Division of Property on Divorce — The Participation in Acquired Property Regime

We explain the division of property on divorce, the participation in acquired property regime, the calculation of the participation claim, the added-value share and the family residence annotation under the Turkish Civil Code.

How Is Property Divided on Divorce and Which Regime Applies?

The division of property on divorce is carried out under the matrimonial property regime rules in Art. 202 et seq. of the Turkish Civil Code (TMK) No. 4721. With the Civil Code, which entered into force on 1 January 2002, participation in acquired property was adopted as the statutory regime and applies unless the spouses agree otherwise.

The participation in acquired property regime does not mean that every asset held during the marriage is divided in half in kind. Each spouse's acquired and personal property is determined separately; after debts, equalisation and added values, half of the resulting residual value as a rule constitutes the other spouse's participation claim.

For couples married before 1 January 2002, where no other regime was chosen during the statutory transitional period, the separation of property regime under the former Civil Code applies to the period before that date, and participation in acquired property to the period after 1 January 2002. A valid matrimonial property agreement and the transitional options in Art. 10 of Law No. 4722 may alter the outcome.

Liquidation under the participation in acquired property regime is not the physical division in two of every asset acquired during the marriage. Each spouse's acquired and personal property groups, the debts attaching to them, the added values and the equalisation are each determined separately. A participation claim may arise over half of the resulting residual value; the parties' mutual claims are set off. In whose name an asset is registered in the land register does not of itself determine the outcome of the liquidation.

What Is the Difference Between Acquired and Personal Property?

Under the participation in acquired property regime, each spouse's assets are assessed in two categories: acquired property and personal property. TMK Art. 219 governs acquired property and TMK Art. 220 personal property. That distinction forms the basis of the division of property.

Acquired Property (TMK Art. 219)

Under TMK Art. 219, acquired property is the assets each spouse obtains for consideration during the property regime. Acquired property comprises:

• Gains obtained in return for work: salaries, wages, bonuses and premiums obtained during the property regime are a source of acquired property. In liquidation, the asset value of that income or the value substituting it is examined; not every amount of wages spent during the marriage is treated as a separate claim to be divided.
• Payments made by social security and social assistance institutions or by funds established to assist personnel fall within the acquired property group. However, the part of a lump sum payment or compensation covering the period after the property regime may be separated by the special calculation in TMK Art. 228.
• Compensation paid for loss of earning capacity is as a rule acquired property; the part of a lump sum relating to the period after the property regime is treated as personal property under TMK Art. 228.
• Income from personal property: rental income from an immovable that is a spouse's personal property counts as acquired property. For example, the rental income from a flat acquired by inheritance is subject to division.
• Values substituting acquired property: values purchased with acquired property, or obtained by selling acquired property, are also acquired property.

Personal Property (TMK Art. 220)

Under TMK Art. 220, personal property is the assets not subject to division and belonging entirely to that spouse:

• Items serving only one spouse's personal use are personal property. For jewellery, not only the purpose of use but also to whom it was given, local custom and the state of the evidence matter, so no single rule of ownership can be laid down for all items of jewellery.
• Assets belonging to a spouse at the beginning of the property regime are personal property.
• Property obtained by inheritance or in any other way without consideration is personal property.
• Claims for moral damages: moral damages received for infringement of personality rights are personal property.
• Values substituting personal property: money obtained by selling personal property, and new property bought with that money, are also personal property.

How Is the Participation Claim Calculated?

In calculating the participation claim, each spouse's personal and acquired property groups are liquidated separately. The added values in TMK Art. 229 are added to the existing acquired property; equalisation between the personal and acquired property groups is carried out; and the debts relating to the acquired property are deducted. The other spouse as a rule becomes entitled to a participation claim over half of the remaining residual value.

The property regime ends on the date the divorce action is brought; but that date is not the valuation date for all assets. The market value of existing assets is as a rule determined as at the time of liquidation. Added values, property disposed of, social security payments, acquisitions financed by credit and contributions from personal property are subject to special rules. A calculation of “total value minus debts, divided by two” is therefore not correct in every file.

