The Legal Status of Construction Agreement in Return for Land Share

ABSTRACT

Construction agreements in return for land

share are among the most seen and practiced

types of contracts in our country. The need

for housing in our country constitutes the

main reason of this situation. The fact that the

costs for construction of houses or offices

being at the top of the list of investments and

expenses in developing countries, causing the

parties to form construction agreements in

return for land share. In this article, by looking

at the definition and elements of construction

agreements in return for land share, the form,

type, and provisions of such contracts and the

differences from similar contracts are examined and the legal status of these contracts is

assessed.

I. INTRODUCTION

Due to the nature of the construction, which is

expensive and requires a certain expertise,

different contract types such as construction agreements in return for land share and

construction agreements in return for flat

have emerged. Within the framework of the

construction agreements in return for land share, the

land owner has the opportunity to use its land’s value,

the contractor on the other hand earns income through

constructing a building by using its labor force and facilities. Herein this article, the legal characteristics of the

construction agreement in return for land share, which

establish certain legal obligations to both parties of the

agreement, is evaluated and assessed with regards to its

form, type and provisions of the agreement.

II. DEFINITION OF THE CONSTRUCTION AGREEMENT IN RETURN FOR LAND SHARE AND ITS ELEMENTS

I. Definition

The construction agreement in return for land share is not a standard contract which is regulated under the Turkish Code of Obligations numbered 6098 (“Law No. 6098”). Therefore, different definitions are made by academics with regard to these contracts. It has been stated by Prof. Dr. Hasan Erman that, “construction agreement in return for land share is a contract which land owner promises to assign the ownership of the land when the contractor promises to delivery of the constructed independent parts in return”1. According to a different opinion declared by Prof. Dr. Halil Akkanat, “construction agreement in return for land share is a mixed type and reciprocal contract which the contractor promises to construct independent part on land given by land owner, and at the end the determined sections to be delivered by contractor to land owner, and which contains the features of both contract of construction and preliminary contract for sale2. In this regard, even though there is not a certain definition for construction agreement in return for land share, it is possible to evaluate it as a kind of contract with reciprocal obligations in which the counterparty can be requested to perform its obligations as much as the requesting party fulfills its own performance.

II. Elements

As a reciprocal agreement, the elements of the construction agreement in return for land share are the land owner’s obligation to deliver the deed, the contractor’s obligation to build in accordance with the procedure and technical principles and transfer the independent parts accordingly.

1. Undertaking of the Land Owner to Transfer the Land Share to the Contractor at a Specific Rate

The parties of the construction agreement in return for land share are committed to fulfill their obligations reciprocally. The obligation to transfer the land share undertaken by the landowner can be achieved during the completion of a certain amount of construction work to be performed by the contractor as well as under the conditions determined between the parties. Since the obligation of the land owner is to transfer the land to the contractor on which a building is to be constructed, the contractor must be assured by the land owner that the land is legally and financially suitable for a construction. In this manner, the obligation of the land owner is not fulfilled solely by delivering the land. In addition, the land must be provided by the land owner to the constructor in a suitable form for the construction. The landowner’s obligation is illustrated in the doctrine as “The transfer of ownership of the land shares shall constitute the basis and reason for the delivery of the independent parts determined in the building to be constructed by the contractor to the land owner, but the land which shall constitute the basis of the land owner's debt should be suitable for the construction of the construction subject to the contract. If the construction is not possible due to the material and legal impossibilities present in the immovable, it will not be possible to mention the fulfillment of the act by the land owner in accordance with the contract”3. In this respect, the land owner's obligation to performwithin the scope of the construction contract to deliver the land to the contractor can be deemed as fulfilled only if the possession of the land is suitable for construction in order to fulfill the contractor's performance.

2. The Contractor's Commitment to Build and Transfer of Construction to the Land Owner

Under the construction agreement in return for land share, the contractor is obliged to build the construction and not causing a situation to the detriment of the owner of the land preventing the transfer of the independent parts of the construction. This is only possible if the contractor fulfills his performance. The ultimate goal of the parties in this contract is to make a profit. As stated by Erman “the purpose of this contract is to convert the building into a condominium and everyone has their own independent units (apartments)4.”In addition, making independent sections of the land owner is not sufficient for contractor to fulfill its obligations in terms of the construction agreement in return for land share. Further, the contractor is under the obligation to provide the condominium facility for the building administration permission (resettlement) from the related administrations and the independent sections available in the structure regarding the completed construction. The constructor shall be deemed to have fulfilled its contractual obligations once it completes these acts together with its construction act.

