BUYER’S LEGAL RIGHTS FOR DEFECTIVE, INCOMPLETE, AND DELAYED PROPERTY DELIVERY IN TURKEY

TYPES OF LEGAL RELATIONSHIP AND PARTY CAPACITIES WHEN BUYING A HOME FROM A CONTRACTOR IN TURKEY

Where a home bought from a contractor has incomplete construction, defective workmanship or a delay in delivery, the legal routes to be followed differ in every concrete case. The most basic mistake made in practice is to assume that every buyer who acquires property from the same contractor has the same legal status. Yet the first step that decides the fate of the legal process is the correct identification of the legal capacity in which the buyer is a party to the contract.

The nature of the contract directly changes the statutory provisions to be applied, the forfeiture periods and the competent court. In Turkish legal practice three basic types of legal relationship stand out:

• Sale of a Home in the Capacity of Consumer: This is the relationship formed by people who buy the home for personal housing purposes rather than professional or commercial ones. It gives the consumer additional statutory protections and an exemption from certain fees; disputes are heard by the Consumer Court.
• Construction Contract in Return for Land Share: This is a work contract under which the landowner acquires independent units in return for transferring shares in the land. As a rule the landowner is not regarded as a consumer, and disputes fall within the jurisdiction of the Civil Court of First Instance.
• Acquisition by External Sale / Assignment of a Claim: This is the contractor’s transfer of the independent unit that will fall to him to a third party without complying with the official form requirement. It does not transfer ownership, but it is treated as an assignment of a claim (TCO Art. 183).

1. The Position of a Buyer Who Purchases a Home from a Construction Company as a Consumer in Turkey

Natural or legal persons who buy the home without any commercial or professional purpose, purely for personal use or as a place to live, hold the capacity of consumer. It makes no difference that the seller is a construction company, a construction company or a project developer; the relationship falls directly within the scope of Consumer Protection Law No. 6502 (CPL).

The main legal advantages that consumer status gives the buyer in Turkey are as follows:

• Extended Protection: In addition to the general law of obligations, the right to have the item replaced with a defect-free equivalent and the principles of interpretation in favour of the consumer apply.
• Statutory Exemptions: Cases brought before the Consumer Courts are exempt from certain court fees.
• Pre-Paid Housing Sale Regime: Where the home is bought from the project before it is finished, with the price paid in cash or in instalments (off-plan / foundation-stage sale), extra protective rules come into play under CPL Art. 40 et seq., such as the obligation to provide security and the impossibility of concluding a contract before a building permit is obtained.

2. The Position of the Landowner in a Construction Contract in Return for Land Share in Turkey

In a construction contract in return for land share (a flat-for-land construction contract), the landowner transfers certain shares in his land to the contractor; in return the contractor undertakes to build independent units on the land and deliver them to the landowner. Under Art. 470 of the Turkish Code of Obligations (TCO) this relationship is a work contract.

Here the developer is in the position of the “contractor”, and the landowner in that of the “owner of the work”. The independent units built are in the nature of the price payable for the work the contractor has produced. According to the settled case law of the Court of Cassation, the landowner is as a rule not regarded as a consumer. This is because the landowner’s aim is not to acquire a consumer good directly but to make economic use of the land he holds. In disputes between the landowner and the contractor the competent court is not the Consumer Court but the Civil Court of First Instance.

Under Turkish law the landowner’s contractual right is a personal right capable of being annotated on the land register. Article 1009 of the Turkish Civil Code expressly lists rights arising from a construction contract in return for land share among the rights that may be annotated. Land Registry Law Art. 26 likewise provides that construction contracts in return for land share drawn up by notaries shall, at the request of either party, be annotated on the land register.

3. The Position in Turkey of Third Parties Who Buy a Home from a Contractor by External Sale (Without Complying with the Official Form)

It is very often seen in practice that the developer sells the independent units due to come to him from the landowner to third parties before the title deed has been transferred. However, under the Turkish Civil Code, sales of immovable property and contracts creating an obligation to transfer ownership must be made in official form (a promise of sale before a notary, or before the Land Registry Office).

Without an official promise of sale executed before a notary, external sales contracts made between the parties in ordinary written form do not transfer ownership. Such contracts may nevertheless be treated as a transfer to a third party of the developer’s right to demand the title deed of the independent unit from the landowner (TCO Art. 183 – assignment of a claim). To avoid a loss of rights in purchases of this kind, it is vitally important to examine the annotations, mortgages, attachments and construction servitude declarations on the land registry record in detail before the sale.

Where the developer collects the price with no intention of performing from the outset or sells the same independent unit to several people under external contracts, alongside the civil claims the offence of fraud may also give rise to criminal liability under Turkish law.

• The Position of People Who Buy a Flat from a Construction Company Under a Promise to Sell Agreement in Turkey

The most common form of buying a flat from a construction company in practice is the promise to sell agreement for immovable property. Where the construction is not yet finished, no construction servitude has been established, or the price is to be paid in instalments, the title deed cannot be transferred straight away; so, instead of a final sale that passes ownership immediately, the parties conclude a preliminary contract (a promise of sale) undertaking that the title deed will be transferred at a later date.

Under Turkish law this transaction does not give the buyer a right of ownership (a right in rem); it gives only a personal right (a claim) to demand that the title deed be transferred. In other words, signing the contract does not make the buyer the owner of the property; it only gives him a power to demand registration in the sense of the law of obligations from the developer. This basic legal distinction between ownership and a personal claim directly decides the whole procedure to be followed and the fate of the case where the contractor falls into default or third parties intervene, so it must be fully grasped at the very first stage.

• In What Form Must a Promise to Sell Agreement Be Made in Turkey?

Article 237 of the Turkish Code of Obligations lays down that a promise to sell immovable property is not valid unless it is drawn up in official form. Notaries Law Art. 89 expressly lists the promise to sell real estate among the contracts which by their nature require a transaction at the land registry, and provides that they must be executed as a notarial deed.

The form requirement here is the point most often misunderstood in practice. For validity the contract must be concluded as a deed drawn up by the notary. A text prepared at an estate agency or between the parties and taken to the notary only for certification of signatures does not count as a deed drawn up by the notary.

A preliminary sales contract concluded in ordinary written form or by way of signature certification is as a rule invalid under Turkish law. In that case the buyer cannot demand transfer of the title deed on the basis of the contract. Whether he may demand repayment of the price he has paid is assessed separately.

Although the official form requirement is the rule in contracts concerning the transfer of immovable property, there is a settled exception to it, shaped by the principle of good faith (TCC Art. 2).

As the Assembly of Civil Chambers of the Court of Cassation also expressly stated in its decision dated 16.12.2021, Case No. 2018/453 and Decision No. 2021/1702; although contracts concluded without complying with the official form are as a rule invalid, once the obligations have been performed reciprocally in full or to a substantial extent, the defect of form can no longer be invoked in a manner contrary to the rule of good faith. In this context, the transfer of the land share to the contractor has also been counted among the cases in which the obligations are performed and a plea of invalidity cannot be heard.

However, relying on this judicial exception and dispensing from the outset with the official form requirement (a notarial deed or registration at the land registry) is extremely risky and cannot be advised. Whether the good-faith exception will be applied in the concrete case despite the breach of form, the completion rate of the construction and proof of the payments made are matters that become final only at the end of a long trial before the Turkish courts.

• Why Does Annotating the Promise to Sell Agreement on the Title Deed Matter in Turkey?

