1. What is a lump sum contract, can the contractor increase the price later?

A lump sum is the total fee definitively determined at the outset for the entire work. Unlike agreements based on per square meter or unit price, if the cost of the work increases, the risk of this generally belongs to the contractor.

In its decision dated 28.03.2012, with file no. 2011/4555 E. and decision no. 2012/1951 K., the 15th Civil Chamber of the Supreme Court of Appeals explained this rule with reference to Article 365 of the repealed Law of Obligations No. 818 as follows: “According to Article 365 of the Law of Obligations, if the fee has been definitively determined in advance, the contractor is obliged to complete the work for this amount, and moreover, even if they have performed more work or incurred greater expenses than initially foreseen, they cannot request any increase.”.

The same rule is found today in Article 480 of the Turkish Code of Obligations No. 6098: If the price has been definitively determined as a lump sum, the contractor cannot request an increase in the price, even if the work requires more labor and expenses than foreseen.

What happens if inflation and material prices increase?

Article 480/2 of the TCO regulates that if circumstances that were unforeseen at the outset or were foreseeable but not taken into account by the parties prevent the completion of the work for a lump sum or make it extremely difficult, the contractor may request from the judge the adaptation of the contract to new conditions, and if this is not possible, the termination of the contract. The general provision for excessive difficulty in performance is also in Article 138 of the TCO. This does not mean that the contractor can increase the price on their own; adaptation is only possible with a court decision and under strict conditions.

The way to prevent disputes in long-term urban transformation projects is to include a measurable price difference clause from the outset in the contract. For example, a formula for increase can be written, linked to a formal index and with an upper limit, only for specific main items (concrete, iron). Otherwise, especially after rough construction, the pressure of “work stops if the difference is not paid” is frequently observed.

Is VAT included in the price?

It should be clearly stated whether the contract price includes or excludes VAT, to whom the difference will belong if the VAT rate changes, and in whose name the invoice will be issued. For the scope of tax and fee exemptions in urban transformation: Which Taxes Will I Never Pay in Urban Transformation?.

2. Is the cost of illegal or non-project compliant construction paid?

The same Supreme Court decision draws an important boundary for unlicensed or non-project compliant constructions. The decision reminds of zoning rules related to public order, stating “Only the demolition of such structures without economic value can be requested” and “Despite this, it was not appropriate to determine a construction cost for illegal structures and rule for partial acceptance of the case.”

For the owners, the outcome is twofold: The contractor cannot demand payment for additional floors, enclosed balconies, or roof additions made contrary to the project; but these constructions also prevent the obtaining of the occupancy permit. Therefore, the contract should include the provision “all stages of the work will be carried out in accordance with the approved project, license, and zoning regulations; all consequences of non-compliance belong to the contractor”; owners should also not request constructions contrary to the project, such as “an extra room”; even if such requests are in writing, they should not serve as a basis for the contractor.

3. Which work items should be listed individually in the contract?

In a contract for work, the contractor is only responsible for the tasks undertaken in the contract. In the decision of Istanbul Anatolian 2nd Civil Court of Commerce, dated 17.05.2018, file no. 2016/40 E. – 2018/568 K., the importance of specifically listing the obligations in the protocol was emphasized, and it was indicated that actions such as “determining the feasibility of the construction cost estimate, obtaining a report for buildings that have completed their economic life under Law No. 6306, obtaining a dilapidation report, and preparing draft projects” should be shown individually at the beginning of the process.

In a contract where the land share is not transferred, the following items should be listed individually, indicating whose responsibility they are and whether they are included in or excluded from the price:

4. Can we demand services from the contractor that are not specified in the contract?

Generally no. In the decision of the 15th Civil Chamber of the Court of Cassation, dated 26.03.2015, with file no. 2014/3231 E. – 2015/1557 K., the construction relationship established by accepting an offer without a written contract was examined, and it was stated that “the work involving the construction of wooden verandas and their roof coverings on villa balconies, as well as railings on balcony edges, carried out by accepting the contractor’s offer within the scope of the construction contract for the villas specified above, is not the contractor’s responsibility, nor is there any commitment by the contractor to obtain an occupancy permit.”

