A Critical Turning Point in Construction Law: Flat-for-Land Construction Contracts and Landowners’ Rights

With the acceleration of urban transformation processes in Turkey, Flat-for-Land Construction Contracts (Construction Contracts in Return for a Land Share) have become one of the most dynamic and dispute-prone areas of law. These "mixed" contracts — in which the landowner promises to transfer their land to the contractor, and the contractor undertakes the obligation to build independent units on that land and deliver them — carry great economic risks and opportunities for both parties.

As Kubat Law, we examine in depth the legal details that landowners and contractors must pay attention to in this complex process.

1. Validity Requirement: Official Form Before a Notary

Flat-for-land construction contracts contain the elements of both a "promise to sell immovable property" and a "works contract". For this reason, they are invalid unless made "in the form of a deed" before a notary, as required by law. Ordinary written contracts signed between the parties themselves, as a rule, carry no legal validity and leave the parties unprotected in a future dispute.

2. The Concept of "Delivery" in the Contract and Delay Compensation

The greatest source of dispute in construction law is the failure to complete the construction on the agreed date.

Occupancy Permit (Building Use Permit): Unless otherwise agreed in the contract, for the construction to be deemed delivered, not only the rough construction must be finished but the occupancy permit must also have been obtained.

Delay Compensation and Penalty Clause: If it is not delivered within the construction period, the landowner may claim, for each month, the loss of rental income (delay compensation) or, if specified in the contract, the penalty clause.

3. Incomplete and Defective Works (Defective Performance)

The completion of the construction does not mean that the contractor is entirely released from their obligation.

Open Defect: Deficiencies visible to the eye at the time of delivery (e.g., the kitchen cabinets not being installed).

Hidden Defect: Defects that emerge during use after delivery (e.g., plumbing leaks, structural problems).

Heirs or property owners have the right to demand, through legal action, the remedying of these defects or a reduction in the price.

4. Default of the Contractor and Termination of the Contract

Where the contractor abandons the construction or it becomes clear that they cannot complete it within a reasonable time, "Termination of the Contract" comes onto the agenda for the landowners. However, if a large part of the construction has been completed (90% or above according to the practice of the Court of Cassation), the balance of rights between the parties is preserved by preferring termination with future effect (ex nunc) instead of termination with retroactive effect (ex tunc). This distinction plays a vital role in title-deed annulment and registration actions.

5. Strategic Advice for Landowners

As Kubat Law, before starting construction projects, we recommend paying attention to the following points:

Technical Specification: Every detail, from the brand to the quality of the materials to be used, should be included in an annex to the contract.

Securities: Obtaining a definite and open-ended bank letter of guarantee from the contractor, or establishing a "construction security mortgage" on the title, carries the landowner to the safest harbour.

Balance of Share Transfer: Instead of transferring all the title deeds at the start of the construction, the transfer should be made gradually according to the progress level of the construction (foundation/damp-proofing, rough construction, occupancy permit, etc.).

Conclusion

Flat-for-land construction projects are processes involving years of effort and valuable properties. A single missing clause in a contract may cause the landowner to struggle with years of litigation. From the contract-drafting stage to the delivery of the project, at every step, Kubat Law secures your rights by providing professional oversight in light of current legislation and Court of Cassation case law.