A promise to sell agreement for immovable property concluded between the contractor and the buyer is by its legal nature a transaction creating an obligation, and gives the buyer only a personal right. Under the principles of the Turkish Code of Obligations, personal rights are subject to the rule of relativity; that is, as a rule they can be asserted only against the contractor who is a party to the contract, and not against third parties.

Article 1009 of the Turkish Civil Code lays down the annotation mechanism in order to prevent the loss of rights that the relativity of personal rights can cause. Where a promise to sell agreement for immovable property executed as a notarial deed is annotated on the land register, the relative right attains the status of a strengthened personal right. Once the annotation is entered, the right arising from the promise of sale can also be asserted against every third party who later acquires a right over that property (new buyers, attachment creditors, mortgage creditors and so on).

Where the promise to sell agreement is not annotated on the land register, the buyer faces a serious ownership risk. If the developer sells the same independent unit to someone else and that person completes the transfer (registration) at the land registry in good faith, the registration is treated as valid. A buyer without an annotation cannot claim the title deed from a good-faith 3rd party; he is left only with the right to demand repayment of the price paid to the developer and compensation for the loss suffered (TCO Art. 112). This is why entering an annotation on the land registry record as soon as the contract is concluded is the foundation of legal protection in Turkey.

An annotation entered on the land registry record does not give protection for an unlimited time. Under Land Registry Law Art. 26, if no sale is made within five years of the annotation, or no easement is created and registered at the land registry, the annotation is struck out of its own motion by the land registry director or the officials. Especially in drawn-out construction processes and urban transformation projects, failing to keep track of this time limit in Turkey causes the protective shield on the title deed to disappear silently.

In pre-paid housing sales, Art. 41 of Law No. 6502 also comes into play in order to protect the consumer. This mandatory provision requires the seller either to register the sale of the home on the land register or to execute the promise to sell agreement as a notarial deed before a notary. Unless a legally valid contract has been concluded, demanding any payment or any promissory note or bond from the consumer, under whatever name, is expressly prohibited.

• What Can Be Claimed in Turkey If the Contractor Does Not Transfer the Property Despite the Promise to Sell Agreement?

If the developer does not carry out the transfer he has undertaken, the buyer may file a title deed cancellation and registration lawsuit on the basis of the promise to sell agreement for immovable property. This action, called compulsory registration in legal technique, has ownership taken from the developer and registered in the buyer’s name by a court judgment.

Because the claim concerns the substance of the property (the right of ownership), it produces three critical legal consequences under Turkish law:

• The Competent Court and the Consumer Distinction: The nature of the relationship between the parties determines the competent court. If the buyer bought the home for personal use or consumption the case is heard by the Consumer Court; if the parties are acting commercially, or a construction contract in return for land share is involved, it is heard by the Civil Court of First Instance.
• Mediation in Cases Concerning the Substance of the Property: Because a claim for compulsory registration concerns the substance of the property, an application for mediation in Turkey is not a precondition to the case.
• Limitation Period: Because no special period is laid down in the Code, a registration claim arising from a promise of sale is subject to the general 10-year limitation period under TCO Art. 146. The limitation period starts to run from the date on which the debt falls due (the date the property should have been delivered and registered). If the property has in fact been delivered to the buyer, under the settled case law of the Court of Cassation the developer cannot raise a limitation defence (TCC Art. 2, the rule of good faith).

THE LEGISLATION APPLIED TO DISPUTES WITH A CONTRACTOR IN TURKEY

Three basic statutes shape the legal solution in Turkey for incomplete work, defective workmanship and delays in delivery in homes bought from a contractor. These statutes apply directly or by analogy according to the buyer’s capacity and the nature of the contract.

• Turkish Code of Obligations No. 6098 (TCO): This is the main legislation governing the contractor’s liability for defects in a work contract and the consequences of the debtor’s default. In late delivery and debtor’s default, Art. 125, which governs the creditor’s optional rights, together with Arts. 470–486, covering the work contract, liability for defects and the optional rights of the owner of the work, are decisive in disputes.
• Consumer Protection Law No. 6502 (CPL): This gives additional and enhanced protection to buyers with consumer status who acquire the home for their personal use rather than for a commercial or professional purpose. The provisions on defective goods and the consumer’s optional rights in Arts. 8–12, together with the special Pre-Paid Housing Sale regime in Arts. 40–45, known as off-plan or foundation-stage sales, are the rules that must be considered first in the event of a dispute.
• Code of Civil Procedure No. 6100 (CCP): This allows unfinished work and faulty construction to be formally established through the court before it is caught by a time limit or altered accidentally or deliberately. Before the case is filed or during it, the provisions of Art. 400 et seq. on the institution of the preservation of evidence, which is vital for the judicial establishment of the situation, must be taken into account.

Alongside these, Art. 1009 of the Turkish Civil Code No. 4721 and Art. 26 of Land Registry Law No. 2644 govern the annotation on the land register of rights arising from promise to sell agreements and construction contracts in return for land share. The form requirement for a promise of sale is set out in Art. 237 of the Turkish Code of Obligations and Art. 89 of Notaries Law No. 1512.

In work contracts (and especially in construction contracts in return for land share), the main rule applied against defective or incomplete performance by the contractor is TCO Art. 475:

TCO Article 475 — Optional rights of the owner of the work

Where the contractor is liable because of a defect in the work, the owner of the work may exercise one of the following optional rights:

1. To rescind the contract if the work is defective to a degree that the owner of the work cannot use it or cannot in fairness be compelled to accept it, or is contrary to the terms of the contract to the same degree.
2. To keep the work and demand a reduction in the price in proportion to the defect.
3. To demand that the work be repaired free of charge, at the contractor’s entire expense, provided this does not require excessive outlay.

The owner of the work’s right to claim compensation under the general provisions is reserved.

Where the work has been built on the owner of the work’s immovable property and removing it would cause excessive loss, the owner of the work cannot exercise the right to rescind the contract.

Paragraph 3 (the final paragraph) of TCO Art. 475 is one of the restrictions most often overlooked in Turkish real estate law practice.

• Prohibition on Rescission: Where the home or independent unit built has been constructed on the landowner’s property and demolishing or removing that structure would cause excessive economic loss, the landowner or the buyer cannot exercise the right of rescission.
• Alternative Legal Routes: Where the prohibition on rescission applies in Turkey, the claim should be directed towards a reduction in the price in proportion to the construction defect (compensation) or free repair or completion, so that no rights are lost.

HOW DOES THE LEGAL PROCESS WORK IN TURKEY IF THERE ARE SHORTCOMINGS IN A HOME BOUGHT FROM A CONTRACTOR?

Under Turkish law, the legal classification of the problems found in a home bought from a developer directly determines the legal routes open to the buyer, the limitation periods and the notification duties that carry forfeiture. For that reason, before any claim is made against the contractor, it is essential to establish and classify in law whether the problem is incomplete work or defective work.

• Why Is the Difference Between Incomplete Work and Defective Work Decisive in Turkey?

Under Turkish law the basic difference in legal classification rests on the distinction between an obligation that is not performed at all (incomplete work) and one that is performed badly or improperly (defective work).

1. Incomplete Work: This is where an item of work provided for in the contract, its annexes, the approved architectural project or the technical specification has not been carried out at all in the independent unit or the common areas. For example, failure to build the enclosed car park shown in the approved project, failure to install the lift that was undertaken, or failure to complete the landscaping all constitute incomplete work.
2. Defective Work: This is where the item of work has physically been carried out but has not been performed properly in terms of quantity, quality or technical standards. For example, inadequate thermal insulation (external cladding), leaks caused by faulty waterproofing in wet areas, or joinery that does not match the brand or quality promised in the technical specification fall within defective work.

