Collusive Transfer by a Deceased (Muris Muvazaası) — Concealing Estate Assets and Proof
The concept of collusive transfer by a deceased, explained together with the claim for cancellation of the land registry entry and re-registration, proof, and the differences from an abatement action, under TBK Art. 19 and Unification of Case Law Decision No. 1974/1 E., 1974/2 K. of 1 April 1974.
What Is a Collusive Transfer by a Deceased?
A collusive transfer by a deceased occurs where a deceased declares an intention different from their true intention, in a transaction on its face, with the aim of concealing assets from their heirs. Under Article 19 of the Turkish Code of Obligations No. 6098, the type and content of a contract are determined by reference to the parties' true and common intention. The classic field of application of the 1974 Unification of Case Law Decision is where a registered immovable is in truth intended to be gifted but is shown in the land register as a sale. Transfers of movables, money, bank accounts or company shares, by contrast, are not automatically brought within that decision; the general provisions on collusion and the transfer and formal rules applicable to the asset in question apply.
Decision No. 1974/1 E., 1974/2 K. of the Grand General Assembly for the Unification of Case Law of 1 April 1974 concerns the situation where a deceased, in truth intending to gift a registered immovable, showed it in the land register as a sale. The decision allows an heir whose inheritance rights have been harmed — whether or not they hold a reserved share — to plead that the apparent sale is invalid for collusion and that the concealed gift is invalid for non-compliance with the required form. Success in the action depends on proving by concrete evidence the deceased's intention to conceal assets and the parties' true intention.
The legal framework consists of TBK Art. 19, the formal requirements for the transfer of immovables, and the rules of succession. Since the heir is not a party to the collusive transaction, they may prove their allegation by any lawful evidence, including witnesses. Nevertheless, a low sale price, kinship, or the deceased's continued use of the immovable do not of themselves prove collusion; all the facts are assessed together.
What Are the Types of Collusion?
Collusion is examined in legal doctrine in two basic categories: absolute collusion and relative collusion. Actions for collusive transfer by a deceased are for the most part assessed within the scope of relative collusion; understanding absolute collusion is nonetheless important for a complete picture.
In absolute collusion the parties do not in fact wish to carry out any legal transaction but intend to appear to third parties as though they had. For example, where a debtor wishing to conceal assets from creditors makes an apparent sale to a relative despite having no intention whatever to transfer, this is an example of absolute collusion. Here the apparent transaction (the sale) does not reflect the true intention, and there is no concealed transaction behind it; the parties essentially wish to carry out no transaction at all.
In relative collusion the parties do in fact wish to carry out a legal transaction but conceal that intention behind another. In the classic example of a collusive transfer by a deceased, the apparent sale is invalid because it does not correspond to the parties' true intention, and the concealed gift is invalid because the formal requirements for the transfer of a registered immovable were not observed.
The agreement to collude is the parties' concurrence that the apparent transaction does not reflect their true intentions. Since the heir is not a party to the transaction, they may prove that agreement and the deceased's intention to conceal assets by any lawful evidence, without being confined to written documents.
The Significance of the Unification of Case Law Decision of 1 April 1974
The Unification of Case Law Decision of 1 April 1974 concerns a deceased showing a registered immovable in the land register as a sale when in truth intending to gift it in order to conceal assets from an heir. The apparent sale is invalid because it does not correspond to the parties' true intention, and the concealed gift is invalid because it was not made in the form required for a registered immovable. In transactions involving reciprocal obligations, such as a contract of maintenance until death, the sale/concealed-gift scheme of that decision does not apply directly; the true intention and the transaction's own conditions of validity are examined. The decision does not apply automatically to transfers of movables, bank accounts or company shares. Such transactions are examined under the collusion provisions of TBK Art. 19 and the transfer and formal rules applicable to the asset in question.
Action for Cancellation of the Land Registry Entry and Re-registration
An heir may seek cancellation of the entry and re-registration to the extent of their own inheritance share. Where the return of the immovable to the estate as a whole is sought, the community of heirs must be duly represented by all the heirs or by an appointed representative. The defendant is as a rule the registered owner. Where the immovable has passed to a third party, the protection of TMK Art. 1023 is assessed by reference to whether the third party knew or ought to have known of the defective registration and to the specific chain of transfers.
An action for collusive transfer by a deceased is as a rule subject to no limitation or forfeiture period; the rule of good faith, difficulties of proof and acquisition by a third party acting in good faith may nevertheless be material. Where several immovables are involved, the rules on connected immovable actions in HMK Art. 12/3 and the specific venue conditions are taken into account; a separate action need not necessarily be brought for each immovable.
