WHAT IS CONTRACT OF FAITH?

Contracts of faith; These are contracts that aim to transfer a person's goods or rights to another person to create security or for another purpose and to receive a refund when the purpose is achieved. With the contract of faith, the guarantee is provided without any collusive transactions.

As a rule, a belief agreement is not subject to any form requirements. However, if a fiduciary agreement is made regarding a transaction subject to the written form requirement, such as the transfer of real estate, it will be subject to the written form requirement. It has also been stated in the Supreme Court decisions that faith agreements are subject to the written form requirement. It is stated in the decisions of the Supreme Court that the contract of faith can be proven with witnesses and other evidence if there is a document that serves as the beginning of written evidence. Although the documents that constitute the beginning of written evidence cannot fully prove the alleged facts, they are documents that give the opinion that the allegations may be true. If such documents are not available, oath, confession etc. It is not possible to prove a contract of faith other than definitive evidence.

How Long is the Fiduciary Transaction Limitation Period?

Claims based on fiduciary transactions are subject to the general statute of limitations of 10 years. The statute of limitations begins to run on the date on which the return debt becomes due, that is, on the date on which the property subject to the contract of faith must be returned.

Can a fiduciary transaction between siblings be proven by witnesses?

There is no legal obstacle to making a faith agreement between siblings. However, in terms of proving the relationship, the requirement for the beginning of written evidence, which is established in the Supreme Court jurisprudence, is also sought in close relatives such as siblings. Transactions between siblings and close relatives constitute an exception to the obligation to prove with a deed. For this reason, many Supreme Court decisions have been voted against and it has been stated that fiduciary transactions between siblings can be proven with witnesses, but this view is not adopted by the majority members.  For this reason, disputes arising from faith agreements made between siblings and close relatives can only be proven with a witness if there is a document that serves as the beginning of written evidence.

Which Court is Competent in Case of Deed Cancellation and Registration Based on Agreement of Faith?

The title deed cancellation case based on faith agreements must be filed in the Civil Court of First Instance where the real estate is located.

Is There a Difference Between Fiduciary Transaction and Collusion Cases?

Since faith contracts are not clearly regulated in the law, no transfer can be made based on faith contracts in the land registry. For this reason, faith contracts are shown as sales in the title deed and the transaction constitutes collusion. If the existence of a contract of faith is proven in the title deed annulment case, the apparent sale transaction will be collusive, so the justification for annulment is based on collusion, similar to cases of abduction from inheritance.

Faith Agreement Supreme Court Decisions

14\. Legal Department 2011/2131 E. 2011/4330 K. 04.04.2011 T._

"Just as there is no written contract of faith, there is also no evidence that is the beginning of written evidence. In such cases, witnesses cannot be heard even if the parties are brothers. In accordance with Article 289 of the Code of Civil Procedure, "288. In matters that must be proven with a deed in accordance with the article, witnesses may be heard with the express consent of the other party by reminding the above provisions. The plaintiff relied on "all kinds of legal evidence" in his petition, but did not mention the oath in the evidence list dated 22.10.2008. Since the plaintiff could not prove his case, it should be decided that the title deed cancellation and registration request should be rejected.”

1\. Legal Department 2016/12114 E., 2019/4759 K. 23.09.2019 T._

"As for the concrete incident, although the court decided to reject the case; ..., whose signature was on the document titled "contract of faith" dated 01.10.2007 signed between the plaintiff and the non-litigator..., was heard as the plaintiff's witness, he accepted his signature in his declaration and said that the transaction between the plaintiff and the plaintiff was a fiduciary transaction, that he did not pay any price, that his purpose was to receive and give trust entirely, so there is no hesitation when it is a fiduciary transaction between the plaintiff and the non-litigator..., and the non-litigator who received an assignment from... As it is understood that … is the son of the plaintiff, the out-of-lawyer … who received an assignment from … is the nephew of the plaintiff and the defendant, and the defendant … who received an assignment from … is the brother of the plaintiff; it is clear that the defendant is in the position of the person who knew or should have known about the fiduciary transaction and will not benefit from the protection of Article 1023 of the Turkish Civil Code. That being the case; "While it should be decided to accept the case, it is not right to make a written decision with a wrong evaluation."

