Your building was declared a risky structure. You sat down with your neighbors and made the following decision: We will not give land share to the contractor; we will have the building constructed by paying for it. This model, financed in some buildings with grant and loan support, in others with the owners’ savings, and in some with a combination of both, is referred to in practice as “do-it-yourself,” “lump-sum,” or “construction for money.” Your entire land remains yours, and all apartments in the new building belong to you. However, a large part of the risk is now also yours: You are the party paying the money, and if the contractor leaves the job unfinished, you will have neither land share bargaining power nor a collateral apartment left.

In this article, we thoroughly examine the lump-sum construction contract that apartment owners, who will demolish and rebuild their homes within the scope of urban transformation, will enter into with a contractor. From the legal nature of the contract to collateral, from the progress payment plan to occupancy permits, from how the “Half from Us” support will be reflected in the contract to what happens if the contractor abandons the work; we explain through the Turkish Code of Obligations, the Turkish Civil Code, Law No. 6306 and its Implementing Regulation, as well as the decisions of the Supreme Court, the Council of State, the Constitutional Court, regional courts of justice, and first instance courts. At the end of the article, you will find a checklist of clauses you should include in your contract and answers to the most frequently asked questions.

1. Legal Nature of the Contract: Lump-Sum Works Contract Without Land Share Transfer

Contracts where apartment owners do not transfer land share to the contractor, and the construction cost is paid in cash by the owners (or covered by grants and loan supports, with the remaining part paid by the owners), legally differ from classic construction contracts in return for land share. In the land share model, the contractor’s counter-performance is an independent unit or land share; here, it is only money. This difference directly changes the method of establishing collateral, title deed procedures, whether consumer law will apply, and the options available to the owners if the contractor abandons the work.

When determining the type of contract, not the name given by the parties, but their true intentions are taken as a basis. Even if the contract is titled “construction contract in exchange for a flat”, if no share is transferred to the contractor and the payment is made in money, the contract is considered a work contract.

Differences between the land share consideration model and the lump-sum price model

For a general comparison of the models, you can also refer to our article on which model is more advantageous in urban transformation.

What changes if you are considered a consumer?

• Competent court: Disputes are heard in consumer courts under Law No. 6502. Before filing a lawsuit in a consumer court, applying to a mediator is a prerequisite for litigation in accordance with Article 73/A of the CTPA; disputes below the monetary limit determined annually by the Ministry of Trade are referred to the consumer arbitration committee.
• Unfair term review: Standard provisions prepared by the contractor and not open to negotiation by the owners (such as unilateral price increase authority, exemption clauses restricting owners’ rights) are subject to unfair term review in accordance with Article 5 of the CTPA.
• Defective service and statute of limitations: Regarding claims arising from defects in a work of residential nature, more protective provisions of consumer law come into play.

2. Key Issues to Consider in the Contract

A. Lump-sum basis and cost increases

When an agreement is made on a lump-sum basis without giving the contractor a share, the most common dispute is the contractor demanding extra money in the middle of construction, saying, “iron prices have increased, labor costs have increased, I cannot finish with this amount.” This is precisely the meaning of a lump-sum contract: the price is definitively determined from the outset, and cost increases are the contractor’s risk.

Exceptional circumstance exception: In accordance with TCO Article 480/2, if circumstances that could not be foreseen at the outset, or that could have been foreseen but were not taken into account by the parties, prevent the completion of the work or make it excessively difficult, the contractor may request the judge to adapt the price, or if this is not possible, to withdraw from the contract. In our country’s high inflation environment, contractors frequently rely on this provision and on the excessive difficulty of performance under TCO Article 138. For this reason, one of the following two options should be consciously chosen in the contract:

• Fixed price and waiver of adaptation: It is explicitly stated that the price is fixed, that increases in inflation, foreign exchange, and material prices are foreseeable risks belonging to the contractor, and that the contractor waives any request for adaptation under TCO Article 480/2 and Article 138. Recording that the economic conditions at the time of the contract were “foreseen and taken into account” strengthens the owners’ position in any future adaptation lawsuit.
• Controlled price difference: To prevent the contractor from not bidding at all or reducing quality in long-term projects, a price difference formula tied to an official index, with an upper limit, and operating only for stages progressing according to the work schedule can be agreed upon for certain main items only (e.g., rebar and ready-mixed concrete). It must be explicitly stated that no price difference will be paid for delayed stages.