For consumer transactions, the concept of defect has been given a wider scope than under the repealed rules by Article 8 of Consumer Protection Law No. 6502:

1. Under CPL Art. 8/1 of Law No. 6502: Defective goods are goods that do not conform to the features stated on their packaging, label, instruction manual, internet portal or in their advertisements and announcements, or that do not conform to the quality stated by the seller or set out in the technical regulation.
2. Under CPL Art. 8/2 of Law No. 6502: For the purpose of establishing non-conformity with the contract, failure to meet the reasonable purpose of use of equivalent goods, or containing material, legal or economic shortcomings that reduce or remove the benefits the consumer reasonably expects, is also accepted as a defect. Under this rule, the absence from the home of the qualities the seller or contractor promised in advertisements, brochures and catalogues likewise constitutes a defect amounting to breach of contract.

The practical and procedural consequences of this legal distinction are vital in Turkey if a loss of rights is to be avoided. As regards defective work, the Code places on the buyer or consumer a duty to inspect the goods after delivery and to give notice of the defect immediately. A notice of defect not given in time raises a presumption that the work has been accepted and leads to the loss of the optional rights. As regards incomplete work, however, what we face is not an obligation performed improperly but an obligation never performed at all, so the defect notification procedure (the burden of inspection and notice) does not apply. A claim for incomplete work can be made directly, without being subject to a notice period, within the general limitation periods.

In Turkey, claims based on incomplete work are assessed within the framework of the general provisions on non-performance of an obligation:

1. Under Art. 112 of the Turkish Code of Obligations (TCO): If an obligation is not performed at all or is not performed properly, the debtor is liable to make good the resulting loss of the creditor unless he proves that no fault whatsoever can be attributed to him.
2. Burden of Proof: TCO Art. 112 accepts as a presumption that the debtor (the contractor) is at fault. The buyer therefore has to prove only the discrepancy between the undertaking in the contract and the actual position (the incomplete work); the contractor is held liable for the loss caused unless he proves that he was free of fault in failing to perform.

• How Are Obvious Defects and Hidden Defects Distinguished in Turkey?

The legal character of the construction faults in a home in Turkey is examined in two main categories, obvious defects and hidden defects, in terms of notification periods, forfeiture periods and the scope of the contractor’s liability. In work and sales contracts, whether the buyer or owner of the work avoids losing rights depends on correctly identifying the type of defect and on discharging the burdens laid down by the legislation in good time.

Under the Turkish Code of Obligations (TCO) and the Consumer Protection Law (CPL), the distinction between the types of defect rests on the following basis:

1. Obvious Defect: These are shortcomings and faults that can be noticed at first sight in Turkey, at the moment of delivery, through a simple sensory review (inspection) carried out in the ordinary course of business. Broken or cracked tiles, a missing kitchen cabinet, paint and plaster faults, a socket that does not work or broken window handles are obvious defects.
2. Hidden Defect: These are faults that cannot be understood by an ordinary review at the moment of delivery and emerge later through use, the passage of time, changing climatic conditions or examination by a technical expert. Engineering errors in the foundations and the load-bearing system of the building, water and damp insulation leaks that appear after rain, and concealed installation faults and mould caused by thermal bridging are typical examples of hidden defects.

• Is There a Duty to Notify the Construction Defect in Turkey When a Defective Home Is Bought from a Contractor?

Within the general provisions on the work contract, under TCO Art. 474/1; after the work is delivered the owner of the work is obliged to review the work as soon as he has the opportunity in the ordinary course of business and, if there are construction defects, to notify them to the contractor within a reasonable period.

Under TCO Art. 474/2, on the other hand, either party is entitled, at its own cost, to demand that the condition of the work be reviewed by an expert and that the result be set out in a report. This possibility is what allows the technical disputes and obvious defects arising between contractor and buyer at the delivery stage to be recorded by way of the determination of evidence in Turkey.

The legislature has attached a heavy legal consequence to failure to discharge the burdens of review and notice of defect in time. Under TCO Art. 477:

1. Presumption of Tacit Acceptance (TCO Art. 477/2): If the owner of the work neglects to review and to give notice, he is deemed to have accepted the work tacitly. In that case it becomes impossible, as a rule, to exercise the optional rights on the basis of obvious defects.
2. Notice Period for Hidden Defects (TCO Art. 477/3): If the defect in the work emerges later (a hidden defect), the situation must be notified to the contractor without delay. If no notice is given, the work is deemed to have been accepted with the hidden defect it carries as well.
3. Liability for Deliberately Concealed Defects (TCO Art. 477/1): Where the contractor has deliberately concealed defects that could not be noticed on a proper review, he cannot escape liability by arguing that the notice period has expired.

The point on which consumers and owners of the work most often come unstuck and lose rights when buying a home from a developer in Turkey is delivery records signed at the moment of handover without any reservation being entered.

• The Legal Risk of Signing Without Reservation: Signing the delivery record at the key handover with the words “I have taken delivery of the flat complete and free of defects” raises a presumption in the developer’s favour that there were no obvious defects.
• Entering a Reservation: At the moment of delivery every visible shortcoming and obvious defect must be written into the record one by one; and a reservation in the form “I take delivery reserving my rights of action and claim in respect of obvious and hidden defects” should be added to the record.

WHAT ARE THE BUYER’S LEGAL RIGHTS IN TURKEY WHEN A DEFECTIVE HOME IS BOUGHT FROM A CONTRACTOR?

Where the home delivered by the developer is defective or incomplete, the legal rights the buyer may use are laid down separately under the Turkish Code of Obligations (TCO) and the Consumer Protection Law (CPL), according to the nature of the relationship between the parties (a general work or sales contract or a consumer transaction).

• The Buyer’s Optional Rights Under the Turkish Code of Obligations (TCO Art. 475)

In work contracts governed by the general provisions, the buyer (the owner of the work) may exercise one of the following optional rights under TCO Art. 475, according to the seriousness and nature of the defect in the work:

1. Rescission of the Contract (TCO Art. 475/1-b.1): If the work is defective to a degree that the owner of the work cannot use it or cannot in fairness be compelled to accept it, or if it is contrary to the terms of the contract, the contract may be rescinded. (For properties built on the owner of the work’s own land, if removal would cause excessive cost the judge may order a price reduction or repair instead of rescission.)
2. Reduction in the Price in Proportion to the Defect (TCO Art. 475/1-b.2): The buyer may take and accept the work and still claim a reduction in the sale or work price in proportion to the loss of value the defect has caused.
3. Demanding Free Repair (TCO Art. 475/1-b.3): Provided it does not require excessive outlay, the buyer may demand that the work be repaired free of charge at the contractor’s entire expense.
4. The Right to Compensation Under the General Provisions (TCO Art. 475/2): The owner of the work’s exercise of any one of these optional rights does not extinguish the right to claim compensation arising under the general provisions in Turkey.

• The Buyer’s Optional Rights Under Consumer Law (Consumer Protection Law No. 6502, Art. 11)

The rights of consumers in Turkey who buy the home for personal, non-professional purposes are set out in Article 11 of Law No. 6502. The consumer is free to choose one of the following four optional rights:

1. Rescission of the contract,
2. Demanding a reduction in the sale price in proportion to the defect,
3. Demanding free repair at the seller’s entire expense, provided this does not require excessive outlay,
4. Demanding, where possible, replacement of the item sold with a defect-free equivalent.