Methods of Proving a Collusive Transfer by a Deceased
Since the heir stands in the position of a third party, they may prove the collusion by any lawful evidence, including witnesses. The deceased's just and reasonable motive, national and local custom, family relationships, the purchaser's ability to pay, the difference between the sale price and the true value, the whole of the deceased's assets, their age and health, and their continued use of the immovable are all assessed together. A low price, close kinship or a short period of care is not of itself conclusive proof.
Differences Between a Collusive Transfer Action and an Abatement Action
In a collusive transfer action the aim is to correct the land register on account of the invalid apparent transaction and the concealed gift made in improper form; no reserved share is required. Abatement is the reduction of the part of a valid disposition exceeding the reserved share and is available only to an heir holding a reserved share. Under TMK Art. 571 the period for abatement is one year from learning that the reserved share has been infringed and, in any event, ten years from the opening of a will or, for other dispositions, from the opening of the succession. The claims may be advanced in the alternative on the conditions of the Code of Civil Procedure; the court does not give the parties “advice”.
Application of Collusion to Movables and Other Transactions
The 1974 Unification of Case Law Decision is specific to the apparent sale/concealed gift structure in registered immovables. For movables, money, bank accounts, cooperative rights or company shares, the general provisions on collusion, the delivery, registration or formal requirements of the transaction, and the claims available under succession law apply. That a contract of maintenance until death is onerous, or that the care was of short duration, is not of itself collusion; the true intention, a reasonable motive and the actual extent of the care provided are examined together.
Parties to the Action and Jurisdiction and Venue
The claimant must have the status of heir and a legal interest. One heir may seek cancellation and re-registration to the extent of their own inheritance share without the participation of the other heirs. Where the return of the immovable to the estate as a whole is sought, the conditions as to parties or representation of the community of heirs must be satisfied.
The defendant is as a rule the person shown as owner in the land register. If the first transferee has died, the proper parties are determined by reference to their heirs. In chains of transfers, the claim to be directed against the last owner and the earlier transferees is assessed separately according to the claims for cancellation of the entry, damages and good faith.
The court with subject-matter jurisdiction is the civil court of first instance. For a claim concerning rights in rem over an immovable, the court of the place where the immovable is situated has exclusive venue under HMK Art. 12. Where several immovables lie in different judicial districts, the connection rule in HMK Art. 12/3 and the structure of the claim are examined together; it cannot be said that a separate action must be brought for each immovable.
Points to Bear in Mind in a Collusive Transfer Action
An action for collusive transfer by a deceased is a complex and multi-faceted type of action in terms of proof. There are certain critical points to which heirs must pay attention in preparing before bringing the action. First, all transfers of immovables made by the deceased during their lifetime should be researched in the land registry records. The values of the immovables at the dates of transfer should be compared with the sale prices shown in the land register. Information and documents should be gathered on the deceased's state of health, financial needs and family relationships at the date of transfer.
In bringing the action, it is important that the allegation of collusion be set out clearly and precisely in the statement of claim, that the supporting evidence be identified and, in particular, that requests for an expert examination, an inspection and the hearing of witnesses be stated. During the proceedings the court obtains an expert report on the market value of the immovable at the date of transfer, arranges for witnesses to be heard and, where necessary, conducts an inspection of the immovable. If collusion is proved, the court orders cancellation of the land registry entry and registration of the immovable in the claimant heir's name to the extent of their inheritance share. Where several heirs have brought the action, registration is ordered to the extent of each one's share. No order is made in respect of the shares of heirs who have not brought an action; those shares remain with the transferee.
Finally, it should be noted that an action for collusive transfer by a deceased is a technical civil action, and the correct gathering and presentation of evidence directly affects the outcome. Heirs are therefore advised to obtain professional support from a succession law attorney throughout the proceedings.
This content has been prepared for general information purposes and does not constitute legal advice. You are advised to consult an attorney in relation to specific disputes.
Frequently Asked Questions
Is the action confined to heirs holding a reserved share?
No; an heir whose inheritance rights have been harmed may bring it on its conditions.
Is there a time limit?
As a rule there is no limitation or forfeiture period; acquisition by a third party and the rule of good faith are reserved.
Is a low sale price sufficient on its own?
No; all the evidence is assessed together.
When does the ten-year abatement period start?
From the opening of a will, or, for other dispositions, from the opening of the succession.
This article was prepared by Av. Mustafa MALGIR.