This decision contains two warnings: Firstly, starting work with an offer letter or verbal acceptance leads to the exclusion of works expected by the owners. Secondly, if the obligation to obtain an occupancy permit is not explicitly written in the contract, it generally cannot be demanded from the contractor. In urban transformation, the most expensive surprises usually arise from these “unwritten” items.

5. Should it be written as turnkey delivery, or delivery with an occupancy permit?

Only writing “turnkey delivery” in the contract without including an occupancy permit condition leads to the delivery date being determined by actual delivery. The 6th Civil Chamber of the Court of Cassation clearly makes this distinction.

The 6th Civil Chamber of the Supreme Court of Appeals, in its decision dated 10.07.2024, numbered 2023/485 E. – 2024/2520 K., stated “Since there is no condition for key delivery and occupancy permit in the contract subject to the lawsuit, the date when the independent sections were actually delivered to the plaintiff landowner should be investigated.” If there is an occupancy permit condition in the contract, the situation changes:

Therefore, the contract should include the provision: “delivery shall be deemed to have occurred on the date the building occupancy permit is obtained.” Thus, delay compensation, the final payment installment, and defect notification periods are tied to this date. Since electricity, water, and sewage services are not permanently provided to a building without an occupancy permit according to Article 31 of the Zoning Law no. 3194, an occupancy permit is also a condition for actual habitation. For the process: Title Deed and Occupancy Permit Procedures.

6. How should the payment plan be established, and when is the price paid?

According to Article 479 of the Turkish Code of Obligations, unless otherwise agreed, the work price becomes due at the moment of delivery of the work. In other words, the law does not foresee the owner making a payment before the work is done; advance or scheduled payment is only possible through a contract. This is a rule that strengthens the owners’ hand in negotiations.

The accepted method in practice is to link payments not to the calendar, but to the actually completed stages of the work. In the ‘Yarısı Bizden’ (Half from Us) campaign, grants and loans are paid to the contractor on behalf of the beneficiaries in stages (30% at the start of work, 30% at the completion of the structural system, 30% at the plastering stage, 10% upon obtaining the occupancy permit).

7. Who pays for infrastructure participation fees, duties, and connection fees?

Fee and charge exemptions provided in urban transformation are not unlimited; some public fees remain outside the scope of exemption. If it is not specified who will pay these, the contractor may demand these items from the owners at the end of the work, claiming they are “outside the contract.”

The 6th Chamber of the Council of State, in its ruling dated 16.09.2020, numbered 2019/20539 E. – 2020/7699 K., made the assessment “The infrastructure participation fee requested under Law No. 3194 is not among the fees exempted under Law No. 6306.” However, the same decision also ruled that this fee cannot be unilaterally imposed by the administration through zoning plan notes: “In transactions related to the regulation of an obligating procedure, such as an infrastructure participation fee, under Article 23 of Law No. 3194, through zoning plan notes and its demand from owners or contractors, compliance with law and legislation has not been observed.”

What did the Constitutional Court’s annulment decision regarding Article 23 of Law No. 3194 change?

With the Constitutional Court’s decision dated 03.06.2025, numbered 2024/211 E. – 2025/123 K. (Official Gazette 13.10.2025/33046), the phrase in the first sentence of the second paragraph of Article 23 of Zoning Law No. 3194, concerning areas where the parceling plan has been approved but the technical infrastructure has not yet been built, stating that building permits shall also be granted to those who pay 25% of the technical infrastructure fee in advance and undertake to pay the remaining 75% within six months at the latest after the infrastructure service is completed, has been annulled. The Court found the lack of criteria for calculating the infrastructure fee in the law to be unconstitutional in terms of the right to property and the principle of limiting fundamental rights by law (Articles 13 and 35 of the Constitution). The decision was published in the Official Gazette on 13.10.2025, and the annulment provision entered into force nine months later, on 13.07.2026.

This development has rendered the legal basis of infrastructure fee claims, which were based on the annulled provision, debatable. Whether the legislative body has made a new regulation after the annulment and the current practice of the relevant municipality should also be checked before the license application.

What kind of clause should be written in the contract?