Under CPL Art. 11 of Law No. 6502, a demand for free repair or replacement must be met, for a home, within a maximum of sixty working days.

• Compensation for the Cost of the Work and the Method of Calculating the Reduction Where the Contractor Delivers Defective or Incomplete Property in Turkey

Where the developer delivers a construction defective or incomplete home, the legal route buyers turn to most often in Turkish legal practice is a claim for the cost of the defective or incomplete work in cash as compensation. The improvement, repair and completion costs needed to bring the home into line with the contract, the technical specification and the legislation are calculated by a panel of technical experts appointed by the court, and their collection from the contractor is ordered, so that compensation for the defective and incomplete work is secured.

In claims for a price reduction on account of a defect, on the other hand, the proportional method is applied under the settled case law of the Court of Cassation. Under the proportional method the amount of the reduction is fixed by applying the ratio between the home’s true market value without the defect and its true market value in its defective condition to the sale price agreed in the contract.

• The Possibility of Intervening in Faulty Construction While the Work Continues: Authorisation to Perform in the Contractor’s Name (TCO Art. 473/2)

For the situation in which the contractor produces faulty construction while the building has not yet been delivered and the process is still running, the legislature has provided a special protective mechanism in Turkey:

Under TCO Art. 473/2, if it is clearly apparent that the work will be produced defectively or contrary to the contract through the contractor’s fault, the owner of the work may serve a warning notice on the debtor giving him a reasonable period. The notice warns that the defect or breach is to be remedied within the period given; failing which the repair or the continuation of the work will be entrusted to a third party at the contractor’s risk and expense (performance in his name). If no correction is made within the period given, the owner of the work may obtain the court’s authorisation to perform in the contractor’s name and have the incomplete work and faulty construction put right by 3rd parties at the contractor’s expense. For this provision to apply, the defect or breach must technically be clearly visible and definite; worries resting on abstract possibilities and assumptions are not enough to set this article in motion.

• Who Has the Right to Sue in Turkey for Incomplete and Defective Work in the Common Areas?

For shortcomings and defects in the common parts of the building (lift, roof, shelter, landscaping, façade cladding and so on), the legal process is governed by the following principles:

1. Individual Right of Action of the Flat Owners: Each owner of an independent unit has the right to bring an action for compensation or a price reduction in proportion to his own land share for defective workmanship and incomplete work in the common areas under Turkish law.
2. Capacity of the Site or Building Management to Sue: Under the Condominium Law, the site or building management as a rule has no power to bring an action for compensation for a defect directly on behalf of the flat owners. However, if express authority is given in the Management Plan or if the Board of Flat Owners has granted the manager authority to sue (power of representation) on this matter on behalf of the flat owners, the manager too may bring an action for incomplete and defective work in the common areas.

DOES OBTAINING THE BUILDING USE PERMIT (OCCUPANCY PERMIT) REMOVE THE CONSTRUCTION COMPANY’S LIABILITY FOR DEFECTS OR INCOMPLETE WORK IN TURKEY?

One of the defences developers raise most often against allegations of incomplete and defective work is that the Building Use Permit (the occupancy permit) for the structure has been obtained. That defence, however, is no more than a confusion between the nature of administrative law and private law relationships, and it has no legal basis.

The Building Use Permit (the occupancy permit) is an administrative permission by which the municipality or the governorship establishes that the building has been constructed in conformity with the zoning legislation, the approved permit and the architectural project. This document concerns the public-law relationship between the administration and the building owner or developer. The legal relationship between the construction company and the buyer or consumer, by contrast, is a private-law relationship deriving from the contract and from the Code. The fact that a building complies with public legislation and the zoning plan does not mean that the quality of the materials inside the flat conforms to the contract, that the water and heat insulation has been done properly, or that the independent unit is free of defects.

Under TCO Art. 477, the construction company can be released from his warranty obligation against defects only and exclusively where the buyer or owner of the work accepts the work expressly or tacitly. Obtaining an administrative document does not take the place of a declaration of acceptance that extinguishes the obligation.

Under Consumer Protection Law No. 6502 there is likewise no rule to the effect that obtaining an occupancy certificate removes the seller’s or contractor’s warranty liability for defects. The fact that the building use permit (the occupancy permit) has been obtained does not bar the buyer’s claims for incomplete work and faulty construction, or his rights to a price reduction or compensation, under property law in Turkey.

WHAT ARE THE LIMITATION PERIODS IN TURKEY FOR DEFECT AND INCOMPLETE WORK CLAIMS IN HOMES BOUGHT FROM A CONSTRUCTION COMPANY?

For the assertion of rights concerning incomplete work and defective workmanship in property bought from a construction company, the legislature has laid down limitation periods. The start of the time limits is calculated by reference to the delivery date.

• The Limitation Period Under the General Provisions for Defective Property Bought from a Contractor (TCO Art. 478)

In actions against the contractor for a defective work, the limitation period is governed under Article 478 of the Turkish Code of Obligations on the following basis:

1. General Limitation Period (TCO Art. 478/1): Actions under Turkish law arising from a defect in immovable structures are subject to a limitation period of 5 years from the delivery date.
2. Limitation Period in Case of Gross Fault (TCO Art. 478/1): If the contractor is guilty of gross fault, the limitation period rises to 20 years, whatever the nature of the work and the type of defect.

The Legal Standard of Gross Fault: Gross fault arises where the contractor deliberately conceals the defect, obstructs inspection by fraudulent means, or displays serious technical negligence in the structural or load-bearing system that creates a danger to life. In the case law of the Court of Cassation not every fault is accepted as gross fault; exceptional circumstances are required.

In its decision of the Assembly of Civil Chambers of the Court of Cassation, Case No. 2024/92, Decision No. 2025/562, dated 24.09.2025, this three-part framework was set out as a single whole. According to the decision, for claims arising from a work contract the periods in Articles 146, 147 and 478 of the Turkish Code of Obligations are applied together. Where the work is defective, Art. 478 applies; in the case of gross fault, which Art. 147/6 leaves outside its scope, the general ten-year period in Art. 146 runs.

The same decision is also important as to when the period begins to run. The majority of the Assembly held that, for the contractor’s obligation under a construction contract in return for land share to be regarded as properly performed, condominium ownership must be established, the building use permit obtained, and actual delivery and transfer at the land registry carried out together. Until those conditions are met, the conclusion is that the limitation period does not begin to run.

• The Limitation Period Where There Is Incomplete Work in Property Bought from a Contractor (TCO Art. 147/6 and Art. 146)

For claims for unfinished work (non-performance of the obligation altogether), a different limitation regime applies under Turkish legislation from the one under the defect provisions:

1. General Limitation Period for Claims Arising from a Work Contract (TCO Art. 147/6): Claims arising from a work contract are as a rule subject to a limitation period of 5 years.
2. Exception to the General Limitation Period (Under TCO Art. 146): If the contractor has failed to perform his obligations at all or properly through his gross fault, the matter falls outside the scope of TCO Art. 147/6. In that case the general 10-year limitation period laid down in Article 146 of the Turkish Code of Obligations applies.

