Introduction
This study analyzes, in construction contracts against land share, the landlord’s rights to claim rental compensation due to delay, to request an increase if the rental fee determined in the contract remains low, and to claim other damages arising from the delay, in cases where the contractor fails to deliver the construction within the agreed period, in light of the presented Supreme Court and Regional Courts of Justice decisions. The study aims to reveal the established precedents on this matter, different perspectives, and the scope of claims the landlord can put forward.
1. Right to Claim Rental Compensation Due to Delay
Court decisions emphasize that if the contractor defaults on their delivery obligation, the landlord’s right to claim rental compensation arises from law even if not explicitly stated in the contract. This right is based on the general provisions of the Code of Obligations regarding debtor default.
This situation was clearly stated in the decision of the 15th Civil Chamber of the Supreme Court of Appeals, numbered 2008/4993 E., 2009/4456 K., as: “The landlord’s right to demand rental compensation arising from the contractor’s failure to perform its obligation on time is a right derived from law.” Similarly, the decision of the General Assembly of Civil Chambers of the Supreme Court of Appeals, numbered 2022/448 E., 2023/506 K., has determined the minimum scope of this right: “Even if no delay compensation is specified in the contract; it is possible for the landowner to demand compensation determined at least at the current monthly rent level, to be set according to local market rates, starting from the delivery date within the statute of limitations.”
This compensation can be demanded until the date the construction is delivered completely and in accordance with the contract (usually by obtaining an occupancy permit). However, in cases where the delay is due to the landowner’s own fault (for example, failing to fulfill their obligations such as title transfer), it has also been stated in the decision of the 15th Civil Chamber of the Supreme Court of Appeals, numbered 2019/2101 E., 2019/3280 K., that compensation cannot be demanded for the period during which they were at fault.
2. Increasing the Low Rental Fee Determined in the Construction Contract in Return for Land Share
It is a common situation for fixed amounts, determined as delay compensation in contracts, to become very low over time due to inflation or changes in market conditions. The Supreme Court of Appeals has developed an approach based on the rule of equity and honesty regarding this matter.
In the decision numbered 2008/4993 E., 2009/4456 K. of the 15th Civil Chamber of the Court of Cassation, this principle was explained as follows: “Accepting that a fixed rent agreed upon will be valid even in long-term delays is contrary to the benefit expected by the parties from the contract, the rules of good faith, and equity, for the reasons explained above.” In the decision numbered 2011/515 E., 2011/7200 K. of the same Chamber, it was confirmed that this approach has become settled, with the expression “it was concluded that our Chamber’s practice regarding the application of fixed delay compensation without modification should be abandoned” . According to these decisions, the fixed compensation amount in the contract is considered valid for a reasonable period to be determined by the court (usually the first year), and for delays exceeding this period, compensation is calculated based on the market rent upon the landowner’s request. In some contracts, this issue is resolved from the outset with provisions such as “that the rent equivalent to the market value of that day would be paid” (Yargıtay 15. HD, 2018/966 E., 2018/2576 K.).
3. Construction Contract in Return for Land Share‘s Delay: Other Claimable Items
The landowner’s claims are not limited to rent loss alone. Other prominent claims in the reviewed decisions are as follows:
Cost of Incomplete and Defective Works: This is the most frequently claimed item along with delay compensation. The landowner can demand from the contractor the cost of incomplete and defective works falling within their share, both in their independent sections and in common areas (Turkish Supreme Court 23rd Civil Chamber, 2016/6932 E., 2017/2028 K.).
Penalty Clause: If a penalty clause has been stipulated in the contract separately from delay compensation, this can also be claimed. However, according to the decision of the Turkish Supreme Court 23rd Civil Chamber, numbered 2014/6038 E., 2014/8417 K., if there is no explicit provision in the contract stating that both can be demanded separately, the landowner can claim the full amount of the penalty clause and the rental loss exceeding it (delay compensation).
Termination of Contract and Optional Rights: The contractor’s default grants the landowner optional rights arising from the Code of Obligations. Instead of waiting for performance along with delay compensation, the landowner can waive performance and demand compensation for their positive damages or terminate the contract (Turkish Supreme Court 23rd Civil Chamber, 2013/5231 E., 2013/8063 K.).
Interest: Interest can also be demanded on the delay compensation claim, effective from the date of the lawsuit or enforcement proceedings. Depending on the claim, legal interest, advance interest, or rediscount interest may be requested (First Instance-Konya 4th ATM, 2022/510 E., 2023/355 K.).
Other Damages: The landowner has the right to claim all damages incurred due to the delay and which they can prove. These may include loss of value due to irreparable defects or expenses incurred outside the contract.
Conclusion
Court decisions strongly protect the landowner in build-and-sell agreements (construction contracts in exchange for land share) if the contractor fails to deliver the construction on time. It is established jurisprudence that the landowner has the right to claim the fair market rental value they were deprived of during the delay period as “delay compensation”, even if there is no explicit provision in the contract. In particular, decisions stating that low and fixed compensation amounts agreed upon in the contract are contrary to equity in cases of long-term delays and can be raised to the fair market value by the court constitute an important assurance for landowners. In addition to delay compensation, it is also possible to claim a wide range of other rights, including the cost of incomplete and defective works, penal clauses, interest, and even termination of the contract.
Why is Expert Legal Support Necessary?
Properly asserting claims such as delay compensation, penal clause, cost of incomplete work, and contract termination in build-and-sell agreements requires not only legal knowledge but also significant technical expertise. Even the slightest procedural error in such cases can lead to loss of rights. Especially in rapidly developing urban transformation and housing projects in regions like Istanbul, Tuzla, Tepeören, Orhanlı, Aydınlı, Pendik, Bayramoğlu, and Kartal, the scope of disputes between the contractor and the landowner becomes much more complex.
Decisions of the Court of Cassation also demonstrate that obtaining professional legal support from a specialized land share agreement lawyer during stages such as the calculation of rental compensation, the scope of penal clause demands, the increase of fixed fees to market rental levels, and the execution of liquidation procedures after contract termination, can directly affect the outcome of the lawsuit.
Furthermore, in each specific case, the construction completion rate, special provisions in the contract, the fault status of the parties, and statutes of limitations may vary. Therefore, working with an experienced construction law lawyer from the very beginning of the process ensures the full and complete exercise of rights, full compensation for material damages, and the pursuit of a strong legal strategy during lengthy judicial proceedings.
In conclusion, the professional management of these processes with the support of an Istanbul Tuzla Tepeören Orhanlı Aydınlı Pendik Bayramoğlu Kartal lawyer is of great importance for landowners to protect their investment and exercise their rights most effectively.
