After an SGK audit, a substantial administrative fine (İPC) is issued to the apartment building or complex; the doorman was uninsured, premium declarations were not made on time, or requested documents were not submitted. So, who bears the cost of this fine? From the management’s fund, or from the personal assets of the negligent manager? In this article, we meticulously examine the manager’s liability arising from the neglect of personnel and SGK obligations; through two separate relationships, one with SGK and the other with the unit owners, within the framework of legislation and established case law.
The manager is an “employer’s representative” for the unit owners regarding the doorman and other employees (Regulation on Residential Doormen Art. 4; Condominium Law Art. 35/d).
There are two distinct relationships: (1) SGK ↔ employer/management (administrative fine, premium); (2) Unit owners ↔ manager (Condominium Law Art. 38 agency liability, recourse).
In administrative fines, the Supreme Court accepts that, based on the principle of personal liability for penalties, a manager cannot be held personally liable merely for a fine issued in the name of the legal entity/employer. For premium debts, joint and several liability under Article 88/20 of Law No. 5510 may arise.
Condominium owners can seek recourse from the manager for penalties that had to be paid due to their fault. Established criterion: if payment was not made despite there being sufficient funds/collected dues in the treasury during the payment period the manager is personally liable.
Discharge at the general assembly does not remove liability for irregularities that emerged later or were concealed (such as employing uninsured workers).
1. First, a Critical Distinction: Two Separate Relationships, Two Separate Responsibilities
The main reason for the confusion on this matter is the intermingling of two different legal relationships. To make a correct assessment, it is essential to distinguish between them:
External relationship (with SGK): The employer status belongs to the condominium owners (the management). SGK addresses this employer entity for premiums and administrative monetary fines. The discussion here proceeds within the framework of “the personal nature of penalties” and the special liability provisions of Law No. 5510.
Internal relationship (with condominium owners): The manager acts as an agent towards the condominium owners (Condominium Law Art. 38). The management can seek recourse from the manager for penalties it was forced to pay due to the manager’s negligent omission, by proving their fault.
In other words, the question “who pays the penalty to SGK” is different from the question “who ultimately bears this burden”. Often, the management’s treasury pays the penalty; but if the fault lies with the manager, this cost reverts to them in the internal relationship.
2. Manager’s Status as Employer’s Representative and Premium Liability
When a doorman/attendant is employed in apartments and housing complexes, the employer is the community of floor owners, which does not have a legal personality; and the manager is their employer’s representative. Pursuant to Article 4 of the Regulation on Residential Doormen and Article 35/d of the Condominium Law (KMK), the manager is responsible for paying employees’ insurance premiums on time, making timely notifications, and complying with labor legislation.
Article 9 of Law No. 5510 stipulates that the notification of employees in residential doorman workplaces must be made no later than the end of the month in which the work was performed. Violation of this notification obligation leads to an administrative fine amounting to multiples of the minimum wage, pursuant to Article 102. Furthermore, pursuant to Article 86, the failure to submit requested ledgers and documents during an audit within 15 days is a separate reason for a penalty.
3. Responsibility Towards SGK: Personal Nature of Penalties and Joint and Several Premium Liability
Regarding administrative monetary penalties, the consistent approach of the Court of Cassation is based on the principles of “personal nature of penalties” and “no crime or punishment without law”: From an administrative fine issued in the name of the employer/legal entity, the manager’s personal assets cannot be pursued solely because they are a representative; a separate penalty decision specifically issued in the individual’s name is required. This principle was also emphasized in the decision of the 10th Civil Chamber of the Court of Cassation dated 19.02.2020, with file no. E. 2019/1624 and decision no. K. 2020/1386.
However, premium debts are subject to a different regime. According to Article 88/20 of Law No. 5510, if the Institution’s premiums and other receivables are not paid on time without a valid reason, the executives and officials responsible for assessment and payment, or senior executives and authorized persons, may be held jointly and severally liable for these receivables along with the employer. The decision of the 10th Civil Chamber of the Court of Cassation, E. 2014/25682, K. 2015/2792, reveals that for this liability to arise, the individual must be in an authorized position regarding the accrual and payment of premiums. In summary: personal liability is the principle for administrative fines; whereas, joint and several liability is possible for premium receivables based on the criteria of authority and fault.
Related article: For details on the manager filing a lawsuit on behalf of the condominium owners and granting power of attorney to a lawyer: Can an Apartment Manager Grant Power of Attorney to a Lawyer? Is a Decision from the Board of Condominium Owners Necessary?
4. Liability Towards Condominium Owners: Condominium Law (KMK) Art. 38 Power of Attorney and Recourse
The determining provision in the internal relationship is Condominium Law (KMK) Art. 38: “The manager is liable to the condominium owners just like an agent.” If an agent causes damage to their client by violating their duty of care, they become liable for it. Therefore, if the administrative fines and late payment penalties that had to be paid result from the manager’s culpable negligence, the management can seek recourse from the manager for this amount.
The critical criterion here is the “cash on hand / possibility” criterion concretized in the settled jurisprudence of the Court of Cassation: For the manager to be held personally liable for a penalty, it is required that there was enough money in the apartment/site’s cash box during the relevant payment period, or that the unit owners had paid their dues on time. That is:
If there was money in the cash box and payment was not made: The fault lies with the manager; they are personally responsible.
If dues were not collected, the cash box was empty, and payment was practically impossible: It becomes difficult to attribute fault to the manager; liability may not arise.
In some decisions, it is also evaluated that if the transaction subject to the penalty requires advanced technical accounting knowledge, this expertise cannot be expected from an ordinary manager, and liability may not arise due to the absence of intent/fault. For this reason, in recourse cases, the concrete determination of fault through an expert examination of the income-expense ledger and bank transactions is decisive.
