Introduction

This study includes an analysis of Supreme Court decisions regarding the termination of construction contracts in exchange for land shares, particularly due to the contractor’s delay, where the landowner has multiple individuals. The study aims to clarify fundamental legal questions such as who can exercise the right of termination and how, the legal nature of a single co-owner’s attempt to terminate, the consequences of collective termination, and the termination procedure (via notary or lawsuit), in light of the presented Supreme Court decisions. The analysis details the role of co-ownership provisions in contract termination and the procedural requirements that arise in this process.

1. Exercise of Termination Authority: Unanimity Requirement (TCC Art. 692)

A fundamental principle consistently emphasized in Supreme Court decisions is that the termination of a construction contract in exchange for land shares is subject to the co-ownership regime and must be evaluated within the scope of Article 692 of the Turkish Civil Code (TCC). This article stipulates that dispositional acts concerning the entire co-owned property are subject to the consent of all co-owners, unless otherwise agreed by unanimous decision. The Supreme Court considers the termination of the contract as an act of this nature.

The 15th Civil Chamber of the Court of Cassation (2008/1673 E., 2009/2655 K.) has clearly stated this situation as, “since the request for termination constitutes an extraordinary transaction concerning the entire co-owned property, the unanimity of all co-owners is mandatory.” Similarly, the 23rd Civil Chamber of the Court of Cassation (2016/3652 E., 2016/3888 K.) also stated that the request for termination “is one of the extraordinary management acts concerning the co-owned property, and therefore, the termination lawsuit must be filed jointly by all co-owners and the land owners who signed the contract.”

These decisions clearly demonstrate that a single land owner cannot make a legally valid declaration of intent to terminate the contract without the consent or participation of the other co-owners.

2. Termination Procedure: The Role of Lawsuit and Notary Procedures

Court of Cassation decisions unequivocally state that construction contracts in return for land share cannot be terminated by a unilateral declaration of intent. The rule for termination is a court decision.

The General Assembly of Civil Chambers of the Court of Cassation (2021/108 E., 2022/1929 K.) affirmed this principle in its decision, stating, “A construction contract in return for land share… cannot be terminated by a unilateral declaration of intent; the parties’ intentions must align regarding termination, or termination is possible with a court decision. If the parties’ intentions do not align regarding termination, a judge’s decision is absolutely necessary.”

Termination notices sent via a notary public do not unilaterally terminate the contract. While these notices are acts that communicate the intention to terminate to the other party and enable legal consequences such as default, the contract remains in effect if the contractor does not accept the termination. In this case, it becomes mandatory for the landowners requesting termination to file a lawsuit. However, if the parties agree on termination (consensual termination), this can also be documented with a deed of termination drawn up by a notary public. But in case of a dispute, the only recourse is the court.

3. Consequences of Termination Attempts

a) Consequences of a Single Person’s Termination Attempt: A termination attempt by a single shareholder is ineffective from the perspective of both substantive law and procedural law.

From the Perspective of Substantive Law: The contract remains in effect. As stated by the 15th Civil Chamber of the Court of Cassation (2011/2775 E., 2012/830 K.), if the termination notice is not sent by all shareholders and is opposed by the contractor, consensual termination does not occur, and the contract remains in effect.

From the Perspective of Procedural Law: A termination lawsuit filed by a single party is procedurally dismissed due to “mandatory joinder of parties”. Instead of immediately dismissing the case, the court grants the plaintiff time to obtain the consent of other shareholders or to include them as defendants in the lawsuit. In the decision of the 6th Civil Chamber of the Supreme Court (2021/1277 E., 2022/2349 K.), this situation was expressed as, “it was not correct to render a judgment by evaluating the merits of the case without ensuring proper party formation.“

b) Consequences of Collective Termination: In a lawsuit filed with the participation of all shareholders, the court examines the material conditions for termination. If there is a valid reason, such as the contractor’s default, the contract is decided to be terminated. The consequences of termination vary according to its nature:

Retroactive Termination: This is the type of termination applied as a rule. As stated by the 23rd Civil Chamber of the Supreme Court (2013/3436 E., 2013/5497 K.), the principle in retroactive termination is that “the parties are restored to their financial status as of the date the contract was made.” In this case, the contractor cannot receive a land share proportionate to the construction completed; however, they may claim the cost of the beneficial construction made according to unjust enrichment provisions. The landowners, on the other hand, reclaim the title deeds they transferred to the contractor.

Prospective Termination: It is an exceptional remedy applied out of fairness in cases where construction is largely completed (e.g., 90% or more) but deficiencies exist. In this case, the contract is considered valid until the date of termination, and the contractor is entitled to a share of the land proportional to the extent of completion. Yargıtay 6. Hukuk Dairesi (2022/447 E., 2023/2421 K.) decision detailed how liquidation should be carried out in the event of prospective termination.

Conclusion

Supreme Court precedents are extremely clear that the termination of construction contracts in exchange for land shares, where there are multiple landowners, is subject to a unanimous decision by all co-owners. This rule, based on Article 692 of the Turkish Civil Code (TMK), characterizes the termination as an “extraordinary disposition” and renders the will of a single co-owner insufficient. Unless there is an agreement between the parties, termination must be carried out not by a unilateral notification, but necessarily through a lawsuit filed in court. A single co-owner’s attempt at termination does not end the contract, and any lawsuit they file will be procedurally flawed due to “mandatory joinder of parties.” However, a valid termination carried out with the participation of all co-owners generally produces retroactive effects, restoring the parties to their pre-contractual situation. A suggested article.

Why is Expert Legal Support Necessary?

The termination process in construction contracts in exchange for land share requires the unanimous consent of all shareholders according to Article 692 of the Turkish Civil Code, and, according to Supreme Court precedents, necessitates a technical process carried out by a court decision. Therefore, a termination attempt made by a single shareholder remains both procedurally deficient and does not legally terminate the contract.
In these types of land share disputes, frequently encountered in regions such as Istanbul, Tuzla, Kartal, Gebze, Tepeören, Bayramoğlu;

Title deed transfer,

Termination lawsuits,

Construction progress rate,

For the correct execution of matters such as default and liquidation calculations,
working with an Istanbul lawyer experienced in real estate law is of great importance. Expert legal support both ensures the validity of the termination process and eliminates the risks of material loss of rights or procedural errors.