• The Limitation Period in Turkey for Homes Bought from a Contractor as a Consumer (CPL Art. 12)

Where the buyer purchases the home from the contractor for personal or family use (for non-professional and non-commercial purposes), the provisions of Consumer Protection Law No. 6502 (CPL) apply:

1. General Limitation Period (CPL Art. 12/1): For homes and holiday properties, liability arising from defective goods runs for 5 YEARS from the delivery date of the property.
2. Period in Second-Hand Home Sales (CPL Art. 12/2): In a second-hand home sale the seller’s period of liability for defective goods cannot be less than 3 years.
3. In Case of Gross Fault or Fraud (CPL Art. 12/3): “If the defect has been concealed by gross fault or by fraud, the limitation provisions do not apply.” Under this provision, where the contractor is guilty of gross fault or has concealed the defect by fraud (for example, use of poor-quality materials, hidden structural faults contrary to the project, insulation fraud and the like), there is no statute of limitations or upper limit whatever for the consumer. The consumer may assert his rights from the date he learns of the defect without running into any limitation bar.

WHAT LEGAL ROUTES ARE AVAILABLE IN TURKEY IF THE CONTRACTOR DOES NOT DELIVER THE HOME ON TIME?

Delay in the delivery of a home bought from a contractor in Turkey is, by its legal nature, governed by the provisions on debtor’s default (delay in performance) rather than those on defective or incomplete performance. This directly changes the procedure and the substance of the buyer’s claims for a warning notice, termination or rescission, delay damages and a penalty clause.

• At What Moment Is the Contractor Deemed to Be in Default? (TCO Art. 117)

The moment at which the contractor falls into default is determined by how the delivery date was agreed in the contract:

1. General Rule (Warning Notice Required): Under Art. 117/1 of the Turkish Code of Obligations (TCO), the debtor of a due obligation falls into default upon a warning notice from the creditor (the buyer).
2. Automatic Default Where a Fixed Period Is Agreed: Under TCO Art. 117/2, if the day on which the obligation is to be performed has been fixed jointly by the parties by the calendar or by reference to a specific period, the contractor falls into default automatically once that day passes, without any need for a further warning notice.

Where a firm delivery date (for example “31.12.2025” or “24 months from the date of the permit”) has been agreed in the sales contract for the property, the contractor falls into default directly once that period expires. If the delivery date has been left vague or is not clear, however, it is legally essential in Turkey to send a warning notice through a notary to the contractor in order to prove that default has occurred.

• The Obligation to Give the Contractor Additional Time (TCO Art. 123 – Art. 124)

Where delivery is delayed under Turkish law, for the buyer to be able to exercise his optional rights he must as a rule give the debtor additional time:

1. The Burden of Granting Additional Time (Under TCO Art. 123): In contracts imposing reciprocal obligations, a reasonable additional period is granted to the debtor in default so that he may perform, or the grant of that period may be requested from the court.
2. Exceptional Cases Where No Additional Time Is Required (Under TCO Art. 124): Where any of the following three situations exists, the buyer may exercise his optional rights directly without giving the contractor additional time:

• • If it is apparent from the contractor’s situation or conduct that granting time would be ineffective,
  • If, as a result of the contractor’s default, performance of the obligation has become useless to the creditor (the buyer),
  • If it appears from the terms of the contract that, where the obligation is not performed within the fixed period or on a specific day, performance will no longer be accepted.

• The Right to Rescind the Contract Without Waiting for the Delivery Date (TCO Art. 473/1)

The legislature has given the buyer, under Turkish law, a special protective possibility where it is clearly apparent from the progress of the construction that delivery cannot be made on time. Under TCO Art. 473/1; if it becomes clearly apparent, on every forecast, that the contractor will not be able to finish the work at the agreed time because he has not started the work on time or has delayed the work contrary to the contract , or because of a delay arising for a reason not attributable to the owner of the work, then the owner of the work may rescind the contract without having to wait for the day fixed for delivery. This provision allows the buyer to start the legal process without waiting for a delivery date that has not yet fallen due and to claim compensation for the losses he has suffered.

The consequence of this provision was expressly stated by the 6th Civil Chamber of the Court of Cassation in its decision Case No. 2024/594, Decision No. 2025/1563, dated 17.04.2025. According to the decision, where these conditions are met the termination cannot be described as wrongful. In that particular case an expert examination established that the contractor had fallen far behind the work programme and had no possibility of completing the work in the time remaining.

• What Are the Buyer’s Optional Rights in Turkey When the Construction Company Is in Default on the Obligation to Deliver the Home?

Where the construction company falls into default on the delivery of the home, the legal rights the buyer may use are laid down within the framework of Art. 125 of the Turkish Code of Obligations (TCO). Under Turkish law these options given to the creditor are alternatives to one another.

Under TCO Art. 125, where the debtor falls into default the buyer may choose one of the following three legal routes:

1- Specific Performance and Delay Compensation (TCO Art. 125/1)

The creditor may at any time demand performance of the obligation in kind (delivery of the home) and the loss he has suffered through the delay (delay compensation / comparable rent loss) to be made good. This is the route most often taken in Turkey where the buyer still wants to acquire the property.

For example, the developer undertook to deliver the flat on 1 January 2025 but delivery did not take place. The buyer files a case and demands delivery of the flat in kind (registration of ownership) and payment of the lost rents at comparable market rates (the delay compensation) for each month of delay. This route is preferred where the increase in value is high in the area where the property is located and the buyer is determined to acquire the property.

2- Waiving Performance and Claiming Positive Damages (TCO Art. 125/2)

Under Turkish law the creditor may waive performance in kind and the right to claim delay compensation by giving notice at once. In that case he may claim the positive damages arising from non-performance (for instance the difference between the current market value of the home and the price in the contract). (Neglecting the “immediate notice” burden in the Code can lead to the loss of the right to waive performance and turn the claim into one for performance in kind.)

For example, the buyer bought the flat in 2023 for 2,000,000 TL. At the delivery date (2026) the market value of the flat had reached 6,000,000 TL. When the developer fails to deliver the home, the buyer gives notice at once and waives performance. He does not want the flat; instead he claims from the developer his positive damages (loss of opportunity) of 4,000,000 TL, being the difference between the current market value (6,000,000 TL) and the price in the contract (2,000,000 TL). The “immediate notice” burden in the Code must be observed, however. If the developer is not told in time that performance has been waived, this right is lost and the claim automatically turns into the performance in kind option.

3- Rescission of the Contract and Compensation for Negative Damages (TCO Art. 125/3)

The buyer terminates the contract with retrospective effect (from the outset). With rescission the parties’ obligations to perform come to an end both for the future and retrospectively; what has been given is returned under the rules on unjust enrichment and the liquidation regime. Once the contract is rescinded in Turkey the relationship returns to its starting point. For that reason “loss of rent” or “loss of opportunity” (positive damages), which depend on the contract continuing, can no longer be claimed. If the contractor cannot prove that he was free of fault in falling into default, the buyer may also claim the negative damages arising from the invalidity of the contract.

In the decision of the 6th Civil Chamber of the Court of Cassation, Case No. 2024/877, Decision No. 2025/1766, dated 30.04.2025, in a case where the owner of the work was held justified in rescinding because the work was defective to a degree he could not in fairness be compelled to accept, the claims were divided in two. Repayment of the price paid and removal of the work carried out were allowed, whereas claims in the nature of positive damages were rejected on the ground that they cannot be sought on rescission unless otherwise agreed. In the same file the extra expense borne because of the delay was classified as negative damages and awarded. This distinction directly affects the choice between rescission and waiving performance.

Where the contract is rescinded in Turkey, returning the sale price paid to the contractor at the nominal (face) value of the money is contrary to fairness. Under the settled case law of the Court of Cassation, the principle of equalising justice is applied when calculating the sum to be returned on rescission. The real purchasing power (the updated value) the amount paid has reached by the delivery date, measured against economic parameters such as inflation, the consumer price index (CPI), exchange rates, gold and civil-servant salary increases, is calculated, and repayment of that updated amount is collected from the contractor.

