Third-Party Claim to Attached Property — Procedure and Proof

What is a third-party claim action and how is it brought? Learn about the claim procedure under İİK Arts. 96-99, the 7-day period, proceedings before the enforcement court, the burden of proof and the rights of third parties.

When the debtor's assets are attached in enforcement proceedings, it may be alleged that the attached property belongs not to the debtor but to a third party, or that a third party has a right over it. The third-party claim and the third-party claim action are important legal institutions protecting third parties' rights over attached property. The Enforcement and Bankruptcy Law No. 2004 (İİK) governs them in detail in Arts. 96-99. This article deals comprehensively with the raising of a third-party claim, the procedure for the action, the 7-day periods, the burden of proof, the rights of third parties and the problems encountered in practice.

What Is a Third-Party Claim and Who May Raise It?

It may be asserted by the debtor or by a third party that attached movable property in the debtor's possession belongs to a third party or is subject to a third party's right of pledge. The creditor either contests or accepts the claim; “the creditor raises a third-party claim in favour of the third party” is not a general procedural position. The attachment of an immovable registered in a third party's name in the land register is assessed by reference to the land register and the conditions for registration in the debtor's name; it is not the same as the classic movable claim procedure under Arts. 96–99.

How Does the Third-Party Claim Procedure Work?

Where the debtor has the property in their own possession, the presumption of ownership operates in the debtor's favour; the third-party claim is recorded in the minutes and notified to the parties. If the creditor or the debtor objects within three days, the file is sent to the enforcement court. At the first stage the court does not order the lifting of the attachment but rules on the continuation of the proceedings or their postponement against security. Once the decision to continue is pronounced or served on the third party, the seven-day period for bringing an action begins.

How Is the Action Brought and What Are the Time Limits?

The third party brings the action before the enforcement court within seven days of the pronouncement or service of the decision to continue. If they learned of the attachment later, they may bring the action, provided the property has been sold, until the sale proceeds are paid to the creditor (İİK Art. 97/9). The defendant is the creditor; if the debtor contested the third-party claim, the debtor is joined as a party. Bringing the action does not automatically result in the property being handed to the third party against security; the court may set security for a postponement of the proceedings.

Who Bears the Burden of Proof?

Where the property is in the debtor's possession or in the joint possession of the debtor and the third party, the debtor benefits from the presumption of ownership and the third party must prove their right. Where the property was attached in the third party's possession, under the procedure in İİK Art. 99 the creditor brings an action to prove the contrary of the third-party claim. Invoices and private records are discretionary evidence; official registers such as the traffic or ship registry have their own statutory effect. No document is “conclusive, strongest evidence” independently of its context.

What Evidence May Be Used?

Any evidence may be used in a third-party claim action. The enforcement court decides by assessing discretionary and conclusive evidence together. The evidence most frequently used in practice is as follows:

• Invoices and sales documents: invoices, receipts and contracts are assessed together with the date of issue, the parties, and the facts of payment and delivery. An invoice in a third party's name does not by itself conclusively prove ownership.
• Official registers and registration documents: the effect of the land, traffic, ship and similar registers is determined by their own statutes. The attachment of an immovable must not be confused with the movable claim procedure in İİK Arts. 96–99.
• Witness statements: assessed together with the other evidence as to the acquisition, delivery and actual use of the property.
• Bank and accounting records: may show who paid the price and the commercial flow of the transaction.
• Expert examination: may be carried out on technical or accounting matters; the expert does not make the legal assessment of ownership in the court's place.

The Rights and Protection of the Third Party

A third party may assert their ownership or pledge right at the time of attachment or when they learn of it. Where the property is in the debtor's possession, İİK Arts. 96–97 apply; where it is in the third party's possession, the procedure in Art. 99. Since the time limits, parties and burden of proof vary according to possession of the property, merely recording the claim in the enforcement minutes does not of itself lift the attachment in every case. The third party may bring a claim action within the statutory period and, where the conditions are met, request postponement of the proceedings; the court may set security. Handing the property directly to the third party is not an automatic outcome. Material or moral damages for a wrongful attachment do not arise automatically upon acceptance of the claim; the relevant conditions of liability — unlawfulness, fault, loss, causation and infringement of personality rights — must be separately proved.

Allegations of Collusion in a Third-Party Claim Action

Allegations of collusion may arise in practice in third-party claim actions. Collusion is the parties' agreement that the apparent transaction does not reflect their true intentions. An allegation that the debtor created a false transfer or relationship of rights in order to shield assets from attachment must be proved by concrete evidence.

İİK Art. 97/a-3 contains an important presumption regarding collusion: where the attached property is attached at a place in which the debtor and the third party live together or which they use together, the property is deemed to be in the debtor's possession. This presumption is frequently applied where the debtor lives with close relatives or works at the same workplace.

In an allegation of collusion, the date of transfer, the price and payment records, the actual use of the property, the relationship between the parties and the commercial records may be assessed together. A date close to the proceedings, or kinship, is not of itself an invariable presumption proving collusion.

If collusion is established, the third-party claim action is dismissed and the attachment over the property continues. The collusive transfer may also be assessed within the scope of an action to set aside the disposition (İİK Arts. 277-284).

Consequences of the Third-Party Claim Action

If the action is upheld, the attachment is lifted to the extent of the third party's right. If it is dismissed, the proceedings continue. The compensation in İİK Art. 97/13 depends on special conditions such as postponement of the proceedings, the party's bad faith and the loss suffered; a third party does not automatically pay compensation of at least fifteen per cent on every dismissal. General damages for a wrongful attachment require fault, loss and causation; moral damages likewise depend on the conditions for infringement of personality rights.

The Third-Party Claim Action Under İİK Art. 99

Where the attached movable property is in the possession not of the debtor but of a third party, the enforcement officer records the third party's claim in the minutes and gives the creditor seven days to bring an action before the enforcement court. If no action is brought, the third party's claim is deemed accepted. The attachment of a bank account, wages or a claim held by a third party, by contrast, is subject to the notice regime in İİK Art. 89; it is not an example of the movable claim under Art. 99.

Examination of the Facts in a Third-Party Claim Action

In applying the presumptions of possession in İİK Art. 97/a, it is determined who had actual control of the property at the moment of attachment. For property attached in a dwelling occupied by spouses together or in a commercial enterprise, possession, the matrimonial property regime, acquisition and payment documents, commercial records and actual use are assessed together. Close kinship, a transaction shortly before the proceedings, or a single invoice does not of itself produce a conclusive result.

This content is for general information purposes; in a specific case the attachment record, the position as to possession and the time limits must be examined on the file.

Frequently Asked Questions

What is the third party's time limit for bringing an action?

Seven days from pronouncement or service of the decision to continue; where they learn later, a special possibility exists until the sale proceeds are paid to the creditor.

Is the property delivered to the third party once the action is brought?

Not automatically; the court may set security for a postponement.

Is fifteen per cent compensation automatic on dismissal?

No; the conditions in İİK Art. 97/13 are required.

Is a claim to a bank account subject to Art. 99?

No; as a rule İİK Art. 89 applies.