This is the English version of a Turkish article. The original, with further detail and linked petition templates, is at Kat Karşılığı İnşaat Sözleşmesi: Arsa Sahibinin Riskleri.
Because it involves the transfer of ownership of immovable property, a construction contract in return for a share of the flats is not valid unless made as a notarial deed. A contract signed as an ordinary written document is as a rule invalid. And where the contract contains no delivery date, no delay penalty and no completion security, a landowner faced with a contractor who falls behind has nothing to rely on.
You hand over your land to a contractor and receive flats in return. It is one of the commonest contracts in Turkey — and one of the most litigated.
This article explains the required form, what can be done where there is delay or abandonment, and how a landowner protects themselves.
How Must the Contract Be Made?
This is a mixed contract: partly a contract for work, partly a promise to sell immovable property.
Because of that second element, making it as a notarial deed is a condition of validity. An ordinary written contract is as a rule invalid.
That said, where an invalid contract has been substantially performed, relying on its invalidity may be treated as contrary to the rule of good faith. But that outcome is risky and varies with the file; the safe course is to comply with the required form.
The contract should also be annotated on the land register. The annotation lets the landowner rely on their right against third parties and reduces the risk of the contractor transferring the land to someone else.
What Must the Contract Contain?
- The division and which units go to whom. State expressly whether the units will be allocated by lot after the construction servitude is created, or by a list agreed in advance. “Forty per cent to the landowner” is not enough.
- The delivery date and the delay penalty. A firm delivery date and a sum payable for each month of delay. Indexing the penalty to the market rent is common and effective.
- The specification schedule. Phrases such as “first-class materials” generate disputes; brands, models and standards should be written in.
- Rent assistance. The sum payable to the landowner during construction and the payment schedule.
- Security. A bank guarantee, or a mortgage over the units allocated to the contractor.
- A prohibition on assignment. Making any transfer of the contract or of the contractor's shares conditional on the landowner's written consent.
- A staged schedule for transferring title. The land shares should pass to the contractor in stages — foundation, structural completion, occupancy permit — rather than all at once.
That last point is the most important protection of all: transferring every share at the outset leaves the landowner defenceless.
| Clause | If it is missing |
|---|---|
| The division and which units go to whom | A dispute arises on delivery |
| Delivery date | The date of default cannot be fixed |
| Delay penalty (daily or monthly) | Loss has to be proved separately |
| Specification of materials | A claim for defective construction is weakened |
| Completion security or mortgage | No protection if the contractor abandons the work |
| The stage at which title passes | Early transfer exposes the landowner |
| Prohibition on assignment | The contractor may transfer the contract to a third party |
| Rent assistance | The landowner bears the cost of housing while out of the property |
The contract must be made as a notarial deed and annotated on the land register; both steps protect the landowner against third parties.
What If the Contractor Falls Behind?
Where a firm delivery date was agreed, the contractor falls into default when it passes, without any notice being required. If it was not, a formal notice must first be sent through a notary.
What can then be claimed:
- the agreed delay penalty, claimable without proving loss
- rent lost for the period of delay, where the penalty does not cover it
- performance and compensation for delay, keeping the contract alive
- rescission and damages, where the delay is serious enough
Rescission is a serious step: the work already done, the land shares already transferred and the position of third parties who have bought units all have to be unwound. Take advice before choosing it.
What If the Contractor Abandons the Work?
This is the worst case, and it is why the security clauses matter. The steps:
- Send a notarial notice giving a period to resume the work, and record the position.
- Apply for preservation of evidence, so that the stage the construction has reached and its quality are established by the court before anything changes.
- Seek an interim injunction preventing further transfer of the contractor's land shares.
- Bring proceedings to rescind the contract and cancel the title transfers, together with a damages claim.
Where units have already been sold to third parties, their position is assessed separately: a buyer in good faith who has registered title is protected, which is why the staged transfer of title matters so much.
Defective Construction
Where the building is delivered but does not meet the specification, the rules on contracts for work apply. The landowner may require the defect to be remedied, seek a reduction in what the contractor receives, or claim damages.
The period matters: for defects in a building, liability runs for five years, and for twenty years where the contractor is grossly at fault (Article 244 of the Code of Obligations).
Defects should be recorded on delivery, in writing and with photographs, and notified to the contractor within a reasonable time of discovery.
The single clause that protects a landowner most is the staged transfer of title: shares pass as the foundation, the structure and the occupancy permit are completed. Transfer everything at the outset and, if the contractor stops work or sells to third parties, you are left with a damages claim instead of your land.
Frequently Asked Questions
Must the contract be made before a notary?
Yes. Because it involves the transfer of immovable property, it is valid only as a notarial deed. An ordinary written contract is as a rule invalid.
What happens if the contractor is late?
Where a firm date was agreed, default arises automatically when it passes. You may claim the agreed delay penalty without proving loss, and lost rent, or in a serious case rescind the contract and claim damages.
What if the contractor abandons the work?
Send a notarial notice, apply for preservation of evidence, seek an interim injunction against further transfer of the land shares, and bring proceedings to rescind the contract and cancel the transfers.
How long is the contractor liable for defects?
Five years for defects in a building, and twenty years where the contractor is grossly at fault (Article 244).
When should the land shares be transferred?
In stages tied to the progress of the work — foundation, structural completion, occupancy permit — never all at once at the outset.