For example, in 2022 the buyer agrees with the developer and pays 1,500,000 TL for a flat; but by 2026 the developer has left the construction at 30% and disappeared. When the buyer rescinds the contract, the 1,500,000 TL he paid is returned not at nominal value but at its present-day purchasing power against inflation and gold or foreign currency under the principle of equalising justice (for instance as 6,500,000 TL). In addition, the wasted notary, land registry and valuation costs (negative damages) are also collected from the developer. Because the contract has been terminated entirely, however, the buyer cannot claim positive damages by saying “I want the 300,000 TL lost rent I would have received had the home been delivered” .

• How Is Loss of Rent Calculated as Delay Compensation in Turkey When the Construction Company Delivers the Home Late?

Where the home is not actually delivered to the buyer in a usable condition on the delivery date agreed in the contract, the construction company falls into debtor’s default (TCO Art. 117). The loss the buyer suffers over the period in which he is deprived of the use of the property because of the delayed handover can be claimed in law as delay compensation (TCO Art. 125/para. 1) within the scope of lost profit.

The principles on this point were set out in detail in the decision of the Assembly of Civil Chambers of the Court of Cassation, Case No. 2018/453, Decision No. 2021/1702, dated 16.12.2021. According to the decision, even if no compensation for delay at all was agreed in the contract, the landowner may claim compensation at the level of the monthly rent to be fixed by local market rates from the date delivery was due. The same decision also settles up to what moment the compensation may be claimed. Delay compensation may be claimed from the delivery date agreed in the contract until the date the work is delivered in conformity with the contract and fit for use, without any reservation being required.

The main principles taken into account in fixing and calculating compensation for loss of rent and during the proceedings before the Turkish courts are as follows:

1. Establishing the Comparable Market Rent: Even where a standard or fixed sum was agreed in the contract, the loss of rent must reflect the true economic value of the home on the market from the date on which it should have been delivered. This figure is established of the court’s own motion through a panel of expert witnesses appointed by the court (a real estate valuation expert / civil engineer), taking into account the location, floor area, number of rooms, aspect and floor level of the home, the build quality, the social facilities and the rental values of comparable properties in the area. The method followed in establishing the comparable figure rests on similar reasoning to that applied in a rent determination case.
2. Method of Calculation and Fixing the Period: The amount of compensation is calculated by multiplying the monthly comparable market rent established by the expert by the total number of months between the date the contractor fell into default and the date the home was actually and properly delivered (or the occupancy permit obtained and the home made ready to live in).
3. The Relationship Between a Fixed Penalty Clause in the Contract and Comparable Rent: The monthly amount of compensation payable in case of delayed delivery may have been fixed in advance as a set sum. As a rule the parties are bound by that amount agreed in the contract and the judge cannot change it directly. However, if the set sum in the contract has fallen far below the current market rate because of high inflation or an extraordinary rise in values in the area while the construction was delayed, the buyer (or the landowner) may claim the real loss exceeding the contractual amount under Article 180/2 of the Turkish Code of Obligations (excess loss), provided he proves the contractor’s fault. The buyer may therefore ask the court, instead of a direct determination of comparable rent, to award his concrete excess loss over and above the fixed compensation
4. No Obligation to Produce a Lease Agreement: For the buyer to claim compensation for delay there is no obligation to prove that he would let the home to a third party, that he had found a tenant, or that he himself was living elsewhere as a tenant (by producing a lease agreement or rent payment receipts). The fact that his ability to benefit from his ownership right has been restricted through the contractor’s fault, the property not having been delivered on time, is enough to earn the compensation under Turkish law.

• Can Loss of Rent (Delay Compensation) and a Penalty Clause Be Claimed Together from the Contractor in Turkey?

The point that causes the most hesitation and the most disputes in practice in Turkey in construction and housing delivery delays is whether the delay penalty (the penalty clause) in the contract and the actual comparable rent loss (delay compensation) can be claimed at the same time.

Article 179/2 of the Turkish Code of Obligations No. 6098 – Where the penalty has been agreed for the case of the obligation not being performed at the fixed time or place, the creditor may demand performance of the penalty together with the principal obligation, unless he has expressly waived his right or has accepted performance without reservation.

This provision governs the type called an “accessory penalty clause attached to performance” in the doctrine and in practice. Because in a delayed delivery of a home the buyer’s principal claim is performance of the obligation (delivery of the independent unit), the delay penalty agreed in the contract is also, as a rule, accessory to performance.

By contrast, the statutory basis for the buyer’s actual loss caused by the delay (the comparable rent loss) is not the penalty clause provisions but TCO Art. 125/1. Indeed the Assembly of Civil Chambers of the Court of Cassation states that delay compensation may be claimed under TCO Art. 125/1 in the event of default even if it was not agreed in the contract, whereas an express clause to that effect in the contract is a precondition for claiming the penalty clause (Assembly of Civil Chambers, 29.06.2021, Case No. 2017/(13)3-2245, Decision No. 2021/880).

1. Where the Contract in Turkey Contains the Clause “Loss of Rent Is Also Paid Alongside the Penalty Clause”

Under Turkish law, if the parties have expressly included in the contract a clause such as “In case of delay, in addition to the agreed delay penalty, the comparable rent shall also be paid separately for the months in which the property could not be delivered”, the buyer may claim both the penalty clause and the comparable rent loss together and in full.

The technical basis for this is that the provisions on the penalty clause are not mandatory — subject to the judge’s power of reduction in TCO Art. 182/3 — so that the parties may agree the opposite of TCO Art. 180. The Assembly of Civil Chambers of the Court of Cassation likewise expressly accepts that the provisions on the contractual penalty are not mandatory and that the parties may agree otherwise (Assembly of Civil Chambers, 29.06.2021, Case No. 2017/(13)3-2245, Decision No. 2021/880; Assembly of Civil Chambers, 07.07.2021, Case No. 2017/15-3169, Decision No. 2021/948). When the contract is drafted, therefore, it is decisive that the words “the delay penalty and the loss of rent may be claimed separately and together” are written in expressly.

2. Where Only a Penalty Clause Is Agreed in the Contract or There Is No Clarity (the Excess Loss Principle in Turkey)

If only a fixed delay penalty (for example “A penalty of 10,000 TL shall be paid for each month of delay”) is written in the contract, or there is no express clause that both items may be claimed separately, the situation is resolved within the framework of TCO Art. 180/2:

Article 180/2 of the Turkish Code of Obligations No. 6098 – Where the loss suffered by the creditor exceeds the agreed amount of the penalty, the creditor cannot claim the excess unless he proves that the debtor is at fault.

This provision is an exceptional rule departing from the general presumption of fault in TCO Art. 112. As regards the excess loss, the burden of proving the debtor’s fault lies on the creditor. That is why, in Turkish legal practice, a claim for excess loss is as a rule harder to prove than a claim under the penalty clause.

According to the settled case law of the Court of Cassation, unless the contract provides otherwise the delay penalty and the loss of rent cannot be added together and claimed. The method to be followed in giving judgment is this: the expert is first asked to calculate the total comparable (market) rent for the period of delay; if the total rent falls below the agreed penalty clause, only the penalty clause is awarded, and if the total market rent is higher, the rent figure established is awarded. Put another way, the creditor is entitled to whichever is the higher of the penalty clause and the rent loss actually incurred; the difference (the loss exceeding the penalty) may be claimed provided the debtor’s fault is proved.

