Preventing the division of agricultural lands is important in preserving quality in the sector and ensuring the continued contribution of agriculture-related income to the domestic economy. As a result, every positive step taken in the agriculture sector creates a similarly positive movement in the economy. Among the most important steps taken in this regard in Turkey were the 2014 amendments to the Law on Soil Protection and Land Use No. 5403, including to the definitions of “minimum agricultural land size” and “agricultural land size of sufficient income,” affecting the division of inherited agricultural land and transfers of ownership of agricultural lands with designated sizes.
The 2014 Law on the Amendment of the Law No. 6537 requires that inheritors of agricultural land after May 15, 2014 who are unable to agree on the transition process of that land within one year of the previous owner’s death do so in court. Within that one year, inheritors can decide to transfer the ownership of the agricultural area to one or more of the inheritors, a family partnership, a limited liability company they have established, or even a third party. When making this decision, however, the rules about “minimum agricultural land size” and “agricultural land size of sufficient income” – both established to protect the value of agricultural land from being diminished via over-division – should be taken into account.
Article 8/A of Law No. 5403 regulates that agricultural lands cannot be divided more than the minimum land size designated as “agricultural land size of sufficient income.” Additionally, it is not possible to increase, in the land registry, the amount of shares or the number of shareholders in land qualifying as “land size of sufficient income,” although there is no prohibition against transferring shares to another current shareholder or to a third party.
Responsibilities of Inheritors Regarding the Transfer of Agricultural Lands and the Legal Consequences of Not Fulfilling These Responsibilities
If inheritors do not reach a settlement regarding the transfer of ownership and none of the inheritors requests the transfer of ownership of the inherited agricultural land from a competent civil court of first instance within one year after the previous owner’s death, the Ministry shall extend the period to do so by an additional three months. If transfer procedures are not completed within this period, a lawsuit can be filed by the Ministry ex officio and exempt from any court expense against the inheritors. In this lawsuit, the court can decide to transfer ownership of agricultural income to a competent inheritor, taking into account in its analysis potential inheritor’s personal skills and abilities, whether they are living off the agriculture sector, and if they have agricultural lands besides the one at issue. If there are no competent inheritors, the court will transfer the ownership to the highest bidding inheritor; if no inheritors want to claim the land, the land can be put up for auction to third parties.
In determining who is a “competent inheritor,” conditions set out in regulations promulgated by the Ministry of Agriculture are taken into account. These regulations set out a point evaluation system, such that inheritors with 50 points or more are considered to be competent inheritors.
If an increase occurs in the value of a part or all of the “agricultural land with sufficient income” due to non-agricultural usage within 20 years after the transfer of ownership to an inheritor, the material value of the land at the time of transfer is recalculated, taking the date at which the non-agricultural use of the land was allowed into account. The difference in value between the two rates is paid to inheritors in accordance with their shares by the inheritor who acquired the land with the transfer. For deaths occurring before May 15, 2014, transfers which have not been completed yet should be completed in accordance with the articles of the previous law.
The importance of these regulations is undisputable when dividing agricultural lands by inheritance, taking into account the decrease in agricultural land use efficiency and the potential damage to the economy are taken into account. However, difficulties in interpreting the law and criticisms that the regulations are impractical show that there will be legal obstacles to overcome for applications within the context of Law No. 5403. For this reason, parties involved in such matters are advised to seek legal advice in order not to face any forfeiture.
By Demet Yilmaz Utkaner, Executive Partner, and Zuhra Acar, Senior Associate, Sezer & Utkaner
This Article was originally published in Issue 6.5 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.