Property Regime

Types of Matrimonial Property Regime and Choice of Matrimonial Property Regime

In Turkish law, there are four matrimonial property regimes that may apply. These are;

• Participation in acquired property (the statutory property regime)
• Separation of property
• Separation of property with sharing
• Community of property

The parties are free to choose one of these matrimonial property regimes. Furthermore, a chosen matrimonial property regime may later be changed by choosing another matrimonial property regime. In order for the provisions of the matrimonial property regime they have chosen to apply, the spouses must enter into a matrimonial property agreement.

Participation in Acquired Property: Acquired and Personal Property

The Turkish Civil Code, which entered into force on 1 January 2002, adopted the participation in acquired property regime as the statutory matrimonial property regime. Accordingly, for spouses who married after 1 January 2002, the participation in acquired property regime will apply to them if they have not chosen an optional matrimonial property regime. For those who married before 1 January 2002, the participation in acquired property regime will apply as of that date. Under the participation in acquired property regime, there are two estates independent of each other: the wife’s assets and the husband’s assets. The wife’s and husband’s assets are in turn each divided into two categories: acquired property and personal property.

Acquired Property

Article 219/1 TCC defines acquired property as “the assets acquired by each spouse for consideration during the continuation of the property regime” . Three elements derive from this definition: 1) acquisition during the continuation of the property regime, 2) being an asset, 3) acquisition for consideration (labour, money, assets).

The second paragraph of the article lists the following as examples of acquired property: 1. acquisitions in return for work, 2. payments made by social security or social assistance institutions and organisations or by funds and similar bodies established to assist staff, 3. compensation paid for loss of capacity to work, 4. income from personal property, 5. assets replacing acquired property. The examples listed in this article are not exhaustive; assets falling within the definition and not included in personal property are regarded as acquired property.

Personal Property

Article 220 TCC lists personal property by operation of law as follows: 1. items used exclusively for the personal use of one of the spouses, 2. assets belonging to one of the spouses at the beginning of the property regime or subsequently acquired by a spouse by inheritance or otherwise gratuitously, 3. claims for non-pecuniary damages, 4. assets replacing personal property.

Contractual Personal or Acquired Property

Article 221 TCC provides: “By means of a matrimonial property agreement, the spouses may agree that assets arising from the practice of a profession or the operation of a business which would otherwise form part of acquired property shall be deemed personal property. By means of a matrimonial property agreement, the spouses may also agree that income from personal property shall not form part of acquired property” and thus the spouses are given the possibility of agreeing, by concluding a matrimonial property agreement, that assets arising from the practice of a profession or the operation of a business which would otherwise form part of acquired property shall be deemed personal property.

Proof

Article 222 TCC contains a provision parallel to the provision on proof in Article 6 TCC. “A person who claims that a particular item of property belongs to one of the spouses is obliged to prove that claim” (Article 222/1 TCC). Accordingly, the person making a claim will bear the burden of proving it. The second and third paragraphs of the article introduce two important presumptions.

Termination of the Matrimonial Property Regime and the Liquidation Action

The grounds for the termination of the marital union are regulated in Article 225 TCC. According to this provision, “The property regime ends upon the death of one of the spouses or upon the adoption of another property regime. Where the court decides that the marriage is to be terminated by annulment or divorce, or that there is to be a transition to separation of property, the property regime ends with effect from the date of the action (Article 225 TCC).”

After the marital union has ended, the liquidation stage of the property regime will commence as a consequence of the termination of the participation in acquired property regime. As a rule, liquidation may be carried out on the basis of a liquidation agreement between the spouses, the validity of which is not subject to any formal requirement and the rules of which they determine themselves. However, if the spouses have not concluded such a liquidation agreement, liquidation is carried out through a liquidation action brought by one of the spouses or their heirs.

Court with Subject-Matter and Territorial Jurisdiction in the Liquidation Action

The liquidation action to be brought is in the nature of a formative action. The court having subject-matter jurisdiction over a liquidation action is the family court. Territorial jurisdiction in liquidation actions is regulated in Article 214 TCC.