3. Agreement Between the Parties on the Essential Elements of the Contract

The construction agreement in return for land share is a reciprocal contract. The most important element required for the validity of this type of contract is to declare the will of the parties with their free will regarding the essential elements of the contract, as in all types of contracts, and their will to conclude a construction contract against the land share, as set out in the general provisions section of the Law no. 6098. After the parties declare their will in this direction, they can determine the content of the contract as the basic or subordinate elements provided that they do not violate the rules of mandatory law. As mentioned by Tuba İşbora; “Parties may agree on matters as the date of the start and end of the construction, actions to be taken if the contractor does not fulfill his debt in a timely manner, the amount of the penalty to be paid by the contractor to the land owner, which party to pay the insurance, mortgage, painting feesrelated to the construction, which court will be competent for the disputes arising from the contract (as contract of mandate established in the article 22 of the Code of Civil Procedure)”5.

As it is seen, the first condition for the conclusion of the contract that the parties declare their will in terms of the construction contract in return for the share of the land to be concluded in accordance with the principle of freedom of contract. As known the essential elements of the construction agreement in return for land share are (i) the contractor’s undertaking to establish a building on the landowner’s land and (ii) delivery of the land by its owner to contractor and promising the delivery of decided independent parts of the building to the contractor. For this reason, the first rule for the contract is parties’ mutually will regarding the essential elements of the contract. After the settlement of these elements, the parties are entitled to establish additional components to the agreement to the extent permitted by legal regulations.

III. THE LEGAL CHARACTERISTIC OF THE CONSTRUCTION AGREEMENT IN RETURN FOR LAND SHARE

A. In General

Since the construction agreement in return for land share is not regulated under the law explicitly, it is considered as an atypical agreement. In other words, this specific type of contract is not determined by the law. The most important impact of this issue arises when determining the applicable law to the dispute resolution with regards to the constructıon agreement in return for land share. The fact that there are different opinions among the scholars is stated in doctrine by Sümeyye Hilal Yıldırım as “There is a consensus in the doctrine that the construction agreement in return for land share has a double-type mixed contract. However, it is seen that there are different opinions and disputes whether the obligation of the construction contract is continuous or not, as same as the contract of work”6.

B. Being a Bilateral Contract

The landowner, who is on one side of the construction contract for the land share, is obliged to transfer the share of the land; on the other side, the contractor undertakes to complete the construction of land in return for the landowner’s share of the land and to transfer these construction parts to the landowner. As seen, both parties have obligations under the contract, which makes the contract a reciprocal contract.

C. Being a Mixed Type of Contract

The construction agreement in return for land share contains more than one type of contracts in terms of the parties’ obligations. Indeed, the obligation of the land owner’s to deliver the share is a feature of the immovable sales contract and the contractor’s obligation arises as a feature of the contract of work. In this scope, since the parties have both different obligation which arises as features of different contracts, the construction agreement in return for land share is a mixed-type contract. 

Mixed-type contract is demonstrated by Erman as conventions that are constituted by bringing together the elements of more than one contract in a way not regulated by law and in this sense, accepted as different from unified contracts and contracts with unique structure (sui generis)7. Considering the issues explained, the construction agreement in return for land share can be mentioned as having a mixed nature.

D. Continuous-Temporary Type of Contractual Relationship

After the conclusion of the construction agreement in return for land share, the matter of the due date for the parties’ obligation arises. The answer to this question will change as per the characterization of the contract whether it is continuous or not. Erman states that the recent opinion adopted by the Court of Appeal on the nature of the contract is the mixed opinion which recognizes that the contractual nature of the contract isboth non-continuous and continuous when it is fair for the current case8. In the current case-law of the Court of Cassation, mixed opinion was adopted at the point that the contract was sudden or continuous. Indeed, in the decision of Court of Cassation’s General Assembly on the Unification of Judgments this issue the contract is regarded as mixed type9. The reason for this distincition is the actions that the parties have or will perform mutually. For instance; even the obligation of the land owner is accepted as “non-continuous/sudden” obligation, since the contractor’s liability takes time, it is considered that the provisions of continuous contracts to be applied to protect the benefits. According to another point in doctrine, this contract is considered as “non-continuous” by mentioning that the interest of the landowner with respect to the performance and the expiration of the contractor's performance take place at the same time10. In this context, it is emphasized that the agreement in return for land share is “non-continuous” since the land share is generally transferred to the contractor as well as the construction rate. Indeed in doctrine it is stated that “the characterization of the contract whether it is continuous or not is important for the effects when the contract is terminated. Thus, if we accept that the relationship is continuous, when the owner of the land terminates the contract, the part of the contract will continue to exist because since the termination of the contract will have proactive effect. However, if we accept that the relationship is non-continuous, since the contract will be effectively terminated the contractor can demand the return of the works he has done so far based on the unjust enrichment provisions”11. In that manner, for a current dispute, it is be necessary to categorize the contract since it will be important at the time of the termination. Indeed, for the non-continuous agreement, the termination of the contract will be realized as “return” while the termination of the continuous contract is realized as “avoidance”. In the first situation, the parties are entitled to request their deeds since the contract ends retroactively. However, in the second option, the performances fulfilled until the date of the termination remain and the conract ends proactively12.

