Introduction

This study presents an analysis of the decisions of the Supreme Court, Regional Courts of Appeal, and Courts of First Instance regarding how and under what conditions construction contracts in return for land share can be terminated. The examined decisions reveal that the termination of such contracts is not possible through a unilateral declaration of will, but can only occur with the convergence of the parties’ wills or a court decision based on just cause. The study thoroughly examines the methods of termination, the just causes required for termination, and the criteria adopted by the High Court regarding the consequences of termination (retroactive and prospective termination).

1. Basic Rule of Termination: Unity of Will or Court Decision

A common and most fundamental principle in all reviewed decisions is that construction contracts in return for land share cannot be terminated by a unilateral declaration of will. The complex structure of these contracts (contract for work and promise to sell real estate) and their inclusion of land share transfer necessitate stricter conditions for termination. This situation was clearly stated in a decision by the 15th Civil Chamber of the Supreme Court of Appeals: “Since construction contracts in return for land share also involve the transfer of shares in the land registry, their termination by a unilateral declaration of will without the acceptance of the other party, or in other words, without the mutual agreement of the parties, is not possible. In this case, termination and rescission can only be done by a court decision and will produce their legal consequences.” (Supreme Court of Appeals 15th Civil Chamber – 2018/2958 E. – 2019/1737 K.).

The exception to this rule is the agreement of the parties regarding termination. TWhen the wills of the parties converge, the contract terminates without the need for a court decision. Sometimes this unity of will can arise from an explicit termination agreement, or through the actions of the parties. For instance, when one party files a lawsuit with claims related to termination (e.g., negative/positive damages, manufacturing cost) in response to a termination notice from the other party, this can be interpreted by courts as “the convergence of termination wills”. This situation was explained as follows in a decision by the İzmir Regional Court of Justice: “…the plaintiff contractor company is deemed to have accepted the termination of the contract with its claims for loss of profit, penalty clause receivable, and work cost in the initial lawsuit it filed. With the filing of this lawsuit, the wills regarding the termination of the contract converged for both the contractor company and the client cooperative.” (Regional Court of Justice-Izmir 14th Civil Chamber – 2020/956 E. – 2022/1096 K.).

2. Reasons for Judicial Termination of a Construction Agreement in Return for Land Share

When an agreement cannot be reached between the parties, the party requesting termination must apply to the court and prove their just causes. The prominent just causes for termination highlighted in judicial decisions are:

Contractor’s Default: This is the most frequently encountered reason for termination. The contractor’s failure to start construction at all or to bring the construction to a reasonable level within the period specified in the contract constitutes a just cause for termination for the landowner. The 6th Civil Chamber of the Court of Cassation found lawful a termination decision rendered upon the determination that, even approximately 23 months after the permit was obtained, the land “was an empty plot, with no construction activity on it” (Court of Cassation, 6th Civil Chamber – 2024/424 E. – 2025/981 K.). Similarly, the construction remaining at a very low level (such as 3%) despite the expiration of the contract period was also deemed sufficient for termination (Court of Cassation, 23rd Civil Chamber – 2014/7459 E. – 2014/8287 K.).

Impossibility of Performance and Illegality: Construction being carried out contrary to the project, zoning regulations, or the permit, and the inability to remedy these non-compliances, renders the performance of the contract impossible. In a decision upheld by the 6th Civil Chamber of the Court of Cassation, the municipality stated that “it was not possible to legalize the building that was contrary to the plan and regulations” and for this reason, based on the justification that obtaining an occupancy permit was not possible, it was decided that the termination of the contract was justified (Court of Cassation, 6th Civil Chamber – 2022/520 E. – 2023/1722 K.).

3. Consequences of Termination and the Importance of Construction Level

The most important consequence of a termination decision is how the liquidation will be carried out. The Supreme Court of Appeals accepts the physical completion rate of the construction as a fundamental criterion at this point.

Retroactive Termination: If the construction level is below 90%, termination generally has retroactive effect. In this case, “since the contract is assumed never to have been made (non-existent) and will produce such a judgment, the parties can mutually reclaim what they have given each other under the provisions of unjust enrichment.” (BAM-İstanbul 15. HD – 2021/2543 E. – 2025/699 K.). The landowner reclaims the deeds transferred to the contractor; the contractor, in turn, can demand the cost of the useful and lawful works performed.

Prospective Termination: In cases where construction is largely complete, retroactive termination may be found to be contrary to the rule of honesty stipulated in Article 2 of the Turkish Civil Code. For this reason, the Supreme Court of Appeals, also referring to a decision on the unification of jurisprudence, has accepted that termination should have prospective effect in constructions that have reached a certain level. This level is generally accepted as 90%. The 23rd Civil Chamber of the Supreme Court of Appeals explained this criterion in one of its decisions as follows: “if the construction reaches 90% or more, and it is also determined that the remaining incomplete works do not hinder the intended use in the contract, the conditions for prospective termination should be considered met; if these conditions are not met, then it should be concluded that the conditions for retroactive termination of the contract have arisen.” (Yargıtay 23. HD – 2013/3436 E. – 2013/5497 K.).

Conclusion

In light of court decisions, the termination of a construction contract in exchange for land share is a legal process subject to strict formal and procedural rules. A unilateral notification is not sufficient for the termination of the contract; it is mandatory either for the parties to agree on the termination or for the party requesting termination to prove their valid reasons before a court and obtain a termination decision. The contractor’s default and the illegality of the construction in a way that cannot be legalized emerge as the most fundamental reasons for termination. The consequences of termination are determined according to the completion rate of the construction; the 90% level is considered a critical threshold for whether the termination will have retrospective or prospective effect. Therefore, it is of great importance for parties and their lawyers involved in the termination process to first correctly determine the termination method, and then to shape their demands within this framework by having the physical and legal status of the construction determined. A journal article suggestion.

Why is Expert Lawyer Support Necessary?

The termination of construction contracts in return for land share is not merely a legal procedure, but also a complex process that can lead to significant loss of rights. Because such contracts simultaneously contain provisions of a contract for work and a promise to sell real estate, they require a meticulous legal assessment from the perspective of both contract law and real estate law. The risks that parties may face are much higher in projects carried out in rapidly developing regions such as Istanbul, Tuzla, Tepeören, Aydınlı, Orhanlı, Pendik, Kartal, Gebze, Darıca, and Bayramoğlu. Incorrect termination of contracts in return for land share construction projects in these regions can lead to serious consequences such as title deed cancellation and registration lawsuits, compensation obligations arising from unjust enrichment, or dispute processes that can last for years.

As seen in the established jurisprudence of the Court of Cassation, how the intention to terminate will be declared and within what timeframes, how legitimate grounds for termination will be proven, and how liquidation procedures following termination will be conducted, involve extremely technical details. At this point, procedures such as determining the completion rate of the construction, calculating the cost of manufacturing, and preparing claims based on unjust enrichment provisions can only be correctly managed by a construction law attorney specialized in this field.

It is especially recommended that parties operating in Istanbul’s Tuzla, Pendik, Kartal line or in regions where industrial and housing projects are concentrated, such as Gebze, Darıca, Bayramoğlu and Tepeören, seek professional legal consultancy from a lawyer experienced in construction contracts in exchange for land share to protect their rights. The support of an expert lawyer not only ensures the correct determination of existing rights and obligations but also contributes to the effective planning of the litigation strategy, the prevention of future legal disputes, and the securing of the investment.