No payment for illegal construction: In the same decision, the Court of Cassation stated regarding unlicensed or project-non-compliant constructions: “Only the demolition of such structures, which have no economic value, can be requested” and “Despite this, determining a construction cost for illegal structures and ruling for partial acceptance of the case was not appropriate.” The contract must state that no construction contrary to the approved project and license shall be undertaken, that no payment can be demanded for off-project construction even at the owner’s request, and that the contractor shall be responsible for this. Owners’ requests like “let’s build an extra room” not only create the risk of demolition and urban planning fines but also leave the money paid for such construction legally unprotected.

VAT and scope of the fee: It must be clearly stated whether the fee includes or excludes VAT, which VAT rate will be applied, and to whom the difference will belong if the rate changes. In housing construction commitment works carried out for rights holders under Law No. 6306, a reduced VAT rate can be applied under certain conditions; the suitability of the rate and conditions for the specific project should be confirmed with a financial advisor before signing the contract.

B. Contractor’s technical competence and authorization certificate group

Before the contract, it should be checked whether the contractor is legally authorized to construct a building of the specified size. Construction contractors are divided into authorization certificate groups by the Ministry of Environment, Urbanization and Climate Change, and each group can undertake projects of a specific size. The authorization certificate can be queried via e-Devlet.

Checks to be made before the contract:

• The group of the authorization certificate, its validity period, and whether the certificate-holding company is the same as the company signing the contract.
• The company’s commercial registry records, partnership structure, capital, and the signature circular of its authorized representative.
• Buildings previously completed by the contractor: It should be confirmed on-site whether these buildings have received occupancy permits and whether the owners are satisfied.
• The company’s financial strength: The capacity to provide a bank guarantee letter is the most practical indicator of the contractor’s financial situation.
• The personal suretyship or guarantee of the company’s main partner should be additionally evaluated, especially in companies with low capital.

C. Clear enumeration of work items and job descriptions

What determines the scope of the lump sum price are the works enumerated in the contract. Work not enumerated is often separately invoiced as “additional work”. Therefore, the works to be undertaken by the contractor must be enumerated individually in the contract and its annexes.

Works that must be clearly specified in the contract or technical specifications as to who will perform them:

• Preliminary works: Demolition permit, demolition, debris and excavation, ground survey, measurement, staking out, preparation and approval of projects (architectural, static, mechanical, electrical, landscaping), building permit application.
• Rough and fine construction: Concrete class, rebar, insulation, exterior facade material, joinery system, doors, kitchen and bathroom fittings, floor coverings, paint, elevator, generator or booster pump systems. Materials must be specified by brand, model, and series or as “equivalent, with the written approval of the owner’s representative.”
• Infrastructure and subscriptions: Electricity, water, natural gas, sewage connections, meters, and subscription costs.
• Common areas: Parking lot, shelter, environmental landscaping, garden wall, management room, and landscaping.
• Finalization procedures: Occupancy permit, SGK non-debt certificate, transition to condominium ownership, and documents required for title deed procedures.
• Square meter definition: The net and gross area of each apartment should be specified along with the apartment plans appended to the contract and with the phrase “according to the project attached to the license”; a price reduction formula should be stipulated in case of a deficiency in area. Regarding square meter loss, you can refer to our article on compensation if square meters decrease in urban transformation.
• Change and additional work procedure: No additional work or changes can be made without the written consent, with a pre-determined cost, of the owner representatives, and payment cannot be requested for works not done in this manner.

D. Occupancy Permit and Key Delivery Condition

For the delivery to be considered legally complete, the obtaining of the occupancy permit (iskân) must be explicitly stated in the contract. Electricity, water, and sewage services are not provided to buildings without an occupancy permit (Law No. 3194, Art. 31), and transition to condominium ownership cannot occur. For the occupancy permit process, you can refer to our article on title deed and occupancy permit procedures.