E. Being Able to be Annotated to the Deed Registry

With regards to the construction agreements in return for land share, it has been regulated in the article 55/b-c of the Land Registry Statue published in Official Gazette dated 07.06.1994 that if the contract is arranged by public notary it may be issued to title deed. In that context, if the contract is issued, even the land owner delivers the land subject to contrary to a third party, contractor may claim his rights to that third party. The article 1009 of Turkish Civil Code numbered 4721 (“Law no. 4721”) regulates the “the construction agreement in return for land share” as a relative right that may be issued to the title deed. One of the important effect of the deed restriction is that the third party buying the land from owner cannot assert his “good will” claims according to article 1027 of the Law no. 4721 

The deed restriction for the construction agreement in return for land share is made in accordance with article 44-b of the Land Registry Law numbered 2622 (“Law no. 2644”). Also, as per the Notary Law article 44/b, preliminary contract for real estate sale and the construction agreement in return for land share can be issued to the title deed at the request of one of the parties. However, in accordance with the provisions of the law, annulment shall be made by the title deed manager or land registry officers if the sale is not made within five (5) years after the annotation or the right of easement is not registered to the title. However, in the event that the specified conditions are fulfilled, the annotation to be realized in terms of the construction agreement in return for land share shall remain effective as long as the rights of the contractor continues due to the fact that there is no time limitation on the validity of the interpreted by the law13.

IV. FORM OF THE CONSTRUCTION AGREEMENT IN RETURN FOR LAND SHARE

A. Form

As explained above, in the construction agreement in return for land share both parties have their obligations; the land owner delivers the land to the contractor and the contractor to complete the building. If the obligations of the parties are examined, the delivery of the land is an element of the real estate sales contract and construction of a building is the contract of work’s which make the construction agreement in return for land share a mixed contract. 

Despite the described mixed nature, the obligations of the parties have validity requirements. In that manner, the validity of the agreement depends whether it is concluded in the form which established by law or not. This issue described in doctrine as “even though there is not an established form for the contractor’s obligation, it is a validation rule for land owner to make the delivery shall be completed formally in accordance with the article 22/2 and 213 of the Turkish Code of Obligations and article 706 of Turkish Civil Code. For that reason, it is obligatory to have the agreement before the notary or land registry office when it contains the commitment to delivery of the land’s share or to be made before the land registry office and with legal form at the beginning of the land share’s delivery”14.

It should be noted at this point that in accordance with Article 26 of the Law no. 2644, the immovable sales contract must be concluded in front of the land registry officer. 

If the contract of sale is regulated by the notary publics, it is possible to accept the contract as a promissory sale contract. In an example decision of the Court of Appeals, it has stated as “the case is about the annulment of the land registry and re-registry and of the registering the right of usufruct regarding the preliminary contract for sale. The preliminary contract for sale regulated under the article 22 of Turkish code of obligations must be concluded before the notary as per the article 213 of the code of obligations and 706 of the Turkish civil code and 89 of the notary law. In order words, its validity depends on official form, it is a bilateral and a type of contract that provides personal rights. The creditor of the promise, if the buyer will not fulfill his obligation to delivery as per the preliminary contract for sale, can request from the court to fulfillment of the promise in accordance with the article 716 of the Turkish civil code”15.

In addition, in some opinions in doctrine it is accepted that even if a construction agreement in return for land share which involves a promise to sell an immovable property is not formed in statutory form, getting the agreement approved before a notary public by having the signatures of the parties would make the agreement valid. In this scope, the construction agreement in return for land share can be valid formally “even the agreement between the parties is not regulated by the notary, if the agreement is accepted and read before the notary by parties, and the notary market he parties to sign the agreement in presence of witnesses”16. This opinion accepts that, if the parties face the mentioned situation, not accepting the agreement’s validity only because of its formal incompliance will be against the freewill and freedom of contract which may cause loss of rights. 

However, if the above-mentioned opinion is not accepted, the contract which is not formed as per the formal rules and only parties’ signatures is approved by the notary, the agreement cannot be accepted as valid. In this situation, the parties only can claim their expenses in accordance with the provisions of unjust enrichment17.

In conclusion, even though the opinions in doctrine are different, as per the article 26 of the Law no. 2644, the construction agreements in return for land share is made in the presence of the land registry officer is the formal form condition required. In addition to this, it is possible and valid18 to make the contract in front of the notary public in accordance with the Article 60 of the Notary Law, provided the contract is regulated by the notary. It is also stated in the case law of Court of Appeals that the construction agreement in return for land share in the form of approval shall not be sufficient for the validity of the contract19. However, as an exception to the general rule, there are some case laws accepting the agreements not regulated by the notary as valid if the construction is completed and the title deed is delivered20.

