In urban transformation projects, if owners are given fewer square meters than their land share or if no consideration is given to the difference in value, the following lawsuits may be filed.

1. Decision-Making Mechanism in Urban Transformation and the Status of Minority Shareholders

Pursuant to Article 6 of Law No. 6306 on the Transformation of Areas Under Disaster Risk, after the demolition of risky structures, the absolute majority of shareholders decide how the property will be utilized (reconstruction, sale of shares, flat-for-land exchange, or revenue sharing, etc.) in proportion to their shares. The land shares of minority shareholders who do not participate in this decision are appraised at fair market value by the Ministry and sold to other consenting shareholders by public auction, at a price not less than this appraised value. If the sale does not occur, the shares are registered in the name of the Treasury after their fair market value is paid by the Ministry.

2. Recourse in Cases of Insufficient Square Footage and Unfair Distribution

In cases where the property owner is given less square footage than their land share, or where an unfair distribution is made among owners without considering the difference in value (şerefiye), minority rights are as follows, in light of judicial precedents:

Judicial Remedy (Courts of First Instance – Civil Courts):

Unjust Enrichment and Compensation: In the event of a clear inequality between independent sections, aggrieved owners may file a compensation lawsuit based on unjust enrichment provisions. The 3rd Civil Chamber of the Court of Cassation has ruled that compensation must be paid if reductions in square footage in the project result in unjust enrichment for other owners.

Contract Annulment and Adaptation: Minority shareholders, asserting that the allocation is not fair, can file a lawsuit for “annulment of the promise to sell real estate in the form of a regulation and the construction contract in exchange for land share” or “contract adaptation”.

Annulment of the Owners’ Board Decision: Owners claiming that the decision taken by simple majority or the protocol forming the basis of this decision is not procedurally compliant (e.g., not being invited to the meeting, illegality, etc.) can file a lawsuit in judicial courts for the annulment of these decisions.

Administrative Judicial Path (Administrative Courts):

Annulment of the Sale Transaction: Minority shareholders can file a lawsuit for the annulment of the administrative act regarding the sale of their land shares. The Council of State Administrative Litigation Chambers Board has ruled that the sale transaction can be annulled on the grounds of violation of property rights in cases where the allocation is “not fair and equitable” (e.g., offering a shop from the back facade instead of a shop on the main street).

Objection to Valuation: In cases where the current market value is determined to be low, an annulment lawsuit can be filed against the tender and valuation processes.

3. Prevention of Share Sales and Judicial Review 

Although minority shareholders’ power to directly prevent share sales is legally limited, this process can be stopped through legal action:

Stay of Execution and Interim Injunction: In lawsuits filed in administrative courts against administrative actions related to share sales, a “stay of execution” may be requested. In judicial courts, an “interim injunction” may be sought to halt the implementation of a decision by the board of owners. However, some decisions state that an interim injunction against share sales can only be requested from administrative courts, and that judicial courts lack jurisdiction in this matter.

Constitutional Court (AYM) Criterion: The Constitutional Court (AYM) considers the sale of shares without judicial review of objections from minority shareholders regarding a new distribution method and without addressing them with sufficient justification, as a violation of the right to property. It is emphasized that the sale should be a “last resort.”

On-site Inspection and Expert Examination: The Council of State mandates that before a sale transaction, the legality of the distribution must be assessed through an on-site inspection and expert examination of the property. If the distribution is found to be unjust, the sale transaction will be canceled and prevented. A document suggestion.

4. Secondary Sources and Additional Context 

The following points are additional contexts obtained from secondary sources due to limited information in the decision texts:

Action for Unjust Enrichment: If a balancing protocol has not been made between landowners to address inequalities in distribution after zoning plan changes or urban transformation, an action for unjust enrichment can be filed under Articles 77-82 of the Turkish Code of Obligations (TBK), and the amount of damages can be claimed.

Importance of Title Deeds: In lawsuits for adjusting land shares, the claim of disproportionality between the ratios determined during the establishment of floor easement and the values of independent sections may not always succeed due to title deed records and limitations of the Condominium Law; in this situation, expert examination is critical for the protection of acquired rights.

Objections to Administrative Parceling: In zoning applications outside of urban transformation (Zoning Law Art. 18), the distribution of shares as “small shares practically impossible to use” is found to be unlawful and can be annulled in administrative courts. This situation may serve as a basis by analogy to the principle of fair distribution in urban transformation.

Individual Application: After exhausting administrative and judicial remedies, an individual application can be made to the Constitutional Court claiming a violation of property rights, requesting a retrial or compensation.

Conclusion: In cases of unfair distribution, minority shareholders can apply to judicial courts for compensation and contract annulment; and to administrative courts for the annulment of the sale transaction and a stay of execution. Preventing the sale is only possible if the unfairness or irregularity of the distribution is determined by the court and a stay of execution/injunction order is issued.

Frequently Asked Questions

Why is Expert Legal Support Necessary in the Urban Transformation Process?

The urban transformation process involves not only contractual relationships but also elements of administrative procedure, property law, law of obligations, and zoning law. Improper management of the process can lead to irreparable loss of rights.

Expert legal support is critically important, especially in the following matters:

review of simple majority decisions

halting share sale transactions

technical examination of fair square meter and goodwill calculations

evaluation of expert reports

contract cancellation and compensation lawsuits

concurrent management of administrative and judicial processes

preventing the risk of property rights violation. Obtaining expert support for urban transformation disputes in Istanbul and its vicinity is crucial to prevent loss of rights.

Istanbul Tuzla Urban Transformation Lawyer — 2M Law Firm

Operating from Istanbul Tuzla, 2M Law Firm provides legal consultancy and litigation services in urban transformation disputes, land share-for-construction contracts, share sale cancellation lawsuits, and processes related to property rights violations.

Support is provided especially in the following areas:

urban transformation contract consultancy

protection of minority shareholder rights

share sale cancellation lawsuits

land share disputes

square meter and goodwill calculation disputes

contract termination and compensation lawsuits

litigation in Istanbul, Tuzla and its vicinity