Introduction

What Rights Does the Landowner Have If the Contractor Fails to Start Construction, Starts Late, or Progresses Construction Slowly? Construction contracts in return for a share of land are bilateral contracts in which the contractor undertakes to construct independent sections on a plot of land, and the landowner, in return, undertakes to transfer certain land shares to the contractor. In these contracts, the contractor’s “obligation to start construction on time and continue the work” is one of the primary performance obligations. Sources in the literature indicate that significant rights arise for the landowner if the contractor acts contrary to this obligation by failing to start construction at all, starting late, or failing to progress construction at a reasonable pace. This situation is generally characterized as the contractor’s default and its legal consequences are primarily addressed within the framework of Article 473 of the Turkish Code of Obligations No. 6098 (TCO).

1. Scope of the Contractor’s Default: Failure to Start Work and Delay

Literature addresses the contractor’s default in land share construction contracts not merely as a failure to meet the work’s delivery date, but within a broad framework encompassing disruptions throughout the construction process. Among the contractor’s primary obligations are starting the work on time and maintaining construction at a pace consistent with the contract.

Definition of Default: The contractor’s default, in its most general definition, is expressed as “the delay in the completion and delivery of construction”. This situation can arise in various forms, such as construction not being started at all, being started late, or it becoming clear that the started construction cannot be completed within the period stipulated in the contract. The contractor’s inability to complete the building, or a delay in its delivery despite completion, leads to the contractor’s default.

Obligation to Start and Continue Work: The contractor’s timely commencement and continuation of construction is considered a requirement of their duty of care. Even if no specific date for starting work is agreed upon in the contract, the contractor is expected to immediately begin preparations and construction upon the formation of the contract

2. Rights of the Landowner: Rescission of the Contract Without Waiting for the Delivery Period (TBK m. 473/1)

In cases where construction is not started or is delayed, the most fundamental and important right granted to the landowner is the right to rescind the contract without waiting for the delivery period. This right is regulated in Article 473, Paragraph 1 of the TBK.

Relevant Legal Provision: This provision, frequently cited in literature, is as follows:”If, due to the contractor’s failure to start the work on time, or delaying the work contrary to the contract provisions, or a delay arising from a cause not attributable to the employer, it becomes clearly evident, based on all estimates, that the contractor will not be able to complete the work by the agreed-upon time, the employer may withdraw from the contract without having to wait for the designated delivery date.

Conditions for the Right of Early Withdrawal: Certain conditions must be met concurrently for this right to be exercised:

Contractor’s Delay: It must be definitively understood that the contractor has either failed to start the work on time, delayed the work contrary to the contract, or that the work cannot be completed by the delivery date based on its progress.

Delay Not Attributable to the Landowner: It is essential that the delay does not stem from an act or omission of the landowner.

Clear Understanding that the Work Cannot Be Completed on Time: This situation must be clearly understandable “based on all estimates.” This refers to a prediction based on concrete data.

Examples from Practice: Case summaries found in literature illustrate the application of this provision:

-In one case, the contractor’s failure to complete the project and abandoning it halfway, despite 2 years having passed since the permit was obtained

-In another case, only 7% of the construction being completed within the 40-month contract period,

-The failure of zoning plan amendment efforts and the inability to start construction at all, despite 7 years having passed since the contract date

-The contractor abandoning the construction at the 1st floor reinforced concrete level and not continuing the work

These examples show that courts conclude that construction cannot be completed on time, not only by looking at the delay in the calendar, but also by examining the pace of work progress.

3. Situations Eliminating the Contractor’s Responsibility

It is strongly emphasized in the literature that the contractor’s inability to start construction or delay will not always constitute default. If the delay is based on a legitimate reason, the contractor cannot be held responsible.

