What to Do If the Contractor Does Not Start Construction? Owners’ Rights, Administrative Termination Process, and Court Decisions
1. Introduction and Legal Framework
The 14th paragraph of Article 6 of Law No. 6306 on the Transformation of Areas Under Disaster Risk grants the administration (Urban Transformation Directorate/authorized administration) the authority to unilaterally terminate contracts to prevent the grievances of owners due to delays caused by contractors in the urban transformation process. According to this provision, after a decision is made by unanimous consent or by an absolute majority of shareholders in proportion to their shares, if construction is not started within one year due to reasons attributable to the contractor, or if construction work is halted and not continued for at least six months with the equipment required to complete the project, owners can apply to the administration with an absolute majority decision.
2. Administration’s Determination and Termination Procedure
Court decisions have clarified the procedure the administration must follow when exercising its authority under this article:
Application and Determination: Upon the application of the owners with a majority decision to the Presidency, the administration conducts an on-site inspection to determine the status of the construction. According to the decisions of the 6th Chamber of the Council of State and the Board of Administrative Litigation Chambers (İDDK), the administration is not obligated to determine in detail “at what level the construction has stopped or which party caused it to stop”; it is deemed sufficient to determine that the construction activity has ceased and that there is a lack of equipment.
Warning Process: If the situation is determined, the contractor is given a period of 30 days and warned to start or continue the work.
Ex Officio Termination: If it is determined that the work has not started or continued at the end of the 30-day period, the contracts are deemed terminated ex officio without the need for any further warning. After termination, the annotations in the land registry are cancelled upon the request of the owners or the administration.
3. Concrete Case Analyses in Light of Court Decisions
Ankara Çankaya Example (Council of State 6th Chamber, 2020/10800 K): A contract was signed in 2016 for the risky building, and the construction reached 85-95% completion but then stopped. In its inspections in 2019 and 2020, the administration determined that no work had been done with equipment for more than 6 months and terminated the contracts after 30-day warnings. The court ruled that the termination was lawful, finding the administration’s on-site inspection and warning procedure sufficient, despite the contractor’s claim of “non-payment”.
Izmir Karşıyaka Example (Council of State IDDK, 2022/1167 K): Contracts were signed with the contractor for the structure demolished in 2016, but construction never began. Upon the application of the owners, the administration issued a 30-day warning in 2019, and when it was determined that work had not commenced by the end of this period, the contracts were terminated. The judiciary confirmed that this practice was in line with the purpose of the Law and public interest.
Istanbul Ümraniye Example (Istanbul 10th Civil Court of Commerce, 2023/777 K): It was determined that construction activities did not continue despite obtaining a building permit in 2017. Upon non-compliance with the warnings issued by the Ministry, the contracts were terminated ex officio. The court accepted that with this termination, the ordinary partnership between the contractors also came to an end.
4. Legal Consequences of Termination
General Legal Provisions: General legal provisions apply to works completed, shares transferred, and payments made up to the date of termination.
Rent Assistance: In accordance with the explicit provision of the Law and judicial decisions, rent assistance payments made by the contractor to beneficiaries up to the date of termination cannot be reclaimed.
Status of Third Parties: The Supreme Court 6th Civil Chamber (2024/2306 K) emphasized that the rights acquired by good faith third parties by relying on the land registry should be protected in terminations based on general provisions. However, in ex officio terminations under Law No. 6306, the removal of annotations is essential upon completion of the administrative process.
5. Information Obtained from Secondary Sources and Additional Context
Secondary Source Note (Council of State, Joint Chambers for Administrative Cases, 2022/3386 K): Contractors claimed that this paragraph was contrary to the freedom of contract and the right to property, and that notarized contracts could not be terminated without a court decision. However, the judiciary rejected these claims, considering the public order objective of urban transformation, and deemed the administration’s authority being subject to judicial review as a sufficient guarantee.
Secondary Source Note (Regional Court of Justice Izmir 14th Civil Chamber, 2022/1767 K): Contractors’ defenses, claiming that the delay was not caused by them (e.g., zoning changes, missing signatures), are frequently put forward during the administrative termination process under Law No. 6306. However, the administrative judiciary tends to consider the cessation of construction activities as a sufficient factual basis to trigger termination.
Secondary Source Note (Supreme Court 23rd Civil Chamber, 2015/4667 K): It is accepted that, within the framework of general legal rules, rental fees paid by the contractor, considering the grievances of the landowners due to the demolition of their houses, do not constitute unjust enrichment and cannot be reclaimed; this situation is parallel to the regulation in Law No. 6306.
6. Evaluation
Court decisions indicate that Article 6/14 of Law No. 6306 grants the administration strong intervention authority to accelerate urban transformation processes stalled due to contractor default. The judiciary oversees the termination process based solely on the facts of “work stoppage” and “failure to commence despite warning,” without delving into the administration’s fault. The liquidation process after termination is left to general legal provisions.
Kentsel dönüşümde müteahhit sözleşmesi tek taraflı feshedilebilir mi?
Evet. 6306 sayılı Kanun’un 6/14. maddesi uyarınca, müteahhitten kaynaklanan sebeplerle inşaata bir yıl içinde başlanmaması veya yapım faaliyetinin en az altı ay süreyle durması halinde, maliklerin çoğunluk kararıyla kentsel dönüşüm başkanlığına veya yetki verdiği idareye başvurulabilir ve idare sözleşmeyi resen feshedebilir.
Müteahhit işe başlamazsa maliklerin doğrudan fesih hakkı var mı?
Malikler doğrudan sözleşmeyi feshetmek yerine çoğunluk kararıyla Bakanlık veya ilgili idareye başvurarak idari fesih sürecini başlatır. İdare inceleme yapar, ihtar süreci işletilir ve şartlar oluşursa sözleşme resen feshedilir.
Resen fesih sonrası müteahhit kira yardımlarını geri isteyebilir mi?
Hayır. Kanun ve yerleşik yargı kararları uyarınca fesih tarihine kadar ödenen kira yardımları geri talep edilemez.
Why is Expert Legal Support Necessary?
The process of terminating construction contracts in exchange for land shares within the scope of urban transformation is an extremely technical and multi-stage legal process that encompasses aspects of administrative law, law of obligations, real estate law, and land registry law. Failure to properly conduct the process can lead to difficult-to-remedy loss of rights for property owners, significant economic damages, and the project being stalled for many years.
Therefore, the termination of urban transformation contracts is not merely a technical procedure; it is a comprehensive process requiring strategic legal management.
Expert legal support is of critical importance, especially for the following reasons:
Ensuring that the majority decision among property owners is made in accordance with the law and that the decision-making process is carried out properly
Preparation of applications to the administration with proper legal justifications and effective follow-up of the process
Legally accurate determination and substantiation of contractor default
Removal of annotations in the land registry and management of the contract liquidation process
Protection of rights to compensation, rent, penalty clauses, and other receivables that may arise from the contractor
Securing the economic interests and property rights of the owners
Prevention of legal risks during the contract process with the new contractor
In urban transformation projects, the proper management of the process is not limited to contract termination but is of decisive importance for property owners in terms of ensuring economic security, protecting property rights, and completing the project in a healthy manner.
As 2M Hukuk Law Firm, based in Istanbul, we provide comprehensive legal consultancy and representation services, especially in urban transformation projects carried out in the Tuzla, Kartal, Maltepe, Pendik, and Gebze regions, covering the preparation of land share construction contracts, dispute resolution, contract termination processes, and the protection of owner rights. With our regional practice experience and expertise in urban transformation legislation, we aim to effectively protect the rights of our clients.
