Recent developments
The decision of the Constitutional Court of the Republic of Türkiye (the “Constitutional Court“) dated 16 July 2026 and numbered E. 2026/23, K. 2026/162 (the “Decision“) was published in the Official Gazette No. 33422 dated 6 November 2026. The Decision annulled the requirement under Article 734(2) of Turkish Civil Code No. 4721 (the “TCC“) to use the court-determined market value, rather than the sale price, when exercising the statutory right of pre-emption. The annulment will take effect nine months after the publication of the Decision in the Official Gazette.
The Decision is available here (in Turkish).
Statutory Framework Governing the Right of Pre-emption
The statutory right of pre-emption is governed by Articles 732 to 734 of the TCC. Accordingly, where a co-owner sells all or part of its share in a property subject to co-ownership to a third party, the other co-owners are entitled to exercise a statutory right of pre-emption. The right is exercised by bringing an action against the purchaser.
The consideration payable upon the exercise of the right of pre-emption is governed by the second paragraph of Article 734 of the TCC, which was amended by Law No. 7571 dated 24 December 2025 (“Law No. 7571“). Prior to the amendment introduced by Law No. 7571, the consideration payable upon the exercise of the right of pre-emption was the sale price of the relevant share. Following the amendment, the applicable consideration became the market value to be determined by the court.
In this context, pursuant to the second paragraph of Article 734 of the TCC, (i) the court is required to determine the market value of the share subject to the proceedings without delay, and (ii) the holder of the right of pre-emption is required to deposit in cash the market value so determined, together with the title deed expenses attributable to the purchaser, at the place designated by the court for accrual of interest and within the final period granted by the court. If the holder of the right of pre-emption fails to deposit these amounts within the final period, the court may not order the registration of the share in the name of the holder. Once the judgment becomes final, the deposited amount is paid to the relevant party together with the interest accrued thereon.
Law No. 7571 also introduced Provisional Article 1 to TCC, providing that the amendments to Article 734 would apply to proceedings commenced before the effective date of those amendments, whereas the amendments to Article 733 would not apply to sales completed before their effective date.
Key Aspects of the Decision
The Constitutional Court stated that the provisions governing the statutory right of pre-emption concern the property interests of the seller, the purchaser and the holder of the right of pre-emption, and that a fair balance must be struck between these interests in accordance with the State’s positive obligations.
In this context, the Constitutional Court emphasized that the right of pre-emption is based on the holder of that right assuming, without modification, the terms of sale accepted by the third-party purchaser. Accordingly, the terms of the sale agreement remain unchanged, with only the identity of the purchaser being replaced.
The Constitutional Court concluded that taking market value as the applicable consideration disturbs this balance. According to the Constitutional Court, applying the market value determined during the proceedings instead of the sale price freely agreed by the parties to the sale transaction results in the right of pre-emption being exercised at a price different from that stipulated in the sale agreement. If the market value exceeds the sale price, the purchaser may obtain an unjustified benefit; if the market value is lower than the sale price, the purchaser may suffer a loss. Furthermore, the holder of the right of pre-emption would only become aware of the amount payable once the market value has been determined during the proceedings.
In practice, since the sale price is freely determined by the parties and title deed fees are calculated on the basis of the declared sale price, the sale price may be declared at an amount lower than the price actually agreed between the parties in order to reduce the applicable title deed fees. This practice has historically given rise to disputes where a statutory right of pre-emption is exercised on the basis of the declared sale price. In addition, particularly in an environment where inflation has significantly exceeded expectations in recent years, purchasers of shares in properties subject to co-ownership may suffer a substantial economic loss if the right of pre-emption is exercised long after the sale on the basis of the original sale price.
Against this background, determining whether the statutory right of pre-emption should be exercised on the basis of the sale price or the market value at the time the right is exercised necessarily requires a balance to be struck between the interests of the holder of the right of pre-emption and those of the purchaser. By annulling the market-value mechanism, the Constitutional Court adopted an approach that gives greater weight to the purchaser’s property interests and the parties’ contractual autonomy, in particular the preservation of the terms, including the price, originally agreed under the sale agreement. However, unless the legislature introduces a new mechanism during the nine-month transition period, the practical issues arising from understated declared prices and the erosion of the sale price due to inflation may remain relevant in future pre-emption disputes.
On these grounds, the Constitutional Court annulled the phrase “market value” in the second paragraph of Article 734 of the TCC, which required market value to be taken as the basis for the exercise of the right of pre-emption, on the grounds that it was contrary to Articles 5 and 35 of the Constitution. The phrases “without delay” and “final period”, as well as the remainder of the second paragraph, were also annulled as they could no longer be applied following the annulment of the phrase “market value”. In addition, paragraph 2 of Provisional Article 1, which provided that the amendments to Article 734 of the TCC would apply to proceedings commenced before the effective date of those amendments, was also annulled.
The Constitutional Court held that the immediate entry into force of the annulment would result in a regulatory gap that could adversely affect public interest. It therefore ruled that the annulled provisions would cease to have effect nine months after the publication of the Decision in the Official Gazette, on 6 August 2027.
Conclusion
The Decision is significant for transfers of properties subject to co-ownership. The existing system based on market value will remain applicable until the annulment takes effect. Following that date, the second paragraph of Article 734 of TCC will cease to have effect. Accordingly, developments during the nine-month transition period should be closely monitored in relation to sales of shares in co-owned properties and existing or potential disputes concerning statutory rights of pre-emption. Whether the legislature will introduce a new provision during this period, and the principles on which the consideration payable upon the exercise of a right of pre-emption will be determined, will have a material impact on transaction processes and litigation strategies.