5. Does the Transfer of Duty and Acquittal Remove Liability?
Two common defenses often yield no results:
“I had transferred the duty to a manager/company”: A manager’s actual transfer of duty to another person does not automatically remove their legal responsibility; their supervision and due diligence obligations continue.
“I was acquitted at the general assembly”: Acquittal only covers transactions known at the time of acquittal. Acquittal does not provide protection for irregularities that emerged after the acquittal or were concealed at that time (e.g., employing uninsured workers).
6. Competent Court: Which Dispute Goes Where?
The competent authority varies according to the type of dispute; this distinction is often confused in practice:
| Dispute | Competent Authority |
|---|---|
| Objection / annulment of administrative fine itself | Administrative Court (first administrative appeal to the Institution) |
| Objection to payment order based on finalized penalty | Labor Court |
| Recourse/compensation between management ↔ manager (Condominium Law Art. 38, Annex Art. 1) | Civil Court of Peace |
In compensation and liability lawsuits between apartment owners and the manager, the Civil Courts of Peace are competent, in accordance with Condominium Law Annex Art. 1.
7. Statute of Limitations and Other Critical Points
Statute of Limitations: For SGK administrative fines, a 10-year period comes into question within the framework of Law No. 5510; long statute of limitations periods also apply to recourse receivables. The calculation of the period should be made according to the concrete case.
Obligation to pay through bank: Failure to pay wages through a bank channel in workplaces with a certain number of employees, in accordance with Labor Law article 32 and related regulations, may result in a separate administrative fine.
Presumption of insured employment: If a doorman does not pay rent or performs duties such as cleaning/garbage collection in exchange for having their expenses covered, this can be considered an actual employment relationship (insured employment) and, if not reported, leads to an administrative monetary fine (IPC).
Service procurement (subcontracting) defense: If it can be shown with service contracts and invoices that the work was genuinely outsourced, then imposing a penalty without proving that the workers are directly employed by the site becomes debatable.
8. Criminal Law Aspect
In criminal complaints filed against the manager/auditor, it is often decided that there is no ground for prosecution on the basis that the act does not constitute a crime under the Turkish Criminal Code (TCK) but rather requires an administrative sanction in accordance with Law No. 5510. However, it is also emphasized that the income-expense ledgers and bank transactions of the site should be examined by an expert to clearly determine the manager’s fault and responsibility; and that the investigation should be deepened in this direction (especially in cases where there are allegations of embezzlement/abuse of trust).
Three elements required for proof in a recourse lawsuit:
The lawsuit being filed in the Civil Court of Peace.
Proof that there was sufficient cash in the till or that dues were collected during the relevant period.
The manager’s breach of due diligence in their capacity as a representative established by an expert report.
Our Other Articles on This Topic
- CCPL Article 34: What Does Number and Land Share (Double) Majority Mean in Manager Selection?
- What Can Apartment Management or Flat Owners Do if the Tenant Does Not Pay Dues?
- Who Has the Authority to Collect Dues in Mass Housing Projects?
- Can an Apartment Manager Give Power of Attorney to a Lawyer?
Frequently Asked Questions (FAQ)
Does a manager who fails to pay the doorman’s premiums personally pay the penalty?
As a rule, administrative fines are imposed in the name of the employer (management), and due to the principle of personal liability for penalties, the manager’s assets cannot be pursued merely because they are a representative. However, flat owners can seek recourse against the manager internally for penalties they had to pay due to the manager’s fault; especially if payment was not made while there was money in the fund, the manager is held personally responsible.
If there is no money in the fund, is the manager still responsible?
According to established case law, the manager’s liability is contingent upon sufficient funds being available in the cash register during the payment period or the collection of dues. If dues could not be collected and payment has become practically impossible, fault may not be attributed to the manager, and the recourse claim may be rejected.
Does the manager’s liability end if acquitted by the general assembly?
No. Acquittal only covers transactions known at the time of acquittal. Acquittal does not provide protection for irregularities that emerge after the acquittal or were concealed at that time (such as employing uninsured workers).
In which court can this penalty and recourse claim be appealed?
For the administrative fine itself, an administrative appeal must first be made to the Institution, followed by the Administrative Court; for appealing the payment order of a finalized penalty, the Labor Court is responsible. The recourse/compensation lawsuit between the management and the manager, however, is heard in the Civil Court of Peace in accordance with Article 1 of the Condominium Law (KMK).
If the doorman works in exchange for rent, is he still considered insured?
Yes. If the doorman performs duties such as cleaning and garbage collection in exchange for not paying rent or having his expenses covered by the complex, this can be considered an actual employment relationship. If this relationship is not reported to the SGK, an administrative fine will be imposed.
Why is Expert Legal Assistance Necessary?
Personnel and SSI (Social Security Institution) neglects quickly expose apartment buildings and residential complexes to heavy administrative fines. As for who will truly bear this burden; it depends on the combined evaluation of the individuality of penalties, Article 88/20 of Law No. 5510 on joint and several liability, Article 38 of the Condominium Law (KMK) on agency liability, and the “cash on hand” criterion. The selection of the correct court (Administrative / Labor / Civil Court of Peace), the establishment of fault through an expert report, and not missing deadlines are decisive for protecting the rights of both the management and the manager.
2M Law Office, in cases concerning condominium law and residential complex management law, objections to SSI administrative fines, and manager liability/recourse actions; provides support to apartment and residential complex managements and managers in the Tuzla, Pendik, Kartal, Maltepe and Gebze/Kocaeli line regarding litigation strategy and petition preparation. For an evaluation regarding your specific case: 2mhukuk.com
This article is for general informational purposes; it does not constitute legal advice or attorney services. Each dispute should be evaluated under its unique circumstances.
