Is contractor’s guarantee mandatory in urban transformation, and can a contractor obtain a building permit if they do not provide a guarantee?

Contractor’s Guarantee is a Legal Obligation

The Law No. 6306 on the Transformation of Areas Under Disaster Risk explicitly mandates a guarantee in transformation projects. According to the Law, it is obligatory for the building contractor undertaking construction work for projects to be carried out in areas and parcels covered by this Law to obtain building completion insurance or provide other guarantees and conditions determined by the Presidency before obtaining a building permit (Law No. 6306, Article 8/6). Since this provision contains the phrase “is mandatory”, it is imperative (binding) in nature; it cannot be removed by agreement of the parties.

This framework provision of the Law is concretized in the ninth paragraph of Article 13 of the Implementation Regulation. According to the Regulation, it is obligatory to provide a guarantee in applications to be carried out in risky areas, reserve building areas, and parcels where risky buildings are located (Implementation Regulation Article 13/9). As can be seen, both the law and the regulation mandate a guarantee in the same direction, leaving no room for discretion.

What Happens If the Contractor Does Not Provide a Guarantee?

Legally, a guarantee is a prerequisite for a building permit. The administration cannot issue a building permit unless the contractor provides the guarantee; because the guarantee obligation is defined as a condition that must be fulfilled “before obtaining a building permit” (Implementation Regulation Article 13/9-c). Therefore, the most concrete consequence for a contractor who does not provide a guarantee is the inability to legally commence construction.

The practical meaning of this is: If the contractor says, “the letter of guarantee is costly, let’s not provide it” , this is often a sign that their financial capacity is insufficient to carry the project. The guarantee also serves as a filter, allowing the contractor’s financial adequacy to be tested before the project even begins. From the property owner’s perspective, this situation should be considered a warning sign. Clarifying whether the contractor can meet the guarantee obligation before the contract is signed prevents potential grievances from the outset. Therefore, when preparing a construction contract in exchange for land share, it is of great importance to clearly state the type, amount, and conditions of the guarantee in the contract.

Building Completion Insurance Can Be Used Instead of a Guarantee

Legislation has also defined an alternative to the guarantee. If the contractor, instead of providing cash or a letter of guarantee to the administration, obtains building completion insurance, an additional guarantee requirement is not sought (Implementation Regulation Art. 13/9-ğ). The scope and implementation principles of this insurance are determined by the Insurance and Private Pension Regulation and Supervision Agency (SEDDK), and its general terms and conditions came into effect on 10/06/2024. Therefore, the full answer to the question “Is a guarantee mandatory?” is: It is mandatory for the contractor to either provide a guarantee or obtain building completion insurance; one of the two must certainly be provided. For details on this matter, you can review our article titled “Building Completion Insurance in Urban Transformation”.

How Does the Process Work in Istanbul, Tuzla, Pendik, Kartal, and Gebze?

Urban transformation intensity is high on Istanbul’s European Side, Anatolian Side (Pendik, Kartal, Maltepe, Tuzla), and in districts of Kocaeli such as Gebze and Darıca. In these areas, the process of identifying risky structures, completing the risky structure detection process, and then moving to the contractor agreement phase is a common flow. Proper submission of the guarantee obligation to the relevant municipality or the Urban Transformation Presidency at each stage is a prerequisite for the legal progression of the process. You can access the current text of official regulations via the Legislation Information System and the latest amendments via the Official Gazette.

Frequently Asked Questions (FAQ)

Is it mandatory to provide a guarantee in urban transformation? Yes. Pursuant to Article 8/6 of Law No. 6306 and Article 13/9 of the Implementation Regulation, it is mandatory to provide a guarantee or obtain building completion insurance for projects carried out on parcels located in risky areas, reserve building areas, and parcels with risky structures.

Can a contractor obtain a building permit if they do not provide a guarantee? No. The guarantee is a condition that must be provided before the building permit. The administration cannot issue a building permit without the guarantee being deposited (Implementation Regulation Art. 13/9-c).

Can another assurance be provided instead of a guarantee? Yes. If the contractor obtains building completion insurance, an additional guarantee is not required (Implementation Regulation Art. 13/9-ğ).

Who receives the guarantee? In parcels containing risky structures, the guarantee is given to the relevant Administration (municipality), while in risky areas, it is given to the Urban Transformation Presidency (Implementation Regulation Art. 13/9-a and c).

Why Is Expert Legal Support Necessary?

Although the security deposit obligation may seem like a simple administrative procedure at first glance, it is a critical guarantee that protects the property owner’s entire investment. If the security clause in the contract signed with the contractor is not properly drafted, the property owner may be left without recourse if the contractor abandons the project. An expert lawyer in the field of urban transformation and real estate law protects the property owner by accurately reflecting the type, amount, and conditions of the security deposit in the contract; and by supervising whether the security deposit has been properly submitted to the administration. As 2M Hukuk Law Office (Attorney Meryem Günay), based in Tuzla and serving the Istanbul Anatolian Side and Kocaeli region, we are with you at every stage of the security deposit and contract processes in urban transformation cases in Pendik, Kartal, Maltepe, Gebze, and Darıca.

This content has been prepared based on the current text of Law No. 6306 and its Implementation Regulation (including amendments dated 13/12/2024-32751 and 04/02/2026-33158). Before publication, current approximate unit construction costs and legislative text should be verified from official sources.