“In actions between spouses or heirs concerning the liquidation of a property regime, the following courts have jurisdiction: 1. where the property regime ends by death, the court of the deceased’s last domicile; 2. where divorce, annulment of the marriage or separation of property by the judge is ordered, the court having jurisdiction over those actions; 3. in other cases, the court of the defendant spouse’s domicile (Article 214 TCC).”

Turkish Civil Code, Art. 214

Stages of Liquidation

Liquidation essentially consists of four stages. These are:

1. Recovery of assets, allocation of an asset held in co-ownership to one of the spouses, and settlement of debts(TMK m. 226)
2. Separation of the categories of assets(TMK m. 228)
3. Calculation of the surplus value(TMK m. 227)
4. Calculation and payment of the participation claimThe participation claim is determined by law, by agreement or by court judgment.

Recovery of Assets, Allocation of Co-Owned Property and Debts

Each spouse takes back his or her property held by the other spouse (Article 226/1 TCC). For example, if a piece of jewellery has been taken, it will be returned to the spouse from whom it was taken.

Article 226/2 TCC provides: “During liquidation, if there is property held in co-ownership in shares, one of the spouses may, in addition to making use of the other options provided for by law, request that the property be allocated to him or her undivided by proving an overriding interest and paying the other spouse’s share” and thus the possibility of allocating property held by the spouses in co-ownership in shares to one of them is provided. For such allocation, the following conditions must be met:

The spouses may settle their mutual debts (Article 226/3 TCC). The debts that the spouses settle may arise from any kind of obligation. The spouses may also settle between themselves their debts to third parties. For example, where one spouse is indebted to a third party from whom the other spouse has a claim, the spouses may make arrangements between themselves under the provisions of the law of obligations.

Separation of the Categories of Assets

The property in the spouses’ estates is divided into two: personal property and acquired property. This property is assessed according to its condition at the time the property regime ends (Article 228/1 TCC). The time of termination will be determined in accordance with Article 225 TCC. A different rule has been introduced regarding the allocation to a category of property of social security payments made to a spouse (Article 228/2 TCC): “Lump-sum payments made to one of the spouses by social security or social assistance institutions, or compensation paid for loss of capacity to work, shall, if, instead of the lump-sum payment or compensation, and in accordance with the procedure applied by the relevant social security or social assistance institution, a lifetime annuity had been granted, the capitalised value of the annuity for the period following the termination of the matrimonial property regime, as it would have stood on that date, is taken into account in the liquidation as personal property in that amount.”

Calculation of the Surplus Value

Article 231 TCC defines the surplus value as “the amount remaining after deducting the debts relating to that property from the total value of each spouse’s acquired property, including the amounts obtained through addition and equalisation” . On the basis of this definition, the assets and liabilities may be identified as follows:

Claim for a Share in the Increase in Value

On this matter, TCC Art. 227 provides “Where one of the spouses has contributed, without receiving any or adequate consideration, to the acquisition, improvement or preservation of property belonging to the other, he or she shall, upon liquidation, have a claim in proportion to his or her contribution for the increase in value of that property, and this claim shall be calculated according to the value of that property at the time of liquidation; where there has been a loss in value, the original value of the contribution shall be taken as the basis” . For this article to apply, the following four conditions must be fulfilled:

• There must be a contribution to the other spouse’s estate,
• There must be no intention to make a gift and no counter-performance,
• There must be an increase in value at the time of liquidation,
• Liquidation of the property regime must be requested.

Calculation of the Claim for a Share in the Increase in Value

For this calculation to be made, three stages must essentially be completed: calculation of 1) the increase in value, 2) the share in the increase in value, and 3) the claim for a share in the increase in value.

1- Increase in Value: The difference between the initial value of the asset and its value at the time the property regime ends.

• Initial value: if the contribution was made on the date the asset was acquired, Initial value = Acquisition value + Amount of contribution,

If the contribution was made after acquisition, Initial value = Value of the asset on the date of the contribution + Amount of contribution

2- Share in the Increase in Value: This is found by proportionally reflecting the contribution to the initial value in the increase in value of the asset to which the contribution was made. Expressed as a formula:

Compensation Claim

The compensation claim may be defined as the claim arising in favour of the financing group of assets where a spouse has met debts relating to acquired property out of personal property, or debts relating to personal property out of acquired property (TCC Art. 230/1).