Indeed the 23rd Civil Chamber of the Court of Cassation held that, in construction contracts in return for land share in Turkey, where both a penalty clause and rent compensation are provided for together, where it is not expressly stated that both are claimable separately, the court may award the penalty clause and, if proved, only the part of the rent compensation exceeding the penalty clause (23rd Civil Chamber, 13.10.2016, Case No. 2015/936, Decision No. 2016/4530).

• What Is the Limitation Period for Delay Compensation in Turkey?

Under TCO Art. 179/2, if the buyer does not expressly declare when taking the delayed delivery that he reserves his right to claim the penalty clause, or does not have it written into the delivery record, his right to claim the penalty clause accessory to performance is as a rule extinguished. This is taken into account by the judge of his own motion even if the defendant does not raise it (Assembly of Civil Chambers, 29.06.2021, Case No. 2017/(13)3-2245, Decision No. 2021/880).

This rule is not absolute, however. According to the Assembly of Civil Chambers of the Court of Cassation, if:

1. the right to claim the delay penalty was reserved by a warning notice served before the delayed performance,
2. the contract provides that no reservation is needed to claim the penalty clause, or
3. the creditor behaved before performance in a way that means he reserved that right,

then on the delivery made later the right to claim the penalty clause is not extinguished even if no reservation was entered. A reservation may be entered by a note added to the delivery–acceptance record, by a written notification made before accepting performance, or by a transaction indicating as much, such as deducting the penalty claim from the price when paying.

In addition, the mere fact that the title has been conveyed at the land registry does not by itself amount to delivery (performance) of the property; the absence of a reservation at the moment of the title transfer does not therefore by itself produce a forfeiture (Assembly of Civil Chambers, 21.04.2022, Case No. 2019/3-751, Decision No. 2022/590). By contrast, since claims for actual rent loss (damage) rest on TCO Art. 125/1, the distinction that the reservation burden may not be required with the same strictness for such claims should be assessed, according to the nature of the particular case, by a specialist real estate lawyer in Turkey.

Because delay damages are a claim tied to the demand for performance in kind, they are subject to the limitation regime governing the delivery claim itself. It is therefore impossible to speak of a single statute of limitations in Turkey:

• Where the contractor is only slightly at fault under a work contract or a construction contract in return for land share, TCO Art. 147/1 lays down a period of 5 years for “claims arising from a work contract, other than where the contractor has failed through gross fault to perform his obligations at all or properly”.
• If the contractor acted intentionally or with gross fault, the exception in TCO Art. 147/6 sends the matter back to the general rule and the 10-year period under TCO Art. 146 applies.
• Where the relationship between buyer and seller is in the nature of a sales contract (for example a pre-paid housing sale) , the period under TCO Art. 146 is 10 years.

Indeed the Assembly of Civil Chambers of the Court of Cassation has stated that, for claims arising from a work contract, the three separate periods in Articles 146, 147 and 478 of the TCO must be assessed together (Assembly of Civil Chambers, 06.03.2024, Case No. 2023/71, Decision No. 2024/156). A mistake often made is to treat compensation for loss of rent as falling within “rents and other periodic obligations” in TCO Art. 147/1 and to limit the limitation period to 5 years. Because comparable rent loss is not truly a rent claim but is in the nature of compensation, that sub-paragraph does not apply.

As to the start of the time limit, the Court of Cassation accepts that time runs not from the date the independent unit was actually delivered but from the date on which it should have been delivered, and that the loss for each month of delay falls due at the end of that month.

THE DUTY OF THIRD PARTIES ACQUIRING A HOME FROM URBAN TRANSFORMATION PROJECTS IN TURKEY TO NOTIFY DEFECTS AND INCOMPLETE WORK

In urban transformation projects or Construction Contracts in Return for Land Share, the independent units built by the construction company reach the market through two different channels: the flats left to the landowner and the flats given to the contractor as his entitlement. Where these flats are bought by 3rd parties from the contractor or from the landowner, the legal regime of liability for defective workmanship and incomplete work differs radically under Turkish law.

1. The Position of 3rd Parties Who Buy a Flat from the Contractor (Assignment of a Claim – TCO Art. 183)

The dispute met most often in Turkish legal practice is where the developer sells the independent units due to fall to him to 3rd parties while the building is still under construction, under an ordinary written sales contract or a promise to sell agreement executed before a notary.

• Legal Character (Transfer of a Personal Right): According to the settled case law of the Court of Cassation, this sales contract between the contractor and the 3rd party is an “assignment of a claim” (TCO Art. 183 et seq.). The 3rd party takes over the personal right the contractor holds against the landowner (the right to demand ownership and delivery of the independent unit).
• Defences the Landowner May Raise (TCO Art. 188): The 3rd party who takes over the claim becomes the contractor’s successor. However, the debtor (the landowner) may raise against the 3rd party all the defences he could raise against the contractor (for example incomplete construction, defective workmanship, failure to obtain the occupancy permit, a penalty clause claim and so on).
• Depositing the Cost of the Incomplete or Defective Work (Practice of the Court of Cassation): If the developer has completed the building to a high rate such as 90% and then abandoned it, for the 3rd party to demand registration of the title from the landowner he must deposit, to be paid to the landowner as determined by the court, the cost of the unfinished work and defective workmanship in the building and the occupancy permit expenses. Otherwise the title deed cancellation and registration lawsuit brought by the 3rd party is dismissed.

2. The Rights in Turkey of 3rd Parties Who Buy a Flat from the Landowner Against the Contractor and the Landowner

Where an independent unit falling to the landowner is bought by a 3rd person, the legal relationship takes on a twofold structure:

A. Rights Against the Landowner (the Seller) in Turkey

The relationship between the landowner and the 3rd party is directly a sales contract (TCO Art. 207). The landowner, as seller, is liable under the provisions on warranty against defects (TCO Art. 219 et seq.). Because the landowner did not carry out the construction himself, however, he may argue that he did not know of the defects. Even so, provided notice of the defect is given within the statutory periods in Turkey, the buyer may exercise against the landowner the rights to rescind the contract, to a price reduction or to compensation in proportion to the defect.

B. The Right of Direct Recourse Against the Construction Company in Turkey (Implied Assignment)

Because the property was bought from the landowner, in normal circumstances there is no direct contract between the 3rd party and the contractor (the principle of privity of contract). The Court of Cassation nevertheless accepts that, when selling the flat to the 3rd party, the landowner also tacitly (impliedly) assigns to the buyer the rights to compensation for defective or incomplete work arising from the construction contract in return for land share. The 3rd party may therefore apply directly to the construction company before the Turkish courts and demand that the defective workmanship be remedied or compensated.

3. The Rights of Landowners in Urban Transformation (Law No. 6306)

In buildings renewed under Law No. 6306 on the Transformation of Areas at Risk of Disaster, landowners do not hold “consumer” status. Disputes between the contractor and the landowners are governed by TCO Art. 470 et seq. (the Work Contract). In actions for incomplete and defective work between the landowners and the contractor the competent court is the Civil Court of First Instance (the Consumer Court has no jurisdiction). When taking delivery of the work, the landowners are obliged under TCO Art. 474 to inspect it as soon as they have the opportunity and to notify the defects to the contractor. The limitation period is 5 years from delivery, rising to 20 years in case of gross fault or fraud (TCO Art. 478).

When an independent unit is taken over from an urban transformation project or a flat-for-land construction contract project, it is vitally important in Turkey whether the sale is made by the landowner or by the developer, whether the title has been transferred, and what the actual completion rate of the construction is. The contractor’s failure to discharge his obligations to the landowner (physical completion, obtaining the occupancy permit and so on) can cause serious hardship to 3rd parties who believe they will be able to obtain their title deed. At the start of the process, support from a specialist lawyer should be obtained for an analysis of the title and contract history.

