Real estate investment is one of the most popular investment tools in Turkey. However, some concepts and documents encountered in this field can confuse investors. One such concept is the “shared title deed.” In this article, we will discuss in detail what a shared title deed is, its advantages, risks, and the key points to pay attention to.
What is a Shared Title Deed?
A shared title deed is an official document that shows a property belongs to more than one person. In this type of deed, the names and numbers of the property owners are clearly stated, but there is no information on which part of the property each partner owns.
Two Different Applications of Shared Title Deeds
Joint Ownership: In this case, the ownership is not divided into specific shares. All co-owners have a shared right over the entire property.
Fractional Ownership: In this application, the property is divided into specific shares. Each owner has a certain percentage of the property, which is explicitly stated on the deed.
History and Legal Framework of Shared Title Deeds
The concept of shared title deeds has a long history in the Turkish legal system. With the enactment of the Turkish Civil Code in 1926, a legal framework was established regarding the division of ownership rights.
In 2001, amendments were made to regulate shared title deed applications more thoroughly. These regulations were made to address the needs arising from rapid urbanization and the growing population.
Advantages of Shared Title Deeds
Shared title deeds have several important advantages:
Ease of Access: A shared title deed facilitates the easy registration of the property in official records when it is owned by more than one person. This is particularly advantageous for properties acquired through inheritance.
Shared Use: In cases of joint ownership, the entire property is open to the use of all co-owners. This can be especially beneficial in family-owned properties.
Financial Flexibility: A shared title deed allows for entry into real estate investment with smaller budgets. This can be an opportunity for those who want to invest in high-value properties but do not have sufficient capital.
Risk Sharing: Having more than one person as a co-owner of a property means sharing the investment risk. This can be advantageous in large projects for risk management purposes.
Tax Advantages: In some cases, shared title ownership can provide tax advantages. For example, when selling a property, the gain from the sale can be calculated based on the share ratio.
Risks and Disadvantages of Shared Title Deeds
Owning a shared title deed also has several significant risks and disadvantages:
Uncertainty: A shared title deed does not specify which part of the property each owner holds. This can lead to disputes in the future.
Trust Issues: Disagreements and lack of communication among co-owners can lead to trust issues. This can create difficulties in transactions with third parties.
Sustainability Issues: If one of the co-owners passes away, the number of shareholders increases, making property management more complex.
Right of First Refusal: Shared title deed owners have the right to sell their shares to third parties. However, other shareholders have the right to buy the share by paying the sale price. This makes it difficult to sell shares.
Partition Lawsuits: Any shareholder can file a lawsuit to dissolve the partnership. This can result in both time and financial losses.
Risk of Expulsion: A shareholder can be expelled based on the demands of the other co-owners, which can result in the loss of ownership rights.
Difficulty in Obtaining Loans: Banks are generally reluctant to provide loans for properties with shared title deeds. This can make it difficult to secure financing.
Management Challenges: When there are many shareholders, disputes may arise regarding the management, maintenance, and sharing of expenses related to the property.
Things to Consider When Buying a Shared Title Deed
If you are considering purchasing a shared title deed, it is essential to pay attention to the following points:
Legal Status Check: Examine the legal status of the property in detail. Check the deed records, zoning status, and any court decisions, if applicable.
Know the Co-Owners: Try to get to know the other shareholders. Learn about their plans and expectations regarding the property.
Written Agreement: If possible, make a written agreement with the other shareholders. In this agreement, define issues such as the use of the property, sharing of expenses, and the procedure to be followed in the event of a sale.
Professional Help: Buying a shared title deed can be a complex process. Therefore, it is advisable to seek the assistance of a legal expert or real estate consultant.
Future Plans: Evaluate the potential future value and usage possibilities of the property. For example, consider factors like possible changes in the zoning status or the development potential of the area.
Financial Planning: Keep in mind that it may be challenging to obtain a loan for a property with a shared title deed. Plan your finances accordingly.
Transitioning from Shared to Individual Title Deed
In some cases, it may be possible to transition from a shared title deed to an individual one. This process generally involves the following steps:
Agreement: All shareholders must agree.
Zoning Plan: The property must be checked for compliance with the municipal zoning plan.
Parcel Division: The property is divided into parcels according to the shares.
Deed Transactions: Individual title deeds are issued for the new parcels.
This process can be time-consuming and costly, but in the long run, it can provide a more advantageous ownership structure.
Conclusion
A shared title deed is a concept that presents both opportunities and risks for real estate investors. The advantages and disadvantages of this structure can vary depending on your personal situation and investment goals.
If you are considering owning a shared title deed, you should carefully evaluate all these factors and seek the support of an expert lawyer if possible. With the right information and a cautious approach, you can minimize the potential risks of your shared title deed investment and take full advantage of its benefits.
Remember, like every real estate investment, a shared title deed requires careful evaluation and planning. By taking the right steps, you can make the most of the opportunities this type of investment offers.