Acceptance and defect: Upon delivery of the work, the owners are obliged to inspect the work as soon as circumstances permit in the ordinary course of business and to notify the contractor of any defects within a reasonable period (Turkish Code of Obligations Art. 474). Hidden defects that emerge later must be reported as soon as they are discovered (Turkish Code of Obligations Art. 477). Lawsuits to be filed due to defects in immovable structures become time-barred after five years from delivery, or twenty years if the contractor has grave fault (Turkish Code of Obligations Art. 478). The contract should stipulate the following:

• Distinction between provisional acceptance and final acceptance: In provisional acceptance, deficiencies and defects are recorded and remedied within a certain period; final acceptance is made after the occupancy permit (iskân) and completion of deficiencies.
• Inspection committee: Acceptance is carried out with the participation of an independent engineer or a construction supervision firm, together with the owner’s representatives.
• Warranty period and maintenance obligation: It is stipulated that the contractor’s warranty period, especially for insulation, roofing, installations, and elevators, and the cost of rectifying defects, shall be borne by the contractor.
• Reservation for penalty for delay: In accordance with Article 179/2 of the Turkish Code of Obligations (TBK), if a penalty for delay is stipulated, the creditor cannot claim the penalty unless they explicitly reserve their right when accepting performance. A note stating “penalty for delay and our other rights are reserved” should be added to the key handover record.

E. Owners’ participation, consent, and representation process

The consent of the owners is essential for dispositions concerning the land and the structure. According to Article 692 of the Turkish Civil Code, changing the purpose for which jointly owned property is designated, undertaking construction work exceeding the scope required by ordinary use, or disposition transactions over the entire property are subject to the acceptance of all co-owners, unless otherwise agreed by unanimous decision.

Special rule of Law No. 6306: There is a regulation that deviates from the general rule in risky buildings. According to the first paragraph of Article 6 of Law No. 6306, decisions regarding reconstruction and implementation on the parcel where the risky building is located can be taken by the absolute majority of the shareholders, proportional to their shares; the shares of the owners who do not participate in the decision are put up for sale by public auction in accordance with the procedure in the Implementation Regulation. For this reason, even if unanimity cannot be achieved in a building within the scope of 6306, the process can proceed; however, for this, the notification and sale procedures in the Law and Regulation must be strictly followed. For calculation, you can refer to our articles on how to calculate absolute majority in urban transformation, and for the situation of the minority owner, I don’t want to participate in urban transformation. In the lump-sum contract model, since each owner will also undertake to pay the construction cost corresponding to their share, in practice, all owners should aim to sign the contract.

In its decision dated 18.10.2012, no. E. 2010/82, K. 2012/159, the Constitutional Court, while examining the rules regarding urban transformation and development project areas within the scope of Article 73 of the Municipality Law no. 5393, evaluated the regulation stating that agreement is essential for the evacuation, demolition, and expropriation of structures in these areas, and that a construction permit and occupancy permit cannot be issued without payment of the project’s common expenses. The decision is also guiding in the lump-sum model, as it demonstrates how participation in common expenses can be linked to the permit and occupancy stages.

Each owner’s payment share and the problem of non-paying owners

This is the least discussed but most problematic aspect of the lump-sum price model: Owners sign the contract together, but each pays their own share. If one owner fails to pay, construction stops, and other owners who have paid also suffer. The following must be regulated in the contract:

• How the total cost is distributed among the owners, specifying by what measure (land share, gross area of the new apartment, or a fixed amount), and each owner’s payment schedule separately.
• That owners are not jointly and severally liable to the contractor; each owner is responsible only for their own share.
• In the event of a non-paying owner, the contractor’s rights are solely against that owner; the work schedule will continue for the other owners.
• Among the owners themselves, a separate protocol among owners regarding that the owners who paid instead of the non-paying owner can demand this amount with interest from the non-paying owner.
• Who has the power of representation in the owners’ correspondence with the contractor: an elected owners’ representation board and on which matters this board can decide alone, and on which matters with the approval of all owners.