B. Results of Lack of Formal Requirements

1. In General

In a broad sense, according to Article 12 of the Law no. 6098, the agreements established against the formal rules will be invalid. In case of such invalidity, the judge may decide as the agreements invalid even though the parties do not assert this claim. The case law states the invalidity of the agreements due to lack of formal requirements as follows; “It is understood that the ordinary written contract dated 25.1.2007 and the construction agreement in return for land share and preliminary contract for immovable sale are concluded in 18.6.2009 by the notary’s approval on the signatures. The contract dated 25.1.2007 includes the obligation of transfer of title deed, and should be arranged in accordance with its official form, therefore the current form of this contract is invalid in accordance with Article 706 of the Turkish Civil Code, article 213 of the Turkish code of obligations, article 26 of the Land Registry Law and article 60 of the notary law. According the scope of file, the delivery of the share subject to case and agreement is not completed. Therefore, the agreement dated 25.1.2007 shall be decided as invalid due to the lack of formal requirements21. 

Indeed, as its nature, the construction agreement in return for land share includes delivery of the land and preliminary contract for sale as per the parties will. As explained above, both agreement has its own provisions regarding the formal requirements. Indeed, -even though there are different opinions in doctrine- while the preliminary contract for sale is regulated by the notary and signed by the parties, the delivery of the land has to be concluded in land registry office as formal requirement. In that manner, these agreements must be concluded in accordance with the formal requirements. Even though the parties will not rise their objections in case of the lack of formal requirements, the court shall take into consideration ex officio and accept the agreements as invalid. 

At last, according to the Court of Appeals decisions, even the formal requirements are not met, the objections raised by the parties may be deemed against the principle of good faith regulated under article 2 of Law no. 4721, provided that the performance as per the agreement is fulfilled by the parties22.

2. Conditions in Which the Lack of Forma Requirements Cannot be Asserted

As explained in detail above, a construction agreement in return for land share is a mixed contract, so it needs to be done in an official form. In case of lack of formal requirements in the contract, this deficiency should be taken into consideration by the judge even if it is not asserted by the parties. However, in some cases assertion of formality deficiency can be against the principle of good faith even if the contract between the parties is invalid due to the fact that the formal conditions are not met. The examples of this situation are; parties to perform their obligations, if one of the party has fulfilled its obligations while the other party has not or asserting the lack of formal requirement even the parties have performed their obligations certain rate. In these conditions it will be against good faith for parties to claim that the contract does not meet formal requirements as per the article 2 of the Law no. 4721. Indeed this issue has been explained in case law as follows; “first of all, it is a condition of validity for the construction agreement in return for land share to be made before land registry officer or notary as per the article 26 of the Law no. 2644, article 60 of the notary law and article 706 of the Law no. 4721. Article 12 of the Code of Obligations numbered 818 is also applicable for the contract which will change the provisions of the constructionagreement in return for land share. If most of the obligations are fulfilled by parties in compliance, then it will be against the good faith -regulated under the article 2 of the Law no. 4721- to asser that the agreement is formally invalid, as accepted by case law”23. As it is seen, even thpugh the Court of Appeals decisions state that the objections regarding the form of the contract is against good faith provided that the parties fulfilled their contractual obligations; it should be examined in terms of each event and evaluated with respect to fairness and honesty rule.

V. THE DIFFERENCES BETWEEN THE CONSTRUCTION AGREEMENTS IN RETURN FOR LAND SHARE AND SIMILAR AGREEMENTS

A. Differences Between The Construction Agreement In Return For Land Share And The Contract of Mandate

Article 502 of the Law no. 6098 regulating the contract of mandate demonstrates; “With the contract of mandate, assignee undertakes to perform an action or conclude a proceeding”. Accordingly, it can be said that the assignee in these contracts usually commits to perform the works determined for a certain fee and accepts the necessary care for the work in question24. In other words, it is accepted for the contract of mandate that assignee only undertakes to show necessary care while performing the works. The contract of mandate is a type of contract specifically regulated by the law and is therefore considered among the typical types of contracts. 

The construction agreement in return for land share are included in the types of atypical contracts that are not regulated by the law, given the elements explained. In addition, even though payment is not an obligatory element for the contract of mandate, it is mandatory for land owner to deliver the independent parts to the contractor which are determined in contract, instead of payment. In addition the contractor commits to obtain results, in the construction agreement in return for land share, in contrary to contract for mandate. In that manner, contract for mandate -which does not contain “payment” element- is a semi-bilateral, while the construction agreement in return for land share is fully mutual by its elements25.

The other difference that arises between the two types of contracts is that, despite the fact that the contract of mandate does not have a formal requirement, the construction agreement in return for land share on the other hand must be made in official form. In addition, while it is possible for the parties to return from the contract for mandate at all times, the return from the construction agreement in return for land share is subject to strict conditions26.

