How flat-for-land construction contracts work in Turkey: the notarised form requirement, key clauses, the owner's rights on delay and defects, and what happens on termination.
This article is based on the provisions of the Turkish Code of Obligations No. 6098 on contracts for work, sale of immovables, default and penalty clauses as in force on 1 November 2026. General references to Court of Cassation practice are given without case numbers; current legislation and case law should be checked before signing a contract or filing a claim. The Turkish version of this article prevails.
Handing your land or old building to a developer in exchange for flats in the new building is one of the most common ways housing is built in Turkey. With urban transformation, this model is no longer only a question for landowners; owners of flats in older apartment blocks – including many foreign owners – now face it too. The problem is that these contracts are often signed quickly on the basis of a developer’s template, and the real questions only surface when construction is delayed, the work turns out defective or the developer abandons the project.
This guide explains the legal nature of the flat-for-land construction contract (kat karşılığı inşaat sözleşmesi), why it must be made in official form, the clauses it should contain, the owner’s rights in case of delay or defects, and the consequences of terminating the contract, by reference to the Turkish Code of Obligations (TCO). The topic is at the core of our flat-for-land construction contracts and construction law practice.
What is a flat-for-land construction contract?
Under a flat-for-land contract (also called a “land share for construction” contract, arsa payı karşılığı inşaat sözleşmesi), the landowner undertakes to transfer certain shares of the land to the contractor (developer, yüklenici), and the contractor undertakes to build on the land and hand over the agreed independent units (bağımsız bölüm) to the landowner. Money usually does not change hands; the price is the land share transferred to the contractor.
Turkish law has no separate chapter for this contract. It combines two elements. The first is a contract for work (eser sözleşmesi): under TCO Article 470, this is a contract in which the contractor undertakes to produce a work and the employer (iş sahibi) undertakes to pay a price for it. Here the work is the building, the employer is the landowner and the price is the land share. The second is a promise to sell immovable property (taşınmaz satış vaadi): the landowner promises to transfer land shares to the contractor in the future. This mixed structure determines both the form of the contract and the rules applied in disputes.
Form: why the contract must be made before a notary
Under TCO Article 237, a sale of immovable property is valid only if made in official form, and a promise to sell immovable property is not valid unless made in official form. Because a flat-for-land contract includes a promise to transfer land shares, in practice it is executed as a notarised deed drawn up by the notary (düzenleme şeklinde). An ordinary written contract, or a document where only the signatures are certified, does not meet this requirement.
The consequences of a defect in form are serious: as a rule, a contract not made in official form does not give the parties a right to demand performance. In Court of Cassation practice, it is accepted that relying on the defect in form may be contrary to good faith in exceptional cases where the obligations have largely been performed (no case number is given here), but starting a project on an ordinary contract in reliance on that is a serious risk.
Another benefit of the notarised form is that the right arising from the promise of sale can be annotated (şerh) on the land register. The annotation helps protect the parties if the land is transferred to third parties after the contract is signed. The duration and conditions of the annotation should be checked separately under the land registry rules.
Clauses every contract should contain
Most disputes arise from issues that were never addressed or were left vague. Before signing, check that the following are set out clearly and measurably:
| Topic | Why it matters |
|---|---|
| Allocation of units | Which flats (floor, aspect, square metres, parking, storage) go to whom, ideally with the project plan and drawings attached. |
| Deadlines | Dates for the building permit application, start of works and handover; the event from which each period runs (e.g. issue of the permit) should be stated. |
| Technical specifications | Without material quality, brand/class and common-area works in writing, it is hard to prove “incomplete” or “defective” work. |
| Staged title transfer | Transferring land shares in stages linked to construction progress, rather than all at once, protects the landowner. |
| Penalty clause (cezai şart) | A set amount for each month of delay eases the burden of proof; the amount should be proportionate. |
| Security | A bank letter of guarantee or similar security protects against the contractor abandoning the project. |
| Costs and taxes | Who pays for permits, the occupancy permit (iskân), title deed fees, utility connections and rent assistance. |
| Restriction on assignment | Whether the contractor may assign the contract or its rights to a third party without the owner’s consent. |
The contractor’s core obligations
Under TCO Article 471, the contractor must perform with loyalty and care, having regard to the employer’s legitimate interests. The standard of care is the professional and technical rules that a prudent contractor in the same field would follow. The contractor must carry out the work personally or under its own management, but may subcontract where its personal qualities are not essential.
