A construction-for-share contract (kat karşılığı inşaat sözleşmesi) is a hybrid arrangement: the landowner transfers or agrees to transfer their land share to the contractor, who in return builds and delivers specified units. When either side fails to perform, some of Turkey’s most complex and protracted real estate litigation results.
How the Contract Works
The landowner contributes the land; the contractor contributes construction. Ownership of specific completed units passes to each party as defined in the contract. Neither party’s obligation is independent of the other’s.
Critical formal requirement: the contract must be executed in notarial form or before the land registry. A contract made only in writing (adi yazılı) is void as a general rule, though partial performance can complicate the picture. Notarial form is always advisable.
Principal Obligations
Landowner:
- Transfer or commit to transfer the designated land share
- Support the permitting process
- Accept delivery of their designated units
Contractor:
- Complete construction on time and in accordance with the project
- Deliver the designated units free of defects
- Comply with all permits, technical standards, and planning requirements
Common Disputes
Construction delay: the most frequent dispute. Where the contractor misses the delivery date, the landowner may grant additional time, terminate the contract and claim damages, or seek cancellation of the contractor’s land registry entries.
Non-delivery or defective delivery: where units are not delivered, or are delivered with structural defects, shortfalls in specification, or planning violations, the landowner has claims for repair, price reduction, or damages.
Wrongful transfer of land share: if the contractor transfers the land share to a third party in breach of contract, a land registry cancellation and registration action becomes necessary. Urgency is critical — an interim injunction should be sought immediately to prevent further transfers.
Contractor insolvency: where the contractor becomes insolvent or abandons the project, both recovery of the land share and completion of the building become complex, requiring coordinated legal steps.
Land Registry Cancellation and Registration Action
The primary judicial remedy in these disputes is the land registry cancellation and registration action (tapu iptali ve tescil davası), heard by the civil court of first instance (asliye hukuk mahkemesi). Either party may seek:
- Cancellation of the opponent’s land registry entry
- Registration of the disputed interest in their own name
- Contract termination and damages
Expert valuation, site inspection, and architectural review are standard elements of the process.
Frequently Asked Questions
The contractor abandoned the project halfway through. What are my options? First, review the contract’s delay and termination provisions. Send a formal notice granting additional time. If the contractor still does not perform, you may terminate and seek land registry cancellation of any shares already transferred. Legal advice should be sought before each step to preserve your rights in sequence.
The contractor sold my designated unit to a third party. What can I do? Apply immediately for an interim injunction to block further transfers. Then bring a land registry cancellation and registration action. The third party’s good faith is critical: a buyer who relied on the land registry in good faith may be protected; a bad-faith acquirer is not.
Is a handwritten construction-for-share contract binding? As a rule, no. The formal requirement is notarial execution or land registry registration. However, where both parties have partly performed, the picture is more complex and case-specific legal analysis is essential.
What is a security mortgage (teminat ipoteği) and should I insist on one? A security mortgage on the contractor’s land share, registered in favour of the landowner, protects against non-performance. It is one of the most commonly omitted yet most effective safeguards — insisting on it at the contract stage is strongly advisable.