B. The Differences Between The Construction Agreement In Return For Land Share And Sales Contract

The main element in sales contracts is the delivery of a product which has already been produced to the buyer and such contracts are defined as typical contracts specifically arranged in the law. Accordingly, even though the product to be delivered in the sale contract is present at the time of the contract, the independent parts under the construction agreement in return for land share the building constructed by the contractor are not yet available at the time the contract is concluded. As a result of the conclusion of the contract, the contractor constructs independent parts and delivers them to the owner. 

It is worth to mention that, the above-mentioned distinction is not solely sufficient to distinguish of sales contracts and the construction agreement in return for land share. Indeed, as mentioned above, the goods that have not yet been manufactured may be the subject ofa sales contract. For this reason, it can be determined whether or not the contract will be considered as a sales contract considering the main performance undertaken by the contractor. Because, as a rule, when labor overrides as element the agreement considered as the construction agreement in return for land share, when material elements overrides, it is accurate to accept as sales contract27. Therefore, in cases where it is not possible to evaluate the contract issue concluded between the parties at the time of signing of the contract, the legal nature of the contract may be determined by the inspection of the performances undertaken by the contractor during the execution of the contract.

C. The Differences Between The Construction Agreement In Return For Land Share And Service Agreement

When the service contracts are examined, it is seen that there is a legal relationship between the workers and the employer is in accordance with the instructions of the employer within the workplace of the employer, in order to do a certain job and in accordance with the duty of care28. In other words and as defined in Article 393 of the Law No. 6098 “The service contract is defined as a contract for the employee to work for a specific or nonspecified period of time depending on the employer and to the employer to pay him / her a fee for the time or the work done.” Accordingly, the employee is not obliged to create any result, but only committed to doing a job in accordance with loyalty and care obligation. 

In the construction agreement in return for land share, the contractor is discharged from the debt by doing the construction work only for a period of time. The obligation of the contractor is to create a whole and deliver it to the owner. For this reason, it is accepted that the contractor will not get rid of his debt unless the independent sections are completed and delivered. 

In terms of the contracts in question, the conditions of the law are different; the service contract is not subject to any form, whereas the construction agreement in return for land share must be made in the form of a notary public arrangement.

VI. THE TYPES OF THE CONSTRUCTION AGREEMENT IN RETURN FOR LAND SHARE

The construction agreement in return for land share,which is an atypical contract type not regulated in the law, can occur in different ways. Accordingly, frequently occurred forms of contract are; (i) where the entire land or certain shares have been transferred to the contractor, (ii) where the land share has been transferred, taking into account the level reached by the construction, (iii) where the landowner undertakes to sell the land shares and the contractor undertakes to build on the land.

A. Transfer of the Entire Land or Certain Shares to the Contractor

In the first type of the construction agreement in return for land share, the landowner transfers the ownership of all or a certain part of the land to the contractor in accordance with the contract concluded. The contractor is under the obligation to complete the construction work against the land owner. With this agreement, the parties determine the qualifications of the flats made for the land owner, the date of transfer of the land shares to be transferred to the contractor and other conditions. Most of the time, the land owner guarantees his rights by establishing mortgages in his favor on the transferred shares. According to the agreement, the mortgages are removed in parallel with the level reached by the construction. 

Although the transfer of the land shares to the contractor is shown as sales and it is accepted that there are two contracts, namely the sales contract and the construction contract, the two contracts are not separate from each other, therefore must be evaluated together29.

B. Transfer of The Land Share with The Consideration of the Level Reached By The Construction

In these contracts, which are type of the construction agreement in return for land share, the landowner is transferring the land shares to the contractor according to the level reached by the construction and fulfills the obligations of his share in accordance with the contract. In addition to this, it is also possible by the landowner to be authorized to represent the contractor for the sale of the completed parts30.

C. Undertaking of the Owner of the Land to Sell its Shares to the Contractor and the Contractor to Perform the Construction on the Land

The land share provision is the most common type of the construction agreement in return for land share and it is accepted that the parties have two different contracts. As a matter of fact, the landowner promises the sale of the independent parts to be transferred to the contractor and the contractor undertakes to carry out the construction work. Therefore, in practice, it is accepted that both parties have concluded two contracts as “preliminary contract for sale” and “construction contract “and agree on mutual obligations under these contracts31.

 In light of the above, it is possible to say that the most common type of the construction agreement in return for land share in practice is to sell the shares of the landowner to the contractor, and the contractor has concluded the contract by undertaking the construction work on the land.

VII. THE PROVISIONS OF THE CONSTRUCTION AGREEMENT IN RETURN FOR LAND SHARE

A. Obligation of the Contractor

1. Delivery of the Building

The most important obligation of the contractor – who is a party to the construction agreement in return for land share- is to complete the building subject to the agreement and deliver the same in accordance with the agreement and procedure. Since the delivery of work can only be accepted when all the parts of the construction is done and delivered as suitable for the purpose, uncompleted works will not be accepted as a fulfilled obligation32. In addition, since the construction subject to agreement built on the land, it is generally accepted that the contractor’s debt is fulfilled by notifying the land owner that the work has been completed33. However, if it is not possible to use the building by the land owner due to the legal or actual impossibilities contained in the work, it will not be appropriate to accept that the delivery has been made properly. 