F. Infrastructure costs, fee exemption and official expenses

Current development: The Constitutional Court, with its decision dated 3.6.2025, no. E. 2024/211, K. 2025/123, annulled the provision in the second paragraph of Article 23 of Law No. 3194, which allowed the issuance of a construction permit in areas where infrastructure is not completed, in exchange for the upfront payment of twenty-five percent of the technical infrastructure fee and a commitment for the remaining amount. The decision was published in the Official Gazette dated 13.10.2025, to come into force nine months later; the annulment provision came into force in July 2026. A distinction of responsibility should be made in the contract regarding the fees demanded by the municipality under this item, and the basis of the demand should be further examined.

• Exemptions from fees and taxes: Many fees, taxes, and charges have been exempted under Article 7 of Law No. 6306. It should be specified who will obtain the exemption documents and who will bear the loss arising from the loss of exemption (e.g., late application by the contractor). For details, you can refer to our article taxes I will never pay in urban transformation.
• Parking fee: After the decisions of the Council of State’s Jurisprudence Unification Board dated 2025, it is accepted that the parking fee is not covered by the exemption under Law No. 6306. If sufficient parking cannot be provided in the project, it must be clearly stated in the contract who will be responsible for this fee. See is a parking fee charged in urban transformation.
• Other official expenses: Construction inspection service fees, project approval fees, soil surveys, subscription and connection fees, occupancy permit fees, and social security (SGK) procedures must be itemized and charged to the contractor or the owners. Any item not specified will lead to a dispute about whether it is included in the lump sum price.

G. Duration, Work Schedule, and Delay Penalty

• Start date (e.g., a specific number of days from the date the building permit is obtained) and completion date (obtaining occupancy permit) must be stated with clear dates. Uncertain reasons for extension, such as weather conditions and public holidays, must be listed as a closed list.
• A detailed work schedule must be an annex to the contract; payment stages must be tied to this schedule.
• Delay penalty: It must be agreed upon as per apartment or a certain percentage of the total price for each day or month of delay. Since the contracting company is a merchant, in accordance with Article 22 of the Turkish Commercial Code, it cannot demand a reduction of the agreed-upon penalty clause on the grounds that it is excessive.
• Loss of rent compensation: It must be stated whether the delay penalty covers the owners’ loss of rent, and if not, that any exceeding damages can be claimed separately.
• For the course of action to be followed if the contractor never starts the work, you can refer to our article on what to do if the contractor does not start construction.

H. Termination, Entrusting the Work to Another, and Assessment

• Contractor’s delay: According to Article 473/1 of the Turkish Code of Obligations, if the contractor does not start the work on time or delays the work in such a way that it is clearly understood that it cannot be completed within the agreed time, the employer may withdraw from the contract without waiting for the delivery date.
• During defective manufacturing: According to Article 473/2 of the Turkish Code of Obligations, if it is clearly understood that the work will be made defectively or contrary to the contract due to the fault of the contractor, the employer may request its rectification by giving a suitable period; otherwise, they may have the rectification or continuation work done by a third party at the contractor’s expense. This right must be explicitly and detailedly stated in the contract.
• Determination at the time of termination: In case of termination, the determination of the level and value of the work done through preliminary evidence gathering by the court is the basis for a subsequent claim lawsuit. The handover of the construction site, inventory of materials, and transfer of documents (projects, permits, construction supervision records) must be regulated in the contract.
• Owners’ right to withdraw: According to Article 484 of the Turkish Code of Obligations, the employer may withdraw from the contract before the work is completed by paying the value of the work done and all of the contractor’s damages. This is a path that owners can always use, but it is expensive; therefore, valid reasons for termination must be concretely listed in the contract.
• Role of the administration: In some cases within the scope of Law No. 6306, the administration also has the authority to terminate the contract; for the conditions, you can refer to our article administrative termination of a contractor’s agreement in urban transformation.

I. Statutory mortgage and subcontractor risk: You have paid the money, but your title deed may be mortgaged

This is the risk that most surprises owners in the lump-sum contract model. According to Article 893, first paragraph, third subparagraph of the Turkish Civil Code, subcontractors and artisans who are creditors of the owner or contractor, for having expended labor, with or without providing materials, in construction works carried out on an immovable property, may request the registration of a statutory mortgage on that immovable property. In other words, even if you have paid the contractor all the money, a subcontractor (blacksmith, concrete worker, plumber) whom the contractor has not paid may request the registration of a mortgage on your immovable property.

