When a debtor transfers assets to third parties with the intention of avoiding debt, but such transfers are actually “collusive,” the concept of annulment of a fraudulent transaction based on collusion arises.
What Is Collusion?
Collusion occurs when parties execute a legal transaction that does not reflect their true intent, with the aim of deceiving third parties. In other words, although the agreement between the debtor and the buyer appears valid, they do not actually intend to transfer ownership. In practice, this often occurs when a debtor pretends to sell a property to a spouse, sibling, or relative at an artificially low price. Even if the property is transferred, the debtor continues to use it in reality.
Conditions for Filing the Lawsuit
According to Articles 278 and 279 of the Enforcement and Bankruptcy Law, fraudulent transactions may be annulled. A creditor wishing to file such a lawsuit must prove:
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The existence of a valid claim,
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That the debtor acted with the intent to evade debt,
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That the transferee was in bad faith or closely related to the debtor.
Proving collusion is not easy, but it can be demonstrated through indirect evidence such as continued use of the asset by the debtor, transfers contrary to ordinary course of life, lack of payment documentation, and witness statements.
Who Can File This Lawsuit? Which Court Has Jurisdiction?
Anyone who suffers a loss due to the alleged fraudulent transaction may file this action before the Civil Court of First Instance at the debtor’s domicile.
This type of lawsuit is most frequently seen in inheritance disputes. For example, a decedent may transfer a movable or immovable asset to a chosen heir to exclude it from the estate and disguise it as a sale. Another common example is when a decedent hides a donation under a lifetime care agreement. These transfers are considered fraudulent transactions:
“…In inheritance collusion, the decedent and the counterparty usually disguise a donation agreement under the form of a sale or lifetime care agreement. In other words, the decedent and the other party genuinely agree to transfer ownership. However, the nature of the apparent sale or lifetime care agreement is altered by a collusive contract, and an additional hidden donation agreement is arranged. Since the apparent contract’s nature is completely altered, inheritance collusion also constitutes a form of ‘absolute collusion’…” (Supreme Court General Assembly Decision 2017/1-1263 E., 2019/603 K., dated 23.05.2019)
What Do We Do at Sayın Hukuk?
At Sayın Hukuk, to protect creditors’ rights in annulment actions, we:
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Thoroughly examine transactions made by the debtor,
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Investigate the relationship between the debtor and the transferee,
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Collect evidence and prepare strong pleadings,
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Immediately initiate seizure and collection proceedings after an annulment decision.
It should be remembered that fraudulent transactions based on collusion not only harm creditors but also undermine the integrity of the legal system and economic security. For this reason, courts often interpret such cases in favor of creditors to ensure justice.