Each debt encumbers the category of assets to which it relates. A debt whose category cannot be determined is deemed to relate to acquired property (TCC Art. 230/2).

There are two types of equalisation claim: the ordinary equalisation claim and the extraordinary equalisation claim. Where a spouse’s debts relating to acquired property are paid from personal property, or debts relating to personal property are paid from acquired property, an ordinary equalisation claim will arise.

From acquired property to the personal property category = equalisation claim in the surplus value calculation as an asset;

From personal property to the acquired property category = equalisation claim in the value calculation as a liability is included.

Where a contribution has been made from one category of property to the acquisition, improvement or preservation of property in the other category, an extraordinary equalisation claim will arise (Article 230/3 TCC). Where there is an increase or decrease in value, the extraordinary equalisation claim comes into play.

Extraordinary equalisation claim = basic contribution + share in the increase in value or share in the decrease in value.

Values to Be Added

Article 229 TCC provides that the following are to be added as values to acquired property:

1. Within the period before the end of the property regime, by one of the spouses one year without the consent of the other the consent of the spouse without, customary gifts, made other than gratuitous disposition,
2. Transfers made by a spouse during the continuance of the property regime with the intention of reducing the other spouse's participation claim.

Surplus Value

Article 231 TCC defines the surplus value as “the amount remaining after deducting the debts relating to that property from the total value of each spouse’s acquired property, including the amounts obtained through addition and equalisation” is defined as follows.

The Participation Claim and Its Payment

The participation claim may be determined in three ways: by law, by court decision and by agreement.

• Statutory participation in the surplus value: Each spouse or his or her heirs are entitled to half of the surplus value of the other spouse (Article 236/1 TCC).
• Contractual participation in the surplus value: For participation in the surplus value, by a property regime agreement a different basis may be adopted (Article 237/1 TCC), and where the court decides that the marriage is to be terminated by annulment or divorce or that there is to be a transition to separation of property, agreements departing from the statutory rules on participation in the surplus value are valid only if this is expressly provided for in the matrimonial property agreement (Article 238 TCC).
• Determination of the participation claim by court decision: In the case of divorce on grounds of adultery or attempt on life judge, the judge may decide that the share of the spouse at fault in the surplus value be reduced or removed in accordance with equity may decide (Article 236/2 TCC).

Payment of the Participation Claim

The participation claim and the share in the increase in value may be paid in kind or in money (TCC Art. 239/1). For payments in kind, the market value of the assets will be taken as the basis.

Separation of Property, Separation of Property with Sharing, and Community of Property

Separation of Property Regime

Under the separation of property regime, the principle is that the wife’s and the husband’s assets are separate. – Under the separation of property regime, each spouse retains the rights of management, use and disposal over his or her own assets within the statutory limits (TCC Art. 242). Accordingly, if the spouses have chosen the separation of property regime;

1. Return of Ownership
2. Contribution Claim
3. Dissolution of Co-Ownership

apart from these cases, there will be no liquidation. Reference is made to the provisions on separation of property with sharing as regards evidence, liability for debts and the allocation of co-owned property.

Separation of Property with Sharing Regime

The spouses may also choose the separation of property with sharing regime by means of a matrimonial property agreement. What distinguishes this regime from the separation of property regime is that its effect becomes apparent upon the termination of the marital union. This regime, which displays exactly the features of the separation of property regime during the marriage, manifests itself at the liquidation stage upon termination of the marital union in the following respects:

• The spouses take back their property held by the other spouse.
• Where the spouses own property in shares, the spouse who proves an overriding interest in being allocated the property is entitled to request that it be allocated to him or her upon payment of the other spouse’s share.
• Where a spouse has contributed to property of the other spouse that is excluded from sharing, he or she may claim from the other spouse the amount corresponding to that contribution.

Property and investments in the joint use of the marital union are divided equally between the spouses.

Community of Property Regime

It is regulated in Articles 256 et seq. of the Turkish Civil Code. The community of property regime will cover the community property and the spouses’ personal property. By concluding a matrimonial property agreement (commonly known as a marriage contract), the spouses may include their personal property in the community and create a community of property. On the other hand, the spouses are obliged to act jointly with respect to the assets tied to the marriage and may not make arbitrary dispositions of immovable and movable property.