• According to the second paragraph of the same article, it is not valid for creditors to waive this right in advance. Writing “subcontractors have waived their mortgage right” in the contract is useless.
• According to Article 895 of the Turkish Civil Code, the registration must be made within three months starting from the completion of the contracted work, and the claim must have been accepted by the owner or decided by a court.
• Contractual Precaution: It should be stipulated that the contractor must provide a list of subcontractors, document the subcontractor and material supplier payments from the previous period with each progress payment and submit a release of liability (waiver of lien), that the progress payment should not be made for undocumented periods, and that any damages incurred by the owners due to subcontractor claims will be covered by the contractor’s collateral. The final progress payment and the return of collateral should not be made before the expiration of the three-month period following the occupancy permit.

I. Insurance, occupational safety, SGK (Social Security Institution), and building inspection

• Construction All Risks insurance and third-party liability insurance must be arranged by the contractor, showing the owners as insured or beneficiaries; policies must be delivered before work commences.
• It should be stated that all liability arising from occupational health and safety and the insurance of workers belongs to the contractor; and the contractor’s obligation to indemnify the owners for any claims directed at them due to a work accident should be specified.
• SGK clearance: Since a clearance letter from the Social Security Institution is required at the occupancy permit stage, the contractor’s premium debt may delay the occupancy permit. Obtaining this clearance letter should be stated as an explicit obligation of the contractor.
• Construction supervision: The reports of the construction supervision company should be listed among the documents to be used as a basis for payment of progress payments. For large projects, it is recommended that owners also appoint an independent control engineer on their behalf.

3. Form of Collateral and Payment Security

In construction contracts where land share transfer is not made, apartment owners are the paying party. Tools like the “security flat” or “mortgage on the contractor’s share” used in the classical model cannot be used here, because the contractor has no share in the property. Therefore, the security must be obtained directly from the contractor, and the payment schedule must be structured together with the security.

Letter of guarantee and order of performance

Qualities that a letter of guarantee must possess:

• Must be a bank letter of guarantee; be unlimited or valid until at least a date after the occupancy permit and final acceptance date.
• Must be definite and unconditional, meaning it should be issued in a way that allows payment upon the owners’ first written demand, without requiring a court order or the contractor’s approval.
• The beneficiary must be shown as all owners or authorized representatives on behalf of the owners, and the contract must specify who has the authority to convert it into cash.
• The amount should be proportional to the cost of the work to be done and be refunded gradually as the work progresses; the final portion should be refunded after the occupancy permit, final acceptance, and subcontractor mortgage period expire.

Guarantee checks and promissory notes: Why are they risky?

In practice, a guarantee check and promissory note are a much weaker assurance compared to a bank guarantee letter: They may turn out to be unfunded, collection becomes difficult if the debtor company enters bankruptcy or concordat proceedings, and the “guarantee” annotation on them can lead to disputes if transferred to third parties. A check or promissory note should only be considered as an additional assurance to a bank guarantee.

Advance payment refunds and conditional guarantee promissory notes

Comparison with land share-based contracts: Why can’t a security apartment be used here?

Progress payment-based payment: Money should follow the work

• Advance limit: If an advance is to be given, it should be limited to a small percentage of the total amount and secured by a letter of guarantee for that amount.
• Stage-based progress payment: Payments must be tied to measurable stages such as demolition and excavation, foundation, pouring of concrete for each floor, completion of rough construction, roof, plaster, finishing works, and occupancy permit; each stage must be documented with a detection report signed by the building inspection body and the owner’s representative.
• Retention deduction: A certain percentage must be deducted from each progress payment and held until the occupancy permit and final acceptance.
• Payment account: Owners’ shares should, if possible, be collected in an account under the joint control of the owners and released with a progress payment report. Cash payments and hand-to-hand payments must absolutely not be made; each payment must be made via bank transfer with a clear explanation.
• The security deposit given to the Administration is separate: According to subparagraph (c) of the ninth paragraph of Article 13 of the 6306 Implementation Regulation, if implementation is carried out by real and private legal persons in parcels where the risky structure is located, the contractor undertaking the construction work must provide a security deposit to the Administration equal to six percent of the estimated construction cost before obtaining the building permit (there is an exception under certain conditions for structures not exceeding two stories excluding the basement and 500 m² in a single parcel). This security deposit is in favor of the Administration; it does not replace the security deposit to be given to the owners. For details, you can refer to our article urban transformation security deposit before building permit.

