- Introduction
Law No. 7589 Amending Certain Laws to Ensure the Effective and Efficient Functioning of the Judiciary, published in the Official Gazette on 31 July 2026 (“Law No. 7589”), amended the Enforcement and Bankruptcy Law No. 2004 (“İİK”), substantially revising Article 114 governing auction sale procedures and auction conditions. These amendments seek to enact the long-discussed proposal that the first sale in proceedings for dissolution of co-ownership should take place among the co-owners. They cover a broad range of matters, from sales of inherited immovable property and exemptions from security to minimum bids and sanctions for failure to pay the auction price on time.
This briefing examines the amendments to Article 114 of the İİK.
II. Sale Exclusively among Heirs of Inherited Immovable Property
The amendment to the İİK introduces a new procedure where (i) all owners acquired the property by inheritance and (ii) no third parties hold ownership rights, if dissolution of co-ownership by sale is ordered. Following that order, the first auction conducted by the sale officer is held exclusively among the heirs who own the property. This special auction procedure applies only once during the process.
In this special first auction held exclusively among heirs, bids must cover at least 100% of the appraised value. The ordinary rule allowing bids starting at 50% of the appraised value therefore does not apply. The aim is to retain the property within the family without loss of value. At the second auction or sales governed by the general rule, the minimum bid remains 50% of the appraised value.
III. Exemption of the Treasury from Security Requirements
The amendment to point 6 of paragraph 7 of Article 114 expressly exempts the Treasury from providing security at auctions. The existing exemption for the creditor requesting the sale is retained to the extent that its claim covers the required security.
IV. Increased Sanctions for Failure to Pay the Auction Price
New sanctions seek to ensure serious bidding and prevent harm where a successful bidder fails to pay within the statutory period. The highest bidder who fails to pay on time is subject to an administrative fine of 5% of the bid. The fine is imposed by the enforcement office or sale officer conducting the sale and collected under Law No. 6183.
If the successful bidder is the creditor requesting the sale and fails to pay on time, 10% of the appraised value is deducted from its claim. All costs of that sale also remain with the creditor and cannot be charged to the debtor.
If payment is not made, sale costs are first deducted from the security and the balance is paid to co-owners proportionately. If the defaulting bidder is itself a co-owner, the entire security is transferred directly to the other co-owners in proportion to their shares, without deducting sale costs.
V. Entry into Force
Under Article 26 of Law No. 7589, the amendment to the İİK entered into force upon publication. However, under Provisional Article 1 of the same Law, the amendments do not apply to auctions announced before 31 July 2026.
VII. Conclusion
The amendments serve two principal purposes: preventing inherited family property from being sold below value to third parties while giving heirs priority to purchase; and imposing deterrent financial sanctions, including a 5% administrative fine and complete forfeiture of security, on bidders who obstruct or delay auctions through unserious bids. As the amendments apply to auctions announced after 31 July 2026, the date on which litigation or sale procedures began is immaterial.
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