If the contractor supplies the materials, it is liable to the employer like a seller for defects in those materials (TCO Article 472). Under the same article, if it emerges that the materials or site provided by the employer are defective, or anything else threatens proper or timely completion, the contractor must notify the employer immediately; otherwise it bears the consequences. Ground conditions and design changes are common examples.
Owner’s rights when construction is delayed
Withdrawing before the handover date
The owner does not always have to wait for the handover date. Under TCO Article 473, if the contractor fails to start on time, delays the work in breach of the contract, or a delay not attributable to the employer makes it clear by all estimates that the work will not be finished on time, the employer may withdraw from the contract without waiting for the handover date. Because this has serious consequences, it is important to have the delay technically documented (for example, through a court-ordered evidence determination, delil tespiti).
Default and the owner’s options
If the handover date is fixed in the contract, the contractor is in default once that date passes; otherwise a formal notice is needed (TCO Article 117). A debtor in default must compensate the loss caused by late performance unless it proves it was not at fault (TCO Article 118). In bilateral contracts, the creditor may give the debtor a reasonable additional period to perform, or ask the court to set one (TCO Article 123).
If performance is still not made, under TCO Article 125 the owner chooses one of three routes: (1) demand completion plus damages for delay; (2) waive performance and claim damages for non-performance; or (3) withdraw from the contract. The choice must be made by promptly notifying that performance and delay damages are being waived. Which route is right depends on how far construction has progressed and what the owner actually needs.
Late-delivery damages and penalty clauses
In practice, loss from late delivery is usually calculated on the basis of the rental income the owner lost during the delay (this is the common approach in Court of Cassation practice; no case number is given). If the contract contains a penalty clause for delay, two points matter:
- Under TCO Article 179(2), where the penalty is agreed for failure to perform on time, the creditor may claim the penalty together with performance unless it has expressly waived that right or accepted performance without reservation. When taking delivery of the flats, the owner should therefore state in writing that the penalty claim is reserved (ihtirazi kayıt). Otherwise the right to claim the penalty may be disputed on the ground of unreserved acceptance.
- Under TCO Article 182, the parties may freely set the amount of the penalty, but the judge will reduce an excessive penalty of its own motion. Under Article 180, the penalty is payable even if the creditor has suffered no loss; if the loss exceeds the penalty, the creditor may claim the excess only by proving the debtor’s fault.
Defective or incomplete work
After handover, the owner’s first task is to inspect the building. Under TCO Article 474, the employer must inspect the work as soon as is feasible in the ordinary course of business and notify the contractor of any defects within a reasonable time; either party may ask for the work to be examined by an expert. Under Article 477, an employer who fails to inspect and notify is deemed to have accepted the work, and defects that appear later (latent defects) must also be notified without delay.
The employer’s options for defects are listed in TCO Article 475: withdrawal if the work is so defective that the employer cannot use it or cannot fairly be expected to accept it; keeping the work with a price reduction proportional to the defect; or free repair if this does not involve excessive cost. The right to damages under the general rules is reserved. An important limit: where the work was built on the employer’s land and removing it would cause excessive harm, the employer cannot withdraw. In flat-for-land projects this limit often applies, so in practice price reduction, repair and damages come to the fore.
As to time limits, under TCO Article 478 claims for defective work in immovable structures become time-barred five years from handover, and twenty years where the contractor is grossly at fault, regardless of the nature of the work.
