” it can be filed. There are at least three parties in a transaction avoidance lawsuit: The creditor who cannot collect their claim through enforcement proceedings and has obtained a bankruptcy certificate against the debtor is the plaintiff. The debtor who transferred the property to conceal it from the creditor is the defendant. The third party who holds the property subject to the avoidance lawsuit and transferred the property to the defendant debtor is the third-party defendant/defendant in the lawsuit.
Conditions for a Transfer Cancellation Lawsuit
a) For a transfer cancellation lawsuit to be filed, there must first be a genuine debt relationship between the creditor and the debtor. Since the transfer cancellation lawsuit will be filed against the debtor and the third party who acquired the property from the debtor, the legal security of the third party is protected in this way. If the debt relationship arising between the plaintiff creditor and the defendant debtor is not based on a genuine legal relationship, an action for cancellation of the transaction cannot be filed.
To determine whether the payment in question constitutes an actual debt repayment, the defendant debtor and the non-defendant … All tender documents dated February 16, 2009, between the defendant debtor and the Education House (contract, title reports, payment documents, whether the tender work in question could be performed by a subcontractor, etc.) shall be requested from the relevant administration, and the commercial records of the company outside the scope of the lawsuit, which the defendant debtor O. and the defendant S. claim to manage, shall be examined by a certified public accountant or accounting expert, and a report shall be obtained.
(After requesting the trade registry records to determine the connection of the defendant S. with the aforementioned company) a sworn financial advisor or accounting expert shall examine them and obtain a report…‘’ (17th Chamber of Civil Court, 11.03.2013, 14091/3212).
b) There must be a final or provisional certificate of insolvency regarding the debtor; a certificate of insolvency must be obtained regarding the creditor subject to enforcement proceedings. However, a certificate of insolvency is not required at the stage of filing the lawsuit. The certificate of insolvency is one of the conditions of the lawsuit that can be substituted later.
The creditor, i.e., the plaintiff in the action for cancellation of the disposition, may submit the certificate of insolvency to the court at any stage of the proceedings, including the appeal process. A plaintiff who submits a provisional certificate of insolvency at the beginning of the case must subsequently submit a final certificate of insolvency to the file. A seizure record showing that the debtor has no seizable property also serves as a certificate of insolvency.
No final or provisional bankruptcy certificate has been submitted to the file.
In this case, since no final or provisional bankruptcy certificate, which is a condition for the lawsuit, was submitted, the court should have decided to dismiss the case. However, it was not considered appropriate to decide to accept the case as a result of incomplete examination and investigation (Y17. HD E. No: 2012/2516 Decision No: 2013/224 K.).
c) The enforcement proceedings initiated against the debtor must be finalized; if the person against whom enforcement proceedings have been initiated objects to the enforcement proceedings or if the notification has not been made to him/her in accordance with the procedure, the enforcement proceedings cannot be said to have been finalized and, therefore, an action for cancellation of the disposition cannot be brought against the debtor based on the enforcement proceedings.
d) In order to request the cancellation of a transaction based on Articles 277 et seq. of the Enforcement and Bankruptcy Law, the transaction to be canceled must have been made after the date on which the claim subject to enforcement arose.
For a claim for cancellation of the disposition to be filed, it is a prerequisite that the claim arose before the disposition sought to be canceled, and this circumstance must be investigated ex officio by the court. If the prerequisite for the claim is not met, no decision on the merits of the claim can be made.
In the present case, the debt subject to the lawsuit filed on behalf of the defendant debtor Rüstem arises from a loan agreement signed with a bank that is not a party to the lawsuit, as accepted in the decision of the General Assembly of the Court of Cassation dated 13/10/2010, No. 2010/17-398 E. and 2010/497 K. the debt subject to the lawsuit filed against the defendant debtor Rüstem arises from a credit agreement signed with a bank that is not a party to the lawsuit, and it is possible to file an action for annulment for the debtor’s subsequent transactions. (HGK -K.2015/1759)