Terms, Form, Proof and Consequences of the Contract of Faith
(HGK-K.2021/635)
As is known, there is no legal provision directly regulating faithful transactions under Turkish Law. However, in practice and in the doctrine, it is accepted that faith contracts can be regulated and validated within the scope of the principle of “freedom of contract” under Article 26 of the Turkish Code of Obligations No. 6098 (abrogated Article 19 of the Code of Obligations No. 818). In belief transactions, the believer and the believed party agree that the ownership of the subject matter of the belief contract shall first pass to the believer and then return to the believer. As stated in the decision of the General Assembly of Civil Chambers dated 17.05.2000 and numbered 2000/2-888 E., 2000/885 K., fiduciary transactions are the transactions in which a person transfers some rights to another person in order to protect his interest or to provide security, but the parties agree that the acquirer of the rights shall not use some of the powers arising from them at all, and shall be obliged to use some of them only in the manner indicated by the person who previously had the right and still has the interest. As can be seen, a fiduciary transaction is a legal transaction based on trust. The parties transfer the ownership of a good to the other party to the contract as a result of the trust they have in each other and trust that this good will return to them afterwards. In fact, the believer is defined as the person who trusts that the property will return to him.
A belief contract is an obligatory transaction between the believer and the believer, which determines their rights and obligations, the reasons for the termination of the belief transaction and the conditions for the return of the transferred right by the believer to the believer. This agreement is an independent contract that covers the rights and obligations of the parties and constitutes the legal basis for the transfer of receivables and property.
The parties to a fiduciary transaction are the believer and the believer. A person who transfers a right or an object to a trusted person is called a “believer”. The person who directly or indirectly uses the transferred right or object for his own benefit as a right belonging to him is called the “believer”. The right or object that the believer gives to the believer is characterized as “the thing subject to belief”. In a fiduciary transaction, the parties to the beneficial transaction are the same as the parties to the agreement giving rise to a debt.
In a fiduciary transaction, the believer is obliged to comply with the agreed conditions while exercising his right, and to transfer the right or object back to the believer (or to the third party indicated by him) when the purpose is realized or the period expires. A fiduciary transaction is a contract that gives the person who made the transfer, i.e. the believer, the right to demand the return of the transfer when certain conditions are met. If this obligation is not fulfilled, it may be requested to be fulfilled by judgment through litigation.
With such a contract and the related transaction, the parties usually apply to make a faithful acquisition of a thing or right included in the assets to constitute collateral and to be returned to the believer by creating a stronger legal situation than ordinary legal transactions pursuing the same purpose. In other words, with this transaction, the debtor, instead of pledging its property to its creditor, i.e. granting only a limited real right, transfers the ownership of its property and grants a right that is stronger and more advanced than the right of pledge.
Due to the aforementioned characteristics of the contract and the related assignment, the person who sells the immovable property under a contract of faith has only a right to claim the immovable property by returning the borrowed money, and the person who buys the immovable property under a contract of faith has only an obligation not to sell the immovable property to anyone else until the debt is paid, and to return it when the debt is paid.
In other words, the ownership of the immovable property has passed to the believer (creditor). The creditor (the debtor) does not have any property right in the immovable property, and there is no pledge right established on this property right of the buyer. Since belief contracts are in accordance with the mutual will of the parties, they are valid contracts that impose mutual obligations on them and give them the right to receive. (Article 97 of the Turkish Code of Obligations No. 6098) In the aforementioned contracts, while determining the rights and obligations imposed on them by the contract, the parties may also determine the reasons for the termination of the belief transaction; the conditions for the return of the transferred right by the believer to the believer, and, of course, its duration. In addition, they may also include the sanctions for breach of contract in their contracts. Such contractual provisions are deemed valid as long as they do not contradict Articles 26 and 27 of the Turkish Code of Obligations No. 6098 (Articles 19 and 20 of the Code of Obligations No. 818).
However, in Turkish law, disposals regarding immovable property can be made officially at the land registry offices. Therefore, the transfer of ownership of immovable property cannot be made through faithful assignment at the land registry office. This situation causes the faithful transfer of immovable property to be confused with collusion and brings many drawbacks. Although the right holders want to transfer the immovable property by faith, since the land registry offices cannot perform this transaction, the parties usually perform the transaction in the form of a sales contract at the land registry office, and the faith contract, which reflects their real will and appears as a confidential transaction, does not meet the form requirement, so the transfer of immovable property by faith contract is not possible.