In practice, the most common example of this issue is that the condition of getting “certificate of occupancy” determined in the contract. In that case, not having a “certificate of occupancy” will be considered as deficiency in obligations as illustrated in the decision of the 14th Chamber of Court of Appeals dated 02.07.2012 numbered 2012/8365 E.ve 2012/9084 K. “The case is about the cancellation of title deed and reregistration as per the construction agreement in return for land share between land owner and contractor. It has been understood that the contractor have not fulfilled his obligation whole and dully. However the rate of the deficiency has not been determined. Therefore, by the exploration with attendance of the experts, the amount of the uncompleted works has to be determined and after determination of whether the complete percentages of the construction is acceptable, time to be given the applicant to stock this price. Also, having certificate of occupancy is determined as the obligation of the contractor in the construction agreement in return for land share, the court must have rule after giving time to the applicant for having certificate of occupancy and completion of the deficiencies. 

In light of these explanations, the essential obligation of the contractor is the transfer of the work to the landowner without any deficiency, in accordance with the procedure and the standard, as determined in the contract.

2. Liability of Loyalty and Care

The duty of loyalty and care of the contractor is stipulated under the Article 471 of the Law no. 6098 as “The contractor has to perform its obligations as per the duty of loyalty and care, by taking into consideration the rightful interests of the business owner. In determining the liability of the contractor for his loyalty and care liability, a prudent contractor who undertakes the works in a similar field shall take into account the appropriate professional and technical rules.” In this respect, the contractor is obliged to investigate whether the appropriate conditions have occurred during the construction of the work, whether the appropriate projects and plans have been applied for the construction of the work, otherwise they are responsible for the problems arising from the projects in question34. 

The duty of care of the contractor can be listed as; liability regarding material used in construction, liability due to the continuing construction under his management, liability to act in accordance with the warning sent due to the deficient and noncompliant work35. 

Although the Law No. 6098 does not give an explicit regulation regarding the loyalty obligation of the contractor, it is accepted in the doctrine that the loyalty liability will be valid for the contractor in terms of the construction agreement in return for land share by applying suitable provision of the contract of mandate36. Accordingly, the contractor must perform his duties properly during the construction of the work and must provide the landowner with the necessary information about of the work and the use of the materials.

B. Obligations of the Land Owner

Being a bilateral agreement which gives both party obligations, the landowner also has some liabilities in the construction agreement in return for land share. They can be sorted as; (i) liability to deliver the land share and (ii) liability to perform his obligations necessary for the construction. 

1. Land Owner’s Liability to Deliver Land Shares

In the construction agreement in return for land share, the land owner’s liability to deliver the land shares can be realized in stages following the delivery of the construction or taking into account the stages of the construction. In addition, the land owner may establish a  mortgage in favor of himself, if he delivers the land share before the construction starts or uncompleted. This type of delivery in the construction agreement in return for land share is not a real delivery or sale, rather it is fulfilling an obligation settled in the agreement37.

The due date for the land owner’s liability may be decided with the agreement. Lack of any provisions at that manner, the liability of the land owner will be effective once the independent parts of the building will be transferred in accordance with the agreement. This issue is illustrated in an example case law as; “The construction agreement in return for land share gives both parties right and responsibilities. Firstly, the land owner – which is obliged to deliver the land share- will give the title deed of the land or deed of construction servitude after the contractor fulfills his obligations. The contractor’s main liability is to construct the building. And by meaning the “construction”, the building must be completed in accordance with the science rules and purpose of the building. If the contractors completes the building under these conditions, may request from land owner the registration at the time of delivery unless otherwise agreed in the agreement, or may request before the deliver or at the rate of the completion of the building when there are provisions in the agreement38. 

It should be noted that, if the agreement is concluded as a “turnkey contract”, not-having certificate of occupancy will be a deficiency in terms of the contractor’s obligation, the liability of the land owner must be recognized once the certificate of occupancy is acquired by the contractor39.

2. The Liability of the Land Owner to Fulfill the Obligations Mandatory for the Construction

Considering that the purpose of the construction agreement in return for land share is the construction of the land in accordance with the conditions determined in the contract on the land owner’s land and transfer of the land shares in return; it will be seen that one of the most important conditions for the fulfillment of these elements in the contract is the fact that the construction on the land is de facto and legally possible. For this reason, the landowner must deliver the land in a convenient way for construction40. Otherwise, the landowner may be responsible for the default and responsibility arising from not delivering the land as required. 

However, unless agreed otherwise in the contract, it is accepted that the projects are prepared and certificate of occupancy is acquired by the owner of the land. However, if a proxy is given to the contractor for the transactions, completion of the projects and requiring the certificates are the contractor’s responsibilities41. This issue is illustrated in a case law as; “Although there is no explicit provision in the contract that the construction license will be taken by the contractor cooperative, it is necessary to assume that the contractor cooperative has the authority to obtain a construction permit, as the contractor cooperative is also appointed as a proxy and has the authority to get construction permits between the authorities42.