4. “Half From Us” Campaign and Reflection of Urban Transformation Loan Supports in the Contract

In the reviewed court decisions (Bakırköy 1st Civil Court of Commerce 2023/808 E., Istanbul Anatolian 3rd Civil Court of Commerce 2020/589 E., Court of Cassation 6th Civil Chamber 2022/2336 E., Bakırköy 7th Civil Court of Commerce 2021/806 E., Court of Cassation 15th Civil Chamber 2014/3231 E. and others), there is no specific assessment regarding the contract terms of credit assistance, interest support, or the “Half from Us” campaign in urban transformation, or how these supports will be reflected in the contractor’s agreement. The decisions address works and construction contracts within the framework of the general principles of the law of obligations and zoning law. Therefore, the reflection of these supports in the contract should be resolved through contractual techniques, taking into account the official functioning of the campaign.

Features of the campaign that directly affect the contract

According to publicly available sources based on the statements of the Ministry of Environment, Urbanization and Climate Change and the Urban Transformation Presidency, the campaign implemented in Istanbul provides grant and loan support for housing (each 875,000 TL with the announced amounts), as well as relocation support. Since the amounts may change, the current figures at the time of application should be confirmed through the Urban Transformation Presidency and e-Devlet (e-Government portal). The important points regarding the contract are as follows:

• Payments are made to the contractor, not the owner: In building-based transformation, grant and loan amounts are transferred directly to the contractor firm on behalf of the beneficiary, according to the progress level of the construction.
• Four-stage payment schedule: Sources state that payments are made as 30% at the start of work, 30% upon completion of the structural system, 30% at the plastering stage, and 10% upon obtaining the occupancy permit.
• Single contractor and all shares: To benefit from the campaign, it is required that all land shares in the building are contracted with a single contractor.
• Project size limit: It is stated that the new building, excluding parking and shelter, should not exceed one and a half times the size of the old building.
• Property owner as credit debtor: The property owner who signs the credit agreement is obligated to repay the loan, regardless of whether the contractor completes the work or not.

How should it be reflected in the contract?

• Alignment of the payment plan: The share to be paid by the property owners from their own pockets must be linked to the same stages as the support payments. If the support is paid up to 30% for the structural system, it should not be accepted that a large portion of the owner’s share is requested upfront at the start of the work.
• If support is not received: It must be clearly stated whether the contractor can stop the work, and how the difference will be covered, in case of a delay, discontinuation, or change in the amount of the grant or loan. Otherwise, the contractor will try to justify the delay by saying, “the state money hasn’t arrived.”
• Offsetting and invoicing: Since the support payment is made to the contractor by offsetting it against the beneficiary’s debt, it must be agreed upon in writing at each stage who the contractor will invoice and how much of each owner’s total debt is covered by the support.
• If the contractor abandons the work: Since support payments go to the contractor, if the work is left unfinished, owners risk being left with both credit debt and an incomplete building. When calculating the amount of the letter of guarantee, payments made from the support should also be taken into account.
• New contractor: In case of contract termination, the conditions for continuing to benefit from the campaign with a new contractor must be learned from the Administration before the contract is signed.

For different financing options, you can refer to our articles on World Bank-funded 3 million TL urban transformation loan and whether both rental assistance and interest support can be received.

5. Comparison Table of Judicial Decisions and Legal Principles

6. Items to be Included in the Contract: Checklist

The list below is the framework of the lump-sum urban transformation contract. Since the conditions of each building are different, the content of the items must be filled in according to the specific project.