4\. Legal Department 2021/15002 E., 2021/7594 K. 26/10/2021 T._

"The immovable property in question was sold by the defendant debtor to the defendant third party ... on 18.02.2014. The defendant ... submitted a written contract of faith dated 30.04.2008, stating that the immovable property belonged to him before, that it was sold to the debtor on 30.04.2008 due to his uncle's son ...'s need for money, and that a loan was taken from the bank, and that he took over the real estate again on 14.02.1018 when the loan debt was completed. In order for the contract of faith to be valid, it is sufficient that it be in writing and it does not need to be made officially. It has been documented that a loan was taken from Yapı ve Kredi Bankası on 01.05.2008 and a mortgage was placed on the real estate, the loan was delivered to the defendant ... from the debtor's bank records and the loan debt was paid off by regularly sending the loan debt to the debtor's account by the company belonging to the relative of the third party. With this written supporting evidence, the contract of faith is also binding on third parties. The required proof conditions have been met. In this case, since it has been established that the transfer made to the defendant ... was not for the purpose of smuggling property, it should be decided to reject the case in terms of this defendant, but giving a written decision with an incorrect evaluation is against the procedure and law."

1\. Legal Department 2021/8202 E., 2022/3242 K. 19/04/2022 T._

"The 10-year forfeiture period specified in Article 12/3 of the Cadastral Law No. 3402 has passed in terms of the real estate numbered 3 parcels, and the plaintiff has not been able to prove his fiduciary transaction claim with written evidence in accordance with the Jurisprudence Unification Decision No. 20/6 dated 5.2.1947, and that the issue of attorney's fee, which is not related to public order and has not been appealed, cannot be appealed in terms of the real estate numbered 4 parcels." There is nothing wrong with making a decision in writing, taking into account the

1\. Legal Department 2021/10653 E., 2022/2378 K. 23/03/2022 T._

“Although the legal cause of the case was defined by the First Instance Court as the invalidity of the legal transaction due to illegal registration; in terms of the way the claim is put forward, the parties' statements and the scope of the file, the case is related to the claim for compensation based on the legal grounds of fiduciary transaction and fraud. Considering that the plaintiff did not submit written evidence or the beginning of evidence regarding the fiduciary transaction, nor did he rely on oath evidence in the petition, it is clear that the plaintiff failed to prove his claim.”

7\. Legal Department 2021/2241 E., 2022/1107 K. 16/02/2022 T._

"As for the concrete case; the bank receipt sent from the bank was accepted as the beginning of written evidence, and the case was accepted by hearing witnesses, even though there was no contract sought to prove the claim. However, as stated above, in order for a document to be accepted as the beginning of written evidence, it must be from the hand of the adversary, not by a third person. Therefore, it is not possible to accept bank receipts as the beginning of written evidence. As a result, the case cannot be resolved by referring to the words of witnesses. However; The plaintiff also relied on oath evidence in the petition and evidence list. First of all, the plaintiff should be reminded of this right, and the issue of whether there is a fiduciary transaction according to the oath he will direct to the defendant, who is a party to the fiduciary transaction, should be emphasized.”

1\. Legal Department 2021/2530 E., 2022/1236 K. 16/02/2022 T._

"Considering that the power of attorney and the dismissal do not constitute the beginning of evidence, that there is no written evidence or a document that constitutes the beginning of evidence within the scope of the file, and for these reasons, witnesses cannot be heard to prove the claim of fiduciary action, there is nothing wrong in making a written decision."

You can forward any questions you have regarding the faith contract to our office below.

Av. Mehmet Yücesoy

İzmir Attorney & Legal Consultancy