CONCLUSION

In conclusion, the construction agreements in return for land share, which are signed by constructor and land owner to have bilateral obligations, are deemed to be sui generis agreements since they are not prescribed explicitly by law. Further, such agreements are defined as mixed type agreements since they are not formulated by a law while they have certain features of different typical agreements and they are characterized as one of the type of immediate performance agreements. However, it should be noted that there are some counterviews in the legal doctrine, and the case law of the Court of Appeals includes the examples to consider the construction agreements in return for land share as having the features of continuous and temporary performance agreements44. 

Since the construction agreements in return for land share must be prepared by notary public to be signed by parties, contrary practice would cause an objection of non-conformity with the mandatory form of the agreement or courts may take such non-conformity into account ex officio. However, both legal doctrine and the case law of Court of Appeals accept that the objections of non-conformity with mandatory form of the agreement must be assessed by the courts in accordance with good faith and equity principles. 

In the light of the explanations of the elements and definitions of such agreements with the legal doctrine and case law of the Court of Appeals, the construction agreements in return for land share can be stipulated as agreements of mixed type and atypical agreements to impose obligations on both parties.

BIBLIOGRAPHY

Arda Sinan Atabekoğlu, Arsa Payı Karşılığı İnşaat Sözleşmesinde Yüklenicinin Eseri Teslim Borcunda Temerrüdü, Master Thesis, Kırıkkale University, Kırıkkale, 2014  

Aydın Zevkliler/Emre Gökyayla, Borçlar Hukuku Özel Borç İlişkileri, 18. Edition, Ankara 2017 

Cengiz Kostakoğlu, İçtihatlı İnşaat Hukuku ve Kat Karşılığı İnşaat Sözleşmeleri, 10. Edition, İstanbul 2017 

Cevdet Yavuz, Borçlar Hukuku Dersleri Özel Hükümler, 6. Edition, İstanbul 2008 

Fahrettin Aral, Borçlar Hukuku Özel Borç İlişkileri, 11. Edition, Ankara 2018 

Fatma Neslihan Aslan, Arsa Payı Karşılığı İnşaat Sözleşmesinde Yüklenicinin Ayıptan Doğan Sorumluluğu Master Thesis, Bahçeşehir University, İstanbul 2016 

Halil Akkanat, “Kat Karşılığı İnşaat Sözleşmelerinde Fazla İnşaat”, Prof. Dr. Fikret Eren’e Armağan, Ankara 2006 

Hasan Erman, Arsa Payı Karşılığı İnşaat Sözleşmesi, 3. Edition, İstanbul, 2007 

Hasan Erman, “Kat Karşılığı İnşaat Sözleşmelerinde Müteahhidin Temerrüdü Bir İçtihadı Birleştirme Kararının Düşündürdükleri”, Journal of Istanbul Bar Association, April-May-June 1984, number 4-5-6 

İlker Hasan Duman, Arsa Payı Karşılığı İnşaat Sözleşmeleri Nasıl Düzenlenmelidir?, 1. Edition, Ankara 2017 

Mahmut Çoşkun, İnşaat Sözleşmelerinden Kaynaklanan Davalar, 1. Edition, Ankara 2017 

Sümeyye Hilal Yıldırım, Arsa Payı Karşılığı İnşaat Sözleşmesi Master Thesis, Gazi University Institute of Social Sciences, Ankara 2011 

Şeyma Karaman, “Arsa Payı İnşaat Sözleşmesi Master Thesis, Çankaya University Institute of Social Sciences, Ankara 2009 

Tuğba İşbora, Arsa Payı Karşılığı İnşaat Sözleşmesi Master Thesis, Akdeniz University Institute of Social Sciences, Antalya 2009

FOOTNOTE

1 Hasan Erman, Arsa Payı Karşılığı İnşaat Sözleşmesi (İnşaat Sözleşmesi), Der Yayınları, Istanbul 2007, p.1.

2 Halil Akkanat, “Kat Karşılığı İnşaat Sözleşmelerinde Fazla İnşaat”, Prof. Dr. Fikret Eren’e Armağan, Ankara 2006, p.63 and following pages.

3 Şeyma Karaman, Arsa Payı İnşaat Sözleşmesi Master Thesis (İnşaat Sözleşmesi), Çankaya University Institute of Social Sciences, Ankara 2009, p.2.

4 Erman, İnşaat Sözleşmesi, p.3.

5 Tuba İşbora, Arsa Payı Karşılığı İnşaat Sözleşmesi Master Thesis (İnşaat Sözleşmesi), Akdeniz University Institute of Social Sciences, Antalya 2009, p.6.