• Building permit fee, infrastructure participation fees, parking fee, water–sewerage–electricity–natural gas connection and subscription fees must be listed individually, and it must be specified whether each is included in or excluded from the lump sum price.
• It should be taken into account that exemptions are limited to 1.5 times the existing construction area under Article 7 of Law 6306, and that fees and charges will arise in the area exceeding this.
• It should be regulated who will have the authority to object to an unlawful fee request and to file a lawsuit, and to whom the refund will belong if it has to be paid.

Do common project expenses arise in municipal urban transformation areas?

Separate rules apply in municipal urban transformation and development project areas falling within the scope of Article 73 of the Municipal Law No. 5393. Among the provisions examined and not annulled by the Constitutional Court in its decision dated 18.10.2012, no. 2010/82 E. – 2012/159 K., and still in force, are: the principle that “the method of agreement is fundamental in the evacuation, demolition, and expropriation of structures located in urban transformation and development project areas”; the rule that “property owners to whom separate blocks or parcels are allocated, and property owners remaining outside expropriation, are obliged to participate in the common project expenses in proportion to the total square meters of the construction they own”; and the sanction that “a building permit cannot be issued, nor an occupancy permit for the constructed buildings, and water, natural gas, and electricity cannot be connected without the common project expense being paid”. If your building is in such an area, the amount of the common project expense and who will pay it should be clarified before the lump sum is calculated.

8. What are the owner’s rights in case of delay, incomplete work, or defect?

• Late start or delay: If the contractor does not start the work on time or delays it contrary to the contract, the employer can withdraw from the contract without waiting for the delivery date (TCO Art. 473). Furthermore, a daily or monthly penalty for delay should be stipulated in the contract.
• Reduction of the penal clause: A contractor who is a merchant cannot, as a rule, request the reduction of a penal clause on the grounds that it is excessive, in accordance with TCC Article 22. This makes the penal clause an effective tool against contractor companies. We have also addressed this issue from the owner’s perspective: If the Landowner Terminates the Construction Contract, Is He Obligated to Pay the Penal Clause?.
• Defect: After delivery, the work must be inspected, and defects must be reported to the contractor within a reasonable time (Turkish Code of Obligations Art. 474). The owner may choose one of the rights: rescission of the contract, price reduction, or repair at the contractor’s expense (Turkish Code of Obligations Art. 475). However, since the work was built on the owner’s immovable property and its removal would cause excessive damage, the right to rescind the contract generally cannot be exercised for the building (Turkish Code of Obligations Art. 475/3); in practice, price reduction or repair comes into consideration.
• Limitation Period: Lawsuits to be filed due to defects in immovable structures are subject to a limitation period of five years from the date of delivery, or twenty years if the contractor has gross negligence (Turkish Code of Obligations Art. 478).
• Owner’s Right to Unilateral Termination: Before the work is completed, the owner may withdraw from the contract by paying the price of the work performed and all damages of the contractor (Turkish Code of Obligations Art. 484). In this way, the owner pays all damages of the contractor, including loss of profit; if there is a just cause for termination, the justified termination route should be taken instead of Art. 484, in which case the contractor cannot claim lost profit.

For the conditions and risks of unilateral termination of the contract: Can a Construction Contract in Return for Land Share Be Unilaterally Terminated?.

9. Why Is Expert Legal Support Necessary?

The protection of property owners in a lump-sum urban transformation contract depends not on the number of pages in the contract, but on the clauses it contains. The price difference formula, the complete inclusion of work items and the list of specifications, linking delivery to the occupancy permit, dividing payments into stages, and the sharing of public charges are topics that become subjects of dispute later if not explicitly written into the contract; the judicial decisions examined clearly demonstrate this risk. Drafting these clauses with a lawyer specializing in construction law helps protect property owners from disputes that could last for years.

The Constitutional Court’s annulment decision regarding Article 23 of Law No. 3194 and the Council of State’s jurisprudence concerning infrastructure participation fees indicate that public charges in urban transformation can no longer be considered fixed. The legal basis of a fee demanded by the municipality must be reviewed, and administrative appeals and lawsuits should be pursued if necessary, considering them together with the price and liability clauses in the contract.

