Pursuant to Code of Pledge of Turkish Commercial Enterprise numbered 1447, pledge on movables is subject to several terms and conditions such as publicity and specificity of the goods, yet most importantly, handover of the possession.
The essential element of a pledge is handing over of the possession to the pledgee and strictly when the possession is given up, the pledge terminates. Handover of possession being the general rule, there are exceptions stipulated under several codes. These can be counted as pledge on animals (by Civil Code art. 854), hypothecation of ships (by Turkish Commercial Code art. 875, 877, 893-944), hypothecation of mines, right of pledge for the benefit of Turkish Halk Bank, debt collection by means of pledge, right of pledge for the benefit of Cooperative for Agricultural Credit (by Code numbered 1581, art. 13) and right of state for obtaining public receivables (by Code numbered 6183, art. 12). In other words, if certain exceptions to the rule of delivery of possession are set forth under law, it is not mandatory to hand over the possession in order to establish the legal bond of pledging. To state the general rule of establishment without transfer of possession, it is possible for the goods that are movable and are to be registered given a statutory obligation, according to article 940/II of the Turkish Civil Code.
In addition, by means of Turkish Civil Code art. 940/II, it is possible to establish pledge on motor vehicles and heavy equipment without the passing of possession, yet with the registration. This will affect the change in the terminology, which is hypothecation. In fact, motor vehicles should be registered to the traffic registry, as per Highway Traffic Code numbered 2918, art. 19. Furthermore, as per the article 22 of the same code stated above, heavy equipment should also be registered to the relating institution. Heavy equipment is defined under the Code numbered 2918, as below: “… that are vehicles which are utilised for agricultural, industrial, military purposes or constructions or services of institutions, may be in-built with several equipment and cannot be used on highway for transportation of persons, animals and goods.” To conclude, hypothecation for the benefit of the creditor on heavy equipment, which is to be registered, can be founded without the need of delivery of possession to the pledgee.