Sample figures can illustrate assumptions only; in a real file they produce no result without assessing the nature of the asset, the date of acquisition, the source of finance, which property group the debt belongs to and the evidential presumptions. In whose name an asset is registered and which property group it belongs to are also not the same question; the presumptions as to ownership and acquired property in TMK Art. 222 apply.

What Is the Added-Value Share and How Is It Claimed?

The added-value share means, under TMK Art. 227, that where one spouse has contributed to the acquisition, improvement or preservation of property belonging to the other, they may claim on liquidation a right to payment in proportion to the increase in value of that property. The added-value share is a separate and independent head of claim from the participation claim.

For an added-value share to arise, the following conditions must be met together:

• One spouse must have contributed to property belonging to the other
• The contribution must have been directed at the acquisition, improvement or preservation of the property
• The consideration for the contribution must not have been waived or already received. In calculating the added-value share, the proportion at the time the contribution was made and the value of the property at the date of liquidation are taken into account. For example, if one spouse contributed TRY 100,000 to the renovation of a house that is the other's personal property and the house was worth TRY 500,000 at the time, the contribution ratio is 20%. If the house is worth TRY 1,500,000 at liquidation, the added-value share is 1,500,000 x 20% = TRY 300,000 (a hypothetical example only; in a real file the special liquidation rules apply).

What Is a Family Residence Annotation and How Does It Affect the Division of Property?

The protection in TMK Art. 194 does not arise only upon annotation in the land register. The owner spouse may not transfer the family residence or restrict rights over it without the other spouse's express consent; nor may a tenant spouse terminate the lease without the other's consent. The annotation strengthens publicity and proof against third parties.

The consequence of a transaction made without consent is assessed together with facts such as whether the property retains its character as a residence, who the parties to the transaction were, and the third party's good faith. The annotation does not transfer ownership of the immovable to the other spouse and does not automatically create a half share in the property regime calculation. Once the divorce becomes final, whether the character as a family residence and the annotation continue is assessed by reference to the actual registry procedure; it should not be said that all consequences follow automatically.

What Remedies Are Available Where Assets Are Concealed?

Where one spouse transfers or conceals assets before or during the divorce in order to reduce the other's participation claim, the mechanism of added values under TMK Art. 229 comes into play. That mechanism provides effective legal protection against the concealment of assets.

Under TMK Art. 229 the following values are added to the acquired property:

• Gratuitous dispositions made by one spouse within one year before the end of the property regime without the other's consent, other than customary gifts
• Transfers made by a spouse during the property regime with the intention of reducing the other's participation claim. The legal remedies available where concealment of assets is alleged are as follows:
• Interim injunction: an interim injunction may be sought under HMK Art. 389, together with the divorce action or separately, to prevent the transfer, consumption or concealment of assets.
• Annotation in the land register: an injunction annotation may be sought from the court over immovables.
• Freezing bank accounts: an order may be sought to prevent the withdrawal of money from bank accounts.
• Allegation of collusion: where the apparent transaction differs from the true intention, collusion may be relied on as the legal basis, according to the parties to the transaction, the land registry record, the relief sought and the rules of evidence. Not every suspicious transfer of itself leads to cancellation of the land registry entry.

How Are Debts Between the Spouses Taken into Account?

Under TMK Art. 230, where a spouse's debt relating to one property group has been paid out of the other group, or value has been transferred from one group to the other, equalisation is carried out on liquidation. Which property group a debt belongs to is determined by its connection with the acquisition, improvement or preservation of the property; a debt whose group cannot be determined is treated as relating to the acquired property.

Where the contribution has caused an increase or decrease in the value of the property, equalisation may be calculated having regard to the ratio of the contribution and the value at liquidation. Where there has been consumption without consideration, or the property was disposed of earlier, a different equitable value may arise. The generalisation that “every contribution is always taken at its nominal value at the date of liquidation” is therefore incorrect.

The spouses' personal debts to one another are not automatically extinguished when the property regime ends. Debts, equalisation and any added-value share must nevertheless be distinguished from one another; the source of payment, the property group and the documentary evidence must be examined concretely.