Withdrawal, termination and return of title
Under TCO Article 125(3), on withdrawal the parties are released from their performance obligations and may reclaim what they have already performed. In a flat-for-land project, this means the land shares already transferred to the contractor can be reclaimed; the party at fault may also have to compensate the loss caused by the contract falling away. If the contractor has already transferred shares to third parties, a title deed cancellation and registration action (tapu iptali ve tescil davası) raises separate issues such as the third party’s good faith and reliance on the land register; see our title deed cancellation and registration page.
Where construction is well advanced, retroactive withdrawal can be problematic both economically and legally. In Court of Cassation practice, solutions such as terminating the contract with effect for the future (ileriye etkili fesih) under the principle of good faith, with the contractor earning land shares in proportion to the work completed, are known to be adopted in such cases (no case number is given). Which route is appropriate depends on an expert determination of the level of completion.
The owner may also end the contract at any time, but at a price: under TCO Article 484, the employer may terminate before completion by paying for the work done and compensating all of the contractor’s losses.
For contractors, rising costs are a frequent issue. If a lump-sum price was agreed, the contractor generally cannot ask for an increase; but if circumstances that could not be foreseen at the outset make the work extremely difficult, it may ask the court to adapt the contract or, if that is not possible, withdraw (TCO Article 480). A similar general rule is the hardship provision in TCO Article 138. These claims require proof that the circumstances at signing changed in an unforeseeable way.
Flat-for-land contracts in urban transformation
In transformation projects carried out after a risky building determination (riskli yapı tespiti), the contract is usually made with many owners rather than a single landowner. Decision-making among owners, the shares of owners who do not join, and rent assistance are then governed by Law No. 6306 on the Transformation of Areas under Disaster Risk and its implementing regulation. The contract-for-work rules above still apply, but the decision-making and allocation rules must be checked separately. For details, see our article on owners’ rights in urban transformation and our urban transformation page.
Frequently asked questions
Is a flat-for-land contract valid if it is only signed in writing?
Because it includes a promise to transfer land shares, TCO Article 237 requires official form; in practice this means a deed drawn up by a notary. An ordinary written contract generally does not meet this requirement. Court of Cassation practice may reach different results in exceptional cases where the obligations have largely been performed, but relying on that is risky.
What can I claim if the developer hands over my flat late?
If the conditions of default are met, under TCO Articles 118 and 125 you may claim delay damages, waive performance and claim damages after giving a reasonable period, or withdraw from the contract. If there is a penalty clause, it is important to state in writing on taking delivery that you reserve your penalty claim.
Is there a deadline for cracks or leaks that appear after handover?
Yes. You must notify the contractor without delay once you discover the defect (TCO Articles 474 and 477). For filing a claim, TCO Article 478 provides five years from handover for immovable structures, or twenty years where the contractor is grossly at fault.
Should I transfer all the land shares to the developer at the start?
Transferring everything up front can leave the landowner exposed if the contractor abandons the project or sells shares to third parties. Linking transfers to construction progress, obtaining security and annotating the contract on the land register reduce this risk.
If the project is abandoned halfway, can I terminate and get my land back?
If the contractor is in default, you may withdraw under TCO Article 125 and reclaim the transferred shares. Where construction is well advanced, solutions such as termination with future effect and allocation in proportion to the work done may come into play. Choosing the right route depends on a technical assessment of the level of completion.
Conclusion
A landowner’s strongest protection in a flat-for-land contract is built when the contract is signed, not after a dispute arises: official form, measurable deadlines, staged title transfer, a proportionate penalty clause and security. During construction, documenting delays and defects on time is decisive to avoid losing the rights the TCO provides. If you would like your draft contract or an ongoing dispute reviewed, you can contact us.
Sources
- Turkish Code of Obligations No. 6098 (published by the Ministry of Labour and Social Security), Arts. 117, 118, 123, 125, 138, 179, 180, 182, 237, 470–475, 477, 478, 480, 484
- Anadolu Agency, amendment to the implementing regulation of Law No. 6306 (news report, in Turkish)
This content is provided for general information and does not constitute legal advice.