Introduction

The construction contract in return for a land share is often defined in Supreme Court precedents as “a two-type-hybrid contract” (Supreme Court Grand Chamber, 2018/174) and as one of the “fully bilateral contracts containing mutual rights and obligations” (Supreme Court 15th Civil Chamber, 2008/6523). With this contract, which is a unique type of work contract regulated in the Turkish Code of Obligations, one party (the contractor) undertakes the obligation to construct a building on the other party’s (landowner’s) land by providing its own financing; while the landowner, in return, undertakes to transfer the ownership of a certain share of their land to the contractor. This study analyzes the fundamental rights and obligations of the parties in light of the presented court decisions.

1. Contractor’s Obligations

Court decisions define the contractor’s most fundamental obligation as “to produce the work (the building)” (Antalya Regional Court of Justice, 2021/363). This obligation requires a qualified performance, beyond merely a construction activity.

Qualified Performance and Delivery Obligation: For the contractor to be considered as having fulfilled their performance, they must “complete the construction in accordance with the contract and its annexes, the approved project and construction permit, urban planning legislation which is part of public order, and the Earthquake Regulations issued in this regard, and deliver it to the landowners” (Supreme Court 23rd Civil Chamber, 2015/925). This means that the structure must be made ready for the landowner’s use not only physically but also legally.

Obligation to Obtain Occupancy Permit: One of the most emphasized obligations in judicial decisions is the procurement of the building occupancy permit (iskân ruhsatı). The Supreme Court 15th Civil Chamber, with its finding that “a building for which an occupancy permit has not been obtained and/or is not suitable for obtaining an occupancy permit has no economic value,” has stated that this obligation is an essential element of performance (2020/766 – 2021/65). In many decisions, obtaining the occupancy permit has been shown as the final condition for the contractor to be entitled to title deed registration.

Financing, Taxes, and Expenses: The contractor “undertakes the construction of a building on the immovable property of the landowner who provides the financing” (Supreme Court Civil General Assembly, 2022/709). This means that all costs of construction will be borne by the contractor. Furthermore, as stated in the decision of the Adana 2nd Civil Court of Commerce, “the obligation to pay tax debts is also a performance that occurs within the scope of construction and subsequent transfer, and it entirely belongs to the contractor” (2021/913 – 2022/605).

2. Landowner’s Obligations

The landowner’s primary obligation is the transfer of land share, which constitutes the contractor’s counter-performance. Delivery of Land and Transfer of Share: The landowner’s initial obligation is to “deliver their land to the contractor under the terms of the contract.” Their main performance is that they are “obligated to transfer the title deed of the independent sections left to the contractor as counter-performance when the contractor fulfills their performance” (Supreme Court 23rd Civil Chamber, 2015/925). This transfer obligation is strictly conditional upon the contractor fulfilling their own performance.

3. Exercise of Rights and Principle of Reciprocity

The “fully bilateral” nature of the contract plays a decisive role in the exercise of rights by the parties. In accordance with Article 97 of the Turkish Code of Obligations, the party who has not fulfilled their own performance cannot demand performance from the other party.

Contractor’s Right and Conditions: The contractor can only demand registration of the land share under the condition of “fulfilling their performance (the obligation to create and deliver the work) and their delivery obligation” and “fulfilling other obligations such as the occupancy permit condition (residence permit) in the contract provisions” (Supreme Court General Assembly of Civil Chambers, 2018/174). The contractor acquires a personal right to the extent that they fulfill their performance, and transfers made before the completion of construction are considered “advances” (Supreme Court 3rd Civil Chamber, 2012/13401).

Landowner’s Right of Defense: In the face of the contractor’s incomplete or defective performance, the landowner’s most important right is to avoid the transfer of title. As stated by the 14th Civil Chamber of the Supreme Court, “if the contractor has assigned to a third party the personal right they would acquire without fully or partially fulfilling their primary performance towards the landowner, the third party cannot compel the landowner, who has the right to benefit from Article 81 of the Code of Obligations, to perform” (2014/2656 – 2014/6785).

Transfer of Rights to Third Parties: The contractor may assign their receivable from the land owner (the right to demand title registration) to third parties. However, this assignment does not change the nature of the receivable. The acquiring third party only obtains the contractor’s rights and faces defenses arising from the contractor’s debts. The General Assembly of Civil Chambers of the Court of Cassation formulated this situation as, “the land owner who learns of the assignment can raise the same defenses against the new creditor (assignee plaintiff) that they could have raised against the previous creditor (contractor) if there had been no assignment” (Court of Cassation 14th Civil Chamber, 2016/1660).

Conclusion

Court decisions treat the construction contract in exchange for land share as a reciprocal contract where the parties’ performances are closely intertwined. The contractor’s primary obligation is to secure financing and construct and deliver a complete building that complies with the contract and legislation, and has obtained an occupancy permit. The land owner’s primary obligation is to transfer the ownership of the agreed land share in return for the complete performance of this obligation. The most important principle consistently emphasized by judicial precedents is that the contractor’s entitlement to the price (land share) is contingent upon their full and proper performance of their own obligation. This principle constitutes the most fundamental safeguard protecting the land owner against a contractor who fails to perform their obligation or against third parties who acquire the contractor’s rights. A text suggestion.

Why Is Expert Lawyer Support Necessary?

Construction contracts in return for land share are complex and technical contracts where the mutual debts and obligations of the parties are tightly interconnected. In these contracts, the contractor must perform their obligation completely, in accordance with legislation, and with an occupancy permit obtained; while the landowner, in return, must transfer the land share. However, in practice, numerous legal disputes can arise, such as incomplete or defective performance, failure to obtain an occupancy permit, default, delay, rights transferred to third parties, or title deed registration. Even a small procedural error made in such situations can lead to significant loss of rights.

Especially in rapidly developing real estate projects in regions such as Istanbul, Tuzla, Gebze, Kartal, Pendik, Tepeören, Bayramoğlu, Aydınlı, and Orhanlı, professional lawyer support is of vital importance for the correct interpretation of the contract, the evaluation of the parties’ performances, the management of title deed registration processes, and the prevention of potential disputes.

Supreme Court precedents also demonstrate that issues such as determining whether the necessary conditions for the contractor to acquire rights have been met, asserting defense rights arising from the contract, the validity of assignments made to third parties, or the landowner’s exercise of the right to refuse title transfer require deep legal knowledge and expertise. At this point, an experienced construction law attorney in their field, by determining strategies that will protect the parties’ rights at every stage of the process, both reduces litigation risks and ensures that disputes are resolved in a shorter period.

In conclusion, acting with the support of an attorney in Istanbul Tuzla Gebze Kartal Pendik Tepeören Bayramoğlu Aydınlı Orhanlı is of great importance in terms of providing legal assurance and preventing financial losses in such complex contracts.