For this reason, it is important what kind of legal consequences will arise from belief contracts in immovable properties or formal contracts and whether they will constitute the reason for the transfer of immovable property if the conditions stipulated in the contract are met, and in the Supreme Court of Appeals Unification of Jurisprudence Decision dated 05.02.1947 and numbered 20/6, it was discussed whether the allegations of collusion and allegations of fictitious name, which were possible and valid according to the old law, could be heard about immovable properties after the Civil Code came into force.
In the aforementioned decision; it is possible to show another name instead of the real owner in an immovable property record and a third party instead of one of the contractors in a contract for various reasons and purposes; in such cases, as in the dispositions made by the attorney on his own behalf and on behalf of his client, it may be aimed to conceal the truth from third parties for a legal situation or for any purpose; except for “malicious and unjust concealments”, a lawsuit to be filed according to the possibilities mentioned will indeed have the nature of either a change of hand based on an existing right or the protection of a right; this situation is a matter accepted as the principle of succession in ownership in the representation and proxy relationship, and even if the ownership of the property is first considered to belong to the proxy in order to correct the succession, it cannot be ruled to be preserved and continued since it is contrary to the provisions of representation, because the provision of the Code of Obligations that “when the principal fulfills his various debts against his agent, the receivables of the agent in the third party on his own behalf and on behalf of his client become the principal’s” confirms this idea, On the other hand, it was stated that in cases of alias al-fias, whether related to movable or immovable property, since the matter cannot be considered as a claim of appropriation and ownership, neither the official deed nor the issue of form can be mentioned, and that the issue should be considered within the scope of Article 18 of the Code of Obligations, which covers collusion in contracts and names, in accordance with the purpose of the law. After mentioning that the consideration of the matter within the scope of Article 18 of the Code of Obligations, which covers collusion in contract and in name, would be in accordance with the purpose of the law, it was concluded that the name-exclusive lawsuits can be heard and proved by written evidence.
It is indisputable that unification of case law decisions are limited to their subjects, guiding with their justifications and binding with their results. As mentioned in the aforementioned Unification of Jurisprudence Decision; belief agreements are binding on the parties in terms of creating an obligation to transfer ownership on the one hand, and on the other hand, they are agreements that contain savings transactions in terms of constituting the reason for the transfer of ownership. In this case, it should be accepted that they have the characteristic of transferring the ownership of immovable property if the conditions are met. Furthermore, in the concluding part of the Unification Decision, it is deemed sufficient that the document referred to as a belief agreement contains the signatures of the parties to the agreement, and nowhere is it discussed that the written document on which the belief transaction is based must have been issued on the date of the transaction or at an earlier date at the latest, nor is there even the slightest explanation on this issue. An acceptance other than this would mean expanding the scope of the Unification Decision, and this situation cannot be accepted by the legal order.
For this reason, it is a natural consequence of the Unification Decision that the claims based on the belief contract can be proved by a written document that does not depend on the form and bears the signature of the parties, and the fact that the document subject to the belief transaction is issued before or after the date of the contract does not affect the result. In the reasoning of the aforementioned decision, there is no expression or provision stating that the written document must be issued before or after the contract; in other words, the document bearing the date after the contract cannot be valid, and in the conclusion section, it is only ruled that “it is permissible to prove nam-ı müstear cases with valid and written evidence”.
It is not possible to include an additional condition that the document must be issued before the date of the contract, which is not included in the content of the Unification Decision, within the scope of the decision, even through interpretation.
As a matter of fact, the same points were emphasized in the decision of the General Assembly of Civil Chambers dated 14.07.2010 and numbered 2010/14-394 E., 2010/395 K. As it can be seen, in the assignment of a deeded immovable property through a fiduciary transaction, it is necessary and sufficient to make the fiduciary transaction in written form, and it is a requirement of the Unification of Case Law Decision dated 05.02.1947 and numbered 20/6 that the written form is a condition of proof. However, the existence of the belief contract, which constitutes the written evidence of the faith transaction, must be proved by the party requesting restitution, compensation or termination of the contract due to the faith transaction in accordance with the general provisions of Article 6 of the Turkish Civil Code No. 4721 (TCC) and Article 190/1 of the Code of Civil Procedure No. 6100 (CCP).
In practice, even if there is no written evidence of the described nature, it is not considered sufficient to prove the entire dispute between the parties, but it is accepted that the belief contract can be proved by any evidence, including “witnesses”, if there is a document in the nature of a beginning of evidence from the other party to prove its occurrence (Decisions of the General Assembly of Civil Chambers dated 28.12.2005 and numbered 2005/14-677 E., 2005/774 K.; dated 14.11.2019 and numbered 2017/1-1254 E., 2019/1197 K.). If there is no written evidence or preliminary evidence, it is also possible to prove the belief contract by conclusive evidence such as persuasion (Art. 188 CCP) and oath (Art. 225 et seq. CCP).
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