1. Parties and representation: Identification and title deed information of all owners, contractor company’s title, tax number, authorization certificate number and group, authorized signatory; owners’ representative board and its powers.
2. Subject and nature: No land share transfer is made, the contract is a lump-sum construction contract.
3. Price/Consideration: Total lump sum, VAT status, distribution measure to owners and each owner’s payment schedule; absence of joint and several liability.
4. Price increase: Fixed price and waiver of adjustment or limited price difference formula.
5. Scope: Technical specifications, material list, apartment plans, net and gross areas appended to the contract.
6. Projects and permits: Project preparation and approval officer, permit application period, owners’ right to approve the project.
7. Duration: Start date and occupancy permit date, work schedule, closed list of extension reasons.
8. Progress payment: Measurable stages, inspection report, building control approval, security deposit deduction, payment account.
9. Security/Guarantee: Amount, duration, nature, staggered return, and cash conversion conditions of the bank guarantee letter.
10. Supports: Alignment of grant and loan payments with stages, course of action if support is delayed, offset and invoicing.
11. Delay penalty: Daily or monthly amount, the ability to claim loss of rent separately, reservation upon delivery.
12. Additional work and changes: Only with written approval and pre-determined cost; prohibition of off-project manufacturing.
13. Subcontractors: List of subcontractors, release of liability before payment certificate, coverage of statutory mortgage risk from collateral.
14. Insurance and occupational safety: All-risk and third-party insurance, liability for occupational accidents and recourse.
15. Official expenses: Fees, exemption documents, building inspection fee, infrastructure and parking fees, subscriptions, SGK clearance.
16. Acceptance: Provisional and final acceptance, list of deficiencies, warranty periods, method of defect notification.
17. Termination: Justifiable grounds for termination (loss of authorization certificate, deviation from work schedule, failure to provide collateral, work stoppage), evidence determination in case of termination, delivery of construction site and documents, having the work completed by another party.
18. Prohibition of assignment: The contractor shall not assign the contract or its receivables without the written consent of the owners.
19. Notices: The parties’ notification addresses and electronic communication channels.
20. Dispute resolution: Competent and authorized court, mediation requirement; it should be noted that in consumer contracts, a jurisdiction clause to the detriment of the consumer shall not be valid.
21. Form: Signing of the contract by all owners and the contractor, notarization of signatures, and initialing of each page of the annexes.

7. Why is it important to properly manage the process in these files?

A lump-sum urban transformation contract is one where all owners of a building entrust their savings, and often their loan debt, to a single company. A missing sentence in the contract can result in a building without an occupancy permit, a title deed with a subcontractor’s mortgage, a construction site halted with the explanation “government funds did not arrive,” or a bill that doubles in the middle of construction. Legal support in these cases covers the entire process, including review before contractor selection, preparation of the contract and its annexes, checking the letter of guarantee, monitoring progress payment reports, notice and termination in case of delay, and all stages of evidence determination and collection lawsuits.

In Istanbul, where urban transformation practices are concentrated, Tuzla, Pendik, Kartal, Maltepe, Kadıköy, Ataşehir, Üsküdar, Ümraniye, Sancaktepe, and Sultanbeyli on the Anatolian Side; Bahçelievler, Bakırköy, Küçükçekmece, Avcılar, Esenyurt, Zeytinburnu, and Fatih on the European Side; and Gebze, Çayırova, Darıca, Dilovası, İzmit, Körfez, and Başiskele in Kocaeli are the regions where these contracts are most frequently on the agenda. Municipal permit and occupancy practices, along with Istanbul-specific support mechanisms like “Yarısı Bizden” (Half of It Is Ours), require the contract to be established according to local conditions. For the general process, you can review our urban transformation and permit and construction process pages.

8. Frequently Asked Questions

Is it possible to have a building constructed by a contractor without giving land share?

Yes. Owners can retain full ownership of the land and commission the construction work to the contractor for a lump sum. This relationship is a contract for work; the contractor’s compensation is money, not an independent unit.

Should an urban transformation contract made for a lump sum be notarized?

Since no transfer of real estate to the contractor is committed, there is no legal form requirement. However, to facilitate proof and prevent disputes about who owns the signatures, it is recommended that the contract be made in writing and the signatures notarized.

Can the contractor increase the price during construction?

