New Regulation Granting Heirs Priority in Sales to End Co-Ownership Has Entered into Force

Law No. 7589 on Amendments to Certain Laws to Improve the Effective and Efficient Functioning of the Judiciary was published in the Official Gazette on 31 July 2026 and has entered into force. The Law introduces significant changes to the auction procedure for court-ordered sales to end co-ownership, particularly for real property inherited by heirs. This amendment to Article 114 of the Enforcement and Bankruptcy Law No. 2004 changes the auction procedure applicable to inherited real property for which a court has ordered a sale to terminate co-ownership following legal proceedings (ortaklığın giderilmesi davası) initiated to eliminate the existing co-ownership relationship. The new regulation will not apply to auctions for which the announcement was made before 31 July 2026.

Under the previous regulation, such real properties were generally sold through a public auction open to all bidders, allowing third parties to participate and purchase the real property.

Pursuant to the new amendment, the first auction will be limited to the heirs who are registered as co-owners, provided that all ownership interests were acquired through inheritance and no third party holds an ownership interest in the real property. If the property is not sold at the first auction, a second auction will be held under the general rules, allowing third parties to participate. The heirs-only auction applies only to the first auction.

For the sale to be completed at the first auction, the highest bid must exceed the 100% of the appraised value of the real property. If this requirement is not met, or if the sale cannot be completed for any other reason, the real property will proceed to a second auction under the general rules, allowing third parties to participate.

The amendment further introduces a financial consequence for heirs who fail to complete the purchase. If a successful heir does not pay the purchase price within the prescribed period, that heir’s security deposit will not be refunded. After deducting the costs of the sale, the remaining amount will be distributed among the other co-owners in proportion to their ownership shares. Additionally, the successful heir who fails to pay the auction price within the prescribed period will also be subject to an administrative fine equal to 5% of the amount of the bid submitted.

The new amendment is intended to preserve family ownership by giving heirs the first opportunity to acquire inherited property among themselves before it is offered to third parties. However, heir co-owners who intend to participate in the first auction should ensure that they have the necessary financing in place. Failure to pay the purchase price on time may result in the loss of the security deposit.