2M Law Office provides legal support to property owners in Tuzla, Pendik, Kartal, Maltepe, Ataşehir, Kadıköy, Üsküdar, Ümraniye, Sancaktepe, Sultanbeyli, as well as Gebze, Çayırova, Darıca, Dilovası, and Kocaeli, in the preparation and review of urban transformation contracts, and in resolving disputes with contractors regarding price, incomplete work, and occupancy permits.

10. Frequently Asked Questions

Can the contractor we agreed with on a lump sum request a price increase?

As a rule, no. According to Article 480 of the Turkish Code of Obligations, if a lump sum price is definitively determined, an increase cannot be requested, even if the work costs more than anticipated. In extraordinary circumstances, an adjustment can only be requested from the judge.

Can the contractor stop the work due to inflation?

The contractor does not have the right to unilaterally increase the price and stop the work. If there are conditions for adjustment, they must apply to the court. To prevent such disputes, it is recommended to include an index-linked, limited price difference clause in the contract.

Can I request a work item from the contractor that is not written in the contract?

According to the decision of the Supreme Court 15th Civil Chamber, numbered 2014/3231 E., tasks not explicitly undertaken, including the obligation to obtain an occupancy permit, cannot generally be requested from the contractor. Therefore, all items must be listed individually.

What is the difference between turnkey delivery and occupancy permit delivery?

If the contract includes an occupancy permit condition, turnkey delivery is not considered sufficient, and the burden of proving delivery rests with the contractor (Supreme Court 6th Civil Chamber 2023/485 E.). If there is no occupancy permit condition, the actual delivery date is investigated.

Is an infrastructure participation fee paid in urban transformation projects?

The 6th Chamber of the Council of State stated that this fee is not among the exemptions of Law No. 6306, but cannot be unilaterally imposed through zoning plan notes. With its decision numbered 2025/123 K., the Constitutional Court annulled the phrase ‘25% upfront / 75% commitment’ in the first sentence of Article 23/2 of Law No. 3194, and the annulment came into force on 13.07.2026.

When should we make payments to the contractor?

According to Article 479 of the TCO, unless otherwise agreed, the price becomes due upon delivery. It is recommended that payments be tied to construction supervision-approved progress reports and that the final installment be paid after the occupancy permit is obtained.

Are we obliged to pay for additional construction made contrary to the project?

According to the decision of the 15th Civil Chamber of the Supreme Court of Appeals, numbered 2011/4555 E., the cost of construction cannot be determined for illegal structures that have no economic value; only their demolition can be requested.

11. Legislation and resources

• Turkish Code of Obligations No. 6098 — Art.138, Art.473–480, Art.484
• Turkish Commercial Code No. 6102 — Art.22
• Zoning Law No. 3194 — Art.23, Art.31
• Law No. 6306 — Art.7
• Law No. 5393 on Municipalities — art.73
• Constitutional Court Decision E.2024/211 K.2025/123 (OG 13.10.2025/33046)
• Anadolu Agency – Ministry’s statement regarding the payment stages of the “Half from Us” campaign (12.08.2024)
• Court of Cassation, 15th Civil Chamber, dated 28.03.2012, Docket No. 2011/4555 – Decision No. 2012/1951 · Istanbul Anatolian 2nd Civil Court of Commerce, dated 17.05.2018, Docket No. 2016/40 – Decision No. 2018/568 · Court of Cassation, 15th Civil Chamber, dated 26.03.2015, Docket No. 2014/3231 – Decision No. 2015/1557 · Court of Cassation, 6th Civil Chamber, dated 10.07.2024, Docket No. 2023/485 – Decision No. 2024/2520 · Council of State, 6th Chamber, dated 16.09.2020, Docket No. 2019/20539 – Decision No. 2020/7699 · Constitutional Court, dated 18.10.2012, Docket No. 2010/82 – Decision No. 2012/159
• It is recommended that decision details be confirmed via UYAP before being used in petitions or publications.

This article serves a general informational purpose; rights and obligations in your specific case may vary depending on the content of the contract and the status of the structure. Legislation and case law information has been compiled as of September 2026.