Reasons Arising from the Landowner: If the delay is due to the landowner’s failure to fulfill their own obligations, the contractor cannot be deemed in default. This situation is also referred to as “creditor’s default.” “When Article 473 of the TCO is examined, if the delay originates from the landowner, the contractor will not be in default if they cannot deliver the performance within the specified period.” The literature provides the following examples for this situation:

The landowner’s failure to transfer the land share that must be transferred in the title deed

Failure to make the necessary applications for the construction permit or to provide documents such as a power of attorney

Failure to ensure the evacuation of tenants on the land

Failure to deliver the land in a suitable condition for construction (e.g., by removing obstacles on it)

Changes made to the project upon the landowner’s request

Objective Reasons and Force Majeure: Default may also not occur if the work is delayed due to reasons beyond the contractor’s control and unforeseeable. For example, “if the work is delayed due to the unforeseen emergence of water or rock in the foundation of the construction, the right to early termination cannot be exercised.” In such cases, the contractor may have the right to request an extension.

4. Condition of Fault and Other Considerations

No Fault Required: For the application of Article 473 of the TCO, it is not a requirement for the contractor to be at fault for the delay. “In cases where the contractor fails to start the work or it becomes apparent that the work will not be completed by the agreed date, the employer is not required to prove fault on the contractor’s part to exercise the right of termination. The legal provision… has sought a breach of contract in this regard. For default to occur, “the delay must objectively constitute a breach of the obligation to deliver.”>

Possibility of Completing the Work on Time Despite a Late Start: Even if the contractor starts construction late, if there is a possibility to complete the work within the period specified in the contract, the landowner does not have the right to terminate the contract solely due to the late start. What is important is whether the delay makes it impossible to complete the work on time.

Conclusion

In light of scholarly opinions and judicial decisions, in a construction contract in return for land share, the contractor’s failure to start construction on time or to delay the work contrary to the contract, constitutes a default that entails serious legal consequences for the landowner. In this situation, the landowner’s most fundamental right, in accordance with Article 473/1 of the TCO, is to terminate the contract without waiting for the agreed delivery date for the completion of the construction.

For this right to be exercised, the delay must stem from a reason not attributable to the landowner, and it must be clearly understood, according to the current situation, that the construction cannot be completed on time. However, if the delay is caused by the landowner’s failure to perform their own obligations (not transferring the land share, not delivering the land, etc.) or by unforeseen objective reasons, the contractor will not be in default, and the landowner’s right to withdraw from the contract will not arise. Therefore, each concrete case must be evaluated within its own conditions, especially considering the reasons for the delay. A writing suggestion.

Why is Lawyer Support Necessary?

The contractor’s default in construction contracts in exchange for land share is one of the most frequently encountered legal disputes, especially in regions with high concentrations of real estate projects such as Istanbul, Tuzla, Kartal, Bayramoğlu, Tepeören, Pendik, and Gebze. For the landowner to be able to exercise their right to withdraw from the contract in situations where construction has not started at all, started late, or is not progressing at a reasonable pace, it depends not only on the detection of the delay but also on the legally correct evaluation of the reasons for the delay. Even a small mistake at this point can lead to serious loss of rights for the landowner.

For example; if the delay is caused not by the contractor but by the landowner, the right to early termination will not arise, and likewise, the termination of the contract may not be possible if the delay is due to force majeure or objective impossibility. Furthermore, if the necessary evidence for exercising the right to early termination is not collected in time, if notary warnings are not issued properly, or if the landowner fails to fulfill their obligations completely, the lawsuit filed may result in an unfavorable outcome.

Therefore, in disputes related to construction contracts in exchange for land shares in regions such as Istanbul, Tuzla, Kartal, Bayramoğlu, Tepeören, Pendik, and Gebze, working with an experienced real estate and construction law attorney is of great importance. The attorney examines the contract details to assess whether the conditions for default have arisen, determines the strategy to protect the landowner’s rights, drafts notary warnings and termination notices in accordance with the law, and manages the litigation process if necessary. Especially in high-value land and projects, professional legal support is the most effective way to prevent financial and temporal losses and to defend the landowner’s rights most strongly.