As a rule, no, if a lump sum price has been agreed upon (Turkish Code of Obligations Art. 480). The contractor can only request an adaptation from the judge in unforeseen extraordinary circumstances. A fixed price and waiver of adaptation or a limited price difference formula should be explicitly regulated in the contract.

What kind of collateral should we get from the contractor?

The strongest guarantee is an indefinite, definite, and unconditional bank guarantee letter. In addition, a guarantee deduction should be made from progress payments. Checks and promissory notes can only be additional collateral; they are not sufficient on their own.

How should we make payments?

Payments should be made after the work done, based on measurable construction stages and the inspection report signed by the building inspector and the owner’s representative. Large upfront payments and cash payments should not be made.

Are flat owners considered consumers?

If real estate is not given to the contractor and the price is paid by the owner, and the apartment is built for residential needs, courts may consider the owners as consumers. In this case, the consumer court becomes competent, and mediation is a prerequisite before litigation.

What happens if an owner does not pay their share?

The contract should state that owners are not jointly and severally liable, and each owner is only responsible for their own share. A separate protocol should also be prepared among the owners for those who make payments on behalf of non-paying owners.

We paid the contractor all the money, can our title deed still have a mortgage placed on it?

Yes. According to Article 893 of the Turkish Civil Code (TMK), subcontractors and artisans whose payments have not been made by the contractor can request the registration of a legal mortgage on the property, and any prior waiver of this right is invalid. Therefore, subcontractor payments must be documented and a release of liability must be obtained for each progress payment.

Who will obtain the occupancy permit?

If not explicitly stated in the contract, disputes will arise; the Court of Appeals has not imposed the obligation to obtain an occupancy permit, if not written in the contract, on the contractor. Obtaining the occupancy permit and the SGK (Social Security Institution) clearance letter should be written as the contractor’s obligation, and the final payment should be tied to the occupancy permit.

What can we do if the contractor leaves the work unfinished?

You can terminate the contract, determine the level of work completed through evidence assessment, convert the letter of guarantee into cash, demand a refund for payments made for unperformed work, and have the work completed by another contractor, claiming the difference from the initial contractor.

How should the penalty for delay be determined?

It should be determined per apartment for each day or month of delay, or as a certain percentage of the total cost. Since the contractor is a merchant, they cannot request a reduction of the penalty on the grounds that it is excessive. Do not forget to state in the record that you reserve your right to the penalty when taking delivery.

What changes in the contract if we receive ‘Yarısı Bizden’ (Half from Us) support?

Since support payments are made directly to the contractor on behalf of the beneficiary and in stages, the owners’ own payments should also be tied to the same stages; if support is delayed, the procedure to be followed, offset and invoicing, and if the contractor abandons the work, how the collateral will cover the support payments, should be regulated.

Why is the contractor’s authorization certificate important?

The authorization certificate group determines the scale of work the contractor can undertake. Courts consider the authorization certificate not covering the construction area as a valid reason for termination. The document should be queried via e-Devlet.

Do fee and tax exemptions cover the parking fee?

No. Following the decisions of the Council of State’s Jurisprudence Unification Board dated 2025, it is accepted that the parking fee is not covered by the 6306 exemption. It should be stated in the contract who will be responsible for this fee.

9. Conclusion

In conclusion, an urban transformation contract made with a lump sum price without transferring the land share gives owners the opportunity to own the entire building, while also burdening them with financing and completion risks. The way to manage this risk is a contract that fixes the price, describes the work in detail, links payments to the progress of the work, secures it with a bank guarantee, makes occupancy permits and subcontractor payments the contractor’s explicit debt, and pre-regulates termination and having the work done by someone else. If “Yarısı Bizden” (Half from Us) or credit support is to be used, the payment plan must be perfectly aligned with the support schedule. Signing is not the end of the process, but the beginning; tracking progress payment certificates and collateral is at least as important as the contract itself.

This article is for general informational purposes only and does not constitute legal advice for specific cases. The mentioned decisions are based on the texts in the sources where they were published; they should be verified from UYAP or official decision databases before being used in a petition or application. Since support amounts and campaign conditions may be changed by the administration, current information should be confirmed with the Urban Transformation Presidency.