A Land-for-Build Agreement or Property-for-Share Construction Agreement or a Build-and-Share Agreement is a form of bilateral agreement under Turkish law, provided for under the Turkish Code of Obligations No. 6098 and the Turkish Civil Code No. 4721. By this agreement, the land owner transfers a portion of the share of land to a contractor (builder). In return, the contractor agrees to make independent units on the property and also to provide the land owner with a certain number of those units.
Key Obligations under a Land-for-Build Agreement
There are two key obligations under such an agreement:
The land owner is under an agreement to convey a specified percentage of his/ her land to the contractor.
The contractor undertakes to transfer the contracted number of independent units to the landowner in accordance with the architectural and construction standards as mentioned in the project.This does not necessarily mean the discharge of all obligations by the contractor since they are also required to complete all units according to the architectural project and give them in a habitable and compliant state per the standards set by the Turkish Regulation on Construction Zoning and Planning.
Legal Nature of the Land-for-Build Agreement
In return, the landowner undertakes to transfer the agreed land share upon pre-defined construction milestones attained by the contractor, such as upon obtaining a temel üstü ruhsat, or the establishment of a building lien. The contractor shall undertake the duty of building and delivering the units to the owner in conformance with approved plans. Such makes the agreement a hybrid contract under Turkish law, Borçlar Kanunu, Madde 470 et seq., where mutual obligations are imposed on both parties. Land-for-Build Agreement in Turkiye
As this contract is related to transferring shares of real property, according to the relevant provision of the Notaries Law, such a transaction should be notarized. If this agreement is not executed in notarized form, it is void, and performances under such a defective agreement can be reclaimed only under the unjust enrichment provisions. Registration and Annotation in the Land Registry Pursuant to the provisions related to the annotation of a pre-sale agreement of the property, the Land-for-Build Agreement has to be annotated on the land registry record Türk Medeni Kanunu Madde 706. However, annotation may be refused upon a court injunction on the land, but such refusal does not have any legal basis. In this case, an annotation supporting the court ruling can override such a decision because the actual annotation does not affect the proprietary rights.
Types of Land-for-Build Agreements
Despite these procedural differences, under the Turkish practice, such agreements are, in general, concluded in three main forms:
Full or Partial Transfer Against Mortgage: The title of the land in full or in part is transferred to the contractor against a mortgage guarantee. The mortgage is progressively released as the construction advances:.
Staged Land Transfer: The share in land is transferred stage by stage as the construction is realized according to the completion stages determined in the agreement, within the framework of the provisions under the Turkish Code of Obligations. A Combined Agreement may contain both the elements of a Land-for-Build Agreement and also a pre-sale agreement for the independent units (taşınmaz satış vaadi )-where the land transfer and construction is contracted within the same agreement. Formal Requirements of a Land-for-Build Agreement
Under the Turkish Code of Obligations, a Land-for-Build Agreement that is not in compliance with the formalities is usually invalid. Any performance under an agreement that is considered void can be reclaimed according to the unjust enrichment rules. However, in the event that the contractor has substantially performed the contract based on the assurances given to him by the landowner then he cannot rescind the agreement since it would run afoul of the principles of equity provided in the Turkish Civil Code Article 2.
Contractor's Obligations
The contractor shall be obligated to carry out the completion and delivery of the units in conformity with the architectural and technical specifications of the agreement. Conformity with the norms of safety and quality, the use of approved materials, and adherence to the Turkish Regulation on Construction Zoning and Planning are obligatory. In case of neglect of these duties, legal penalties might be conducted under Türk Borçlar Kanunu Madde 112 et seq.
Remedies for Defects and Non-Performance
Should the contractor provide defective work or not deliver within the agreed time, the landowner has the following possibilities of cure from the Turkish Code of Obligations:
The landowner may request rectification. (Türk Borçlar Kanunu Madde 475)
The landowner can claim damages - provided rectification is not possible.
In serious cases, the landowner can even apply for the rescission of the contract.
Notaries and Courts' Role
As it involves real property, the contract needs to be signed and registered by a notary, Noterlik Kanunu, Madde 60. Any variation of the agreement terms must also be notarized. Disputes are often resolved with expert panels evaluating quality and extent of contractor performance under Türk Medeni Kanunu Madde 4.
The Land-for-Build Agreements are quite complex legal documents and should meet strict formalities and regulations. Their preparation needs great care for the protection of the parties' rights and interests, duly notarised under the relevant provisions of Turkish law. CCS Law may assist clients in the preparation or any advice regarding preparation on such agreements with wide expertise in real estate and construction law.
For expert assistance with preparing or reviewing Land-for-Build Agreements under Turkish law, please contact CCS Law for tailored legal advice.
Disclaimer: This article is intended for informational purposes only and does not constitute legal advice.
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