6 Sümeyye Hilal Yıldırım, Arsa Payı Karşılığı İnşaat Sözleşmesi Master Thesis (İnşaat Sözleşmesi), Gazi University Institute of Social Sciences, Ankara 2011, p.12.

7 Erman, İnşaat Sözleşmesi, p.5.

8 Erman, İnşaat Sözleşmesi, p.8; Yıldırım, İnşaat Sözleşmesi, p.15.

9 Court of Appeals General Assembly on the unifiction of judgments D. 25.1.1984, E. 1983/3, K. 1984/1.

10 Arda Sinan Atabekoğlu, Arsa Payı Karşılığı İnşaat Sözleşmesinde Yüklenicinin Eseri Teslim Borcunda Temerrüdü Yüksek Lisans Tezi, Kırıkkale Üniversitesi, Kırıkkale 2014, p.30.

11İşbora, İnşaat Sözleşmesi, p.23; Erman, İnşaat Sözleşmesi, p.9.

12 Fatma Neslihan Aslan, Arsa Payı Karşılığı İnşaat Sözleşmesinde Yüklenicinin Ayıptan Doğan Sorumluluğu Master Thesis, Bahçeşehir University, İstanbul 2016, s. 16.

13 İlker Hasan Duman, Arsa Payı Karşılığı İnşaat Sözleşmeleri Nasıl Düzenlenmelidir?, Seçkin, Ankara 2017, p. 103.

14 Karaman, İnşaat Sözleşmesi, p.10; same direction Cengiz Kostakoğlu, İçtihatlı İnşaat Hukuku ve Kat Karşılığı İnşaat Sözleşmeleri (İnşaat ve Kat Karşılığı İnşaat Sözleşmeleri), Beta, Istanbul 2017, p.71; Cevdet Yavuz, Borçlar Hukuku Dersleri-Özel Hükümler, Beta, Istanbul 2008, p.

15 and following pages. 15 Court of Appeals General Assembly of Civil Chambers, D. 10.07.2013, E. 2013/14-474, K. 2013/1050

16 Erman, İnşaar Sözleşmesi, p.17.

17 Erman, İnşaat Sözleşmesi, p. 18.

18 15. Civil Chamber of Court of Appeals D. 01.10.1990, E. 1990/1369, K. 1990/3677.

19 23. Civil Chamber of Court of Appeals, D. 25.5.2017, E. 2016/9367, K. 2017/1578.

20 15. Civil Chamber of Court of Appeals, D. 28.11.2011, E. 2010/7418, K. 2011/6873.

21 23. Civil Chamber of Court of Appeals, D. 07.06.2013, E. 2013/2097, K. 2013/3917.

22 23. Civil Chamber of Court of Appeals, D. 01.10.2012, E. 2012/4002, K.2012/5598.

23 23. Civil Chamber of Court of Appeals Court, D. 01.10.2012, E. 2012/4002, K. 2012/5598.

24 Mahmut Çoşkun, İnşaat Sözleşmelerinden Kaynaklanan Davalar (Davalar), Seçkin, Ankara 2017, p. 127.

25 Fahrettin Aral, Borçlar Hukuku Özel Borç İlişkileri, Yetkin, Ankara 2018, p. 392.

26 Yıldırım, İnşaat Sözleşmesi, p. 51.

27 Aydın Zevkliler, Emre Gökyayla, Borçlar Hukuku-Özel Borç İlişkileri, Tercih Kitapevi, Ankara 2017, p. 484.

28 Çoşkun, Davalar, p. 131.

29 Erman, İnşaat Sözleşmesi, p. 13.

30 İşbora, İnşaat Sözleşmesi, p. 16.

31 Erman, İnşaat Sözleşmesi, p 13.

32 Kostakoğlu, İnşaat ve Kat Karşılığı Sözleşmeleri, p. 387.

33 Erman, İnşaat Sözleşmesi, p. 34.

34 Karaman, İnşaat Sözleşmesi, p. 20.

35 Erman, İnşaat Sözleşmesi, p. 39-52.

36 Karaman, İnşaat Sözleşmesi, p. 18.

37 Coşkun, Davalar, p. 449.

38 14. Civil Chamber of Court Appeals, D. 23.11.2017, E. 2015/6036, 2017/8768 K.

39 Coşkun, Davalar, p. 450.

40 Erman, İnşaat Sözleşmesi p. 55.

41 Coşkun, Davalar, p. 440.

42 15. Civil Chamber of Court of Appeals, D. 22.11.2012, E. 2012/3776, K. 2012/7357.

43 Erman, “Kat Karşılığı İnşaat Sözleşmelerinde Müteahhidin Temerrüdü Bir İçtihadı Birleştirme Kararının Düşündürdükleri”, Journal of Istanbul Bar Association 1984, April-May-June, number 4-5-6, p. 216-217

44 Court of Appeals General Assembly on the unifiction of judgments, D. 25.01.1984 1983/3, K. 1984/1