• Where a spouse transfers pre-marital savings into property acquired during the marriage, that may be taken into account in favour of the relevant property group by way of equalisation or, depending on the circumstances, in calculating the added-value share, once the source and the amount are proved.
• The transfer of sources of acquired property, such as employment income, into a spouse's personal property may give rise to an equalisation calculation, according to the purpose of the contribution and the relationship between the property groups. Whether the contribution was a gratuitous gift is also determined on concrete evidence. The valuation date and the method of calculation used for equalisation and for the added-value share are not the same. TMK Arts. 227 and 230 are applied by examining together the position of the property to which the contribution was made at the time of liquidation, whether it is still held and any change in value. It is therefore incorrect to equate the amount of the contribution either with its nominal value at the date of payment or, in every case, with its value at liquidation.

What Are the Limitation Period and the Competent Court?

The basis of the ten-year limitation period applied to matrimonial property claims is not TMK Art. 178. Where there is no special provision, the general limitation period in TBK Art. 146 applies; in a liquidation following divorce, time as a rule runs from the divorce judgment becoming final. Where the regime ends on death or for another reason, the starting point is determined separately.

The court with subject-matter jurisdiction is the family court. Venue is determined under TMK Art. 214: where the property regime ended on death, the deceased's last place of residence; in divorce or annulment, the court with venue in those actions; and in other cases, the defendant spouse's place of residence.

A claim for liquidation may be advanced together with the divorce; but no final decision on liquidation may be given before the divorce judgment becomes final. The file may be severed, or the finality of the divorce may be treated as a preliminary issue.

What Is a Matrimonial Property Agreement and May the Spouses Choose a Different Regime?

Under TMK Arts. 203-204 the spouses may, by an agreement drawn up or certified before a notary, choose separation of property, separation of property with sharing, or community of property in place of the statutory regime of participation in acquired property. A matrimonial property agreement may be made before the marriage or during it.

Under the separation of property regime each spouse retains the rights of administration, enjoyment and disposal over their own assets. That regime gives rise to no liquidation of participation in acquired property; but the spouses' co-ownership, their debts to one another, claims arising from proved contributions and special protections such as the family residence are assessed separately. The generalisation that “there is no financial claim at all on divorce” is therefore incorrect.

Frequently Asked Questions

Is property bought before the marriage subject to division?

Property acquired before the marriage is as a rule personal property and does not enter the residual value calculation. Income from that property during the property regime counts as acquired property, provided the spouses have not validly agreed otherwise.

Is inherited property divided on divorce?

Property acquired by inheritance is personal property. Income obtained from it during the property regime counts as acquired property; in liquidation, whether that income or a substitute value still exists, and any agreement making it personal property, are examined separately.

When must an action for the division of property be brought?

Within the 10-year limitation period running from the divorce judgment becoming final. It may also be claimed together with the divorce action.

What can I do if my spouse is concealing assets?

You may seek an interim injunction from the court, have an annotation entered in the land register and ask for bank accounts to be frozen. You may also be protected by the added-values mechanism in TMK Art. 229.

How is a family residence annotation entered?

A family residence annotation is entered upon an application made by one of the spouses to the land registry directorate. If the directorate refuses the request, an order may be obtained from the court.

How is a house with a mortgage divided?

For a home acquired with credit, the date of acquisition, the source of the deposit, the principal element of the instalments paid during the property regime, the balance outstanding when the regime ended and subsequent payments are examined together. Neither the formula of current value minus outstanding debt nor allocating each instalment directly to one property group produces the correct result in every file.

Are company shares included in the division of property?

A company shareholding acquired for consideration during the property regime is as a rule acquired property; the result differs if financing from personal property or acquisition without consideration is proved. Ownership of the shares need not be transferred in kind; a claim is calculated on the company's value, its debts, the rights attaching to the shares and any contribution from personal property.

This content is for general information purposes and does not constitute legal advice.

Official sources: Turkish Civil Code No. 4721, Turkish Code of Obligations No. 6098, Code of Civil Procedure No. 6100