IS THE CONTRACTOR RESPONSIBLE FOR OBTAINING THE OCCUPANCY PERMIT IN TURKEY?

Obtaining the building use permit (the occupancy permit) and moving from construction servitude to condominium ownership are, under the law of obligations and the zoning legislation and unless the contract provides otherwise, principal obligations of the contractor.

The fact that the occupancy certificate has been obtained, however, does not remove the contractor’s legal liability for incomplete and defective work in the independent unit or the common areas. Unless the contract contains an express and mandatory clause to the contrary, the occupancy permit fees, municipal expenses, the correction of the property type and the costs of moving to condominium ownership must be borne by the contractor. Any attempt by the developer to pass or load these costs onto the buyer (the consumer or the landowner) has no legal basis under Turkish law.

Where the contractor avoids performing his obligation to obtain the occupancy permit or drags the process out, the flat owners or landowners may apply to the court for “Authorisation to Obtain the Occupancy Permit in the Name and on Account of the Contractor (Performance in His Name and on His Account – TCO Art. 113)”. On that basis the administrative steps are completed by the flat owners and all the permit, fee, premium and technical costs incurred are recovered from the contractor.

IS THERE A MAXIMUM DELIVERY PERIOD FOR PRE-PAID HOUSING SALES IN TURKEY?

In pre-paid housing sales (popularly known as buying a home off the model), the delivery period is limited by mandatory statutory provisions in order to protect the consumer and prevent abuse. It is not legally possible for the seller or developer to extend the delivery date at will.

Under Article 44 of the Consumer Protection Law (CPL), the delivery regime in pre-paid housing sales is tied to mandatory principles. Under CPL Art. 44/1 of Law No. 6502, the pre-paid home must be delivered to the consumer within the period undertaken, and that period can in no event exceed 48 months from the contract date. (That 48-month upper limit was fixed definitively by the amendment made by Law No. 7392 of 24/03/2022.) Under CPL Art. 44/2 of Law No. 6502, transfer and delivery are also deemed to have taken place where the construction servitude is registered on the land register in the consumer’s name and actual possession is handed over at the same time.

The legislature has given the consumer in Turkey who buys a pre-paid home two separate legal ways of bringing the contract to an end without waiting for the process to be completed:

1. Right of Withdrawal Without Reason (Law No. 6502, Art. 43): The consumer may withdraw from the contract within 14 days of the date the contract was concluded, without giving any reason and without paying any penalty.
2. Right of Rescission (Law No. 6502, Art. 45): During the period up to delivery of the home, the consumer may rescind the contract without giving any reason for up to 24 months from the contract date. In that case the seller may claim from the consumer compensation and contract costs, provided these do not exceed the rates laid down in the Code.

The validity of a pre-paid housing sales contract and the protective measures it creates in the consumer’s favour are subject to strict form requirements:

• Building Permit Requirement (CPL Art. 40/3): No pre-paid housing sales contract may be concluded with consumers before a building permit is obtained. All contracts made for projects without a permit are invalid under Turkish law.
• Official Form Requirement and Payment Ban (CPL Art. 41): A pre-paid housing sale must be registered on the land register or made as a promise to sell agreement drawn up as a deed before a notary. Unless a valid contract has been concluded, the seller cannot demand any payment from the consumer under any name (deposit, promissory note, down payment and so on) and cannot issue any document.

The most critical mechanism securing the consumer’s financial rights in pre-paid housing sales in Turkey is the compulsory security regime:

• Building Completion Insurance Obligation: Under CPL Art. 42 of Law No. 6502: For projects above the size set by the Ministry, before starting pre-paid housing sales the seller must take out building completion insurance or provide the other forms of security laid down in the legislation (a bank letter of guarantee, a progress-payment system and so on).
• Insolvency and Ownership Guarantee: Building completion insurance and the securities guarantee that, where the developer becomes insolvent, abandons the work or the project cannot be completed, the amounts the consumer has paid will be repaid directly by the insurer or the bank or that the construction will be completed.
• Mortgage and Loan Processes: In purchases financed by a housing loan, the mortgage registration process and the progress payments between the finance institution and the seller must also be run in line with this statutory security regime.

WHAT IS THE LEGAL PROCESS TO FOLLOW IN TURKEY IF THE CONTRACTOR DELIVERS THE PROPERTY DEFECTIVE OR LATE?

In disputes arising from incomplete work and defective workmanship and from delay in delivery, obtaining the right in time and in full depends on establishing the evidence before it is obscured, taking the correct procedural steps and complying with the preconditions to the case.

• Why Should the Determination of Evidence Be Carried Out Before Filing a Case in Turkey?

In construction law disputes before the Turkish courts, physical evidence carries a high risk of disappearing quickly with time, weather conditions or interference. Unfinished work may be completed afterwards, just as faulty construction may be covered over and concealed.

1. Request for a Site Inspection (CCP Art. 400/1-2): Under Art. 400 of the Code of Civil Procedure No. 6100 (CCP); where a party has not yet filed a case, it may request a site inspection for the purpose of establishing a fact it will rely on in a case it will bring or that will be brought against it, as well as an expert examination or the hearing of witnesses. Under CCP Art. 400/2, a legal interest is deemed to exist where the evidence will be lost if it is not established at once or where it will become markedly harder to rely on.
2. Fixing the Amount of the Claim: The report prepared by the panel of expert witnesses appointed by the court as a result of the determination of evidence documents the defects at the moment closest to the delivery date in terms of quantities, quality and cost. In the compensation or price reduction action to be brought, this report ensures that the value of the claim is correctly fixed and gives it evidential weight.
3. Discharging the Notice Requirement in Time: The determination file and the report served through the court are the strongest legal presumption proving that the statutory duty to give notice of the defect was discharged in time.

• The Obligation to Notify Incomplete Work and Defects to the Contractor in Turkey

Following the determination of evidence report, or at the same time, it is essential in Turkey, in both procedure and substance, that a warning notice through a notary be sent to the contractor. The notice must not use general and abstract wording; the incomplete work and defective workmanship found must be set out concretely, item by item, and the contractor must be given a reasonable period to remedy the problems or to compensate the loss. The notice must state clearly which optional right the buyer or owner of the work is exercising (repair, price reduction, compensation and so on).

• What Lawsuits Can Be Brought Against the Contractor in Turkey?

Where the contractor fails to perform his contractual obligations at all, properly or on time, the legal routes open to the buyer or the landowner and the types of action that may be brought differ according to whether the claim is in the nature of a personal right (a claim) or a right in rem (ownership). The procedural regime to be applied, the pre-action mediation requirement and the competent court are also shaped by this distinction before the Turkish courts.

1- Cases Concerning the Substance of the Property in Turkey (Title Deed Cancellation and Registration Lawsuits)

Cases concerning the substance of the property arise where the contractor does not transfer ownership of the independent unit to the buyer even though he has completed the construction or performed his contractual obligations, and where, in flat-for-land construction contracts, the landowner wants the title deed back because the contractor has not performed his obligation.

• Legal Character of the Case: These actions, aimed at transferring the ownership right or correcting or cancelling the land registry record, concern the ownership right directly. In registration actions brought by a consumer the Consumer Court has jurisdiction, while in disputes between the landowner and the contractor, or those who acquired by external sale, the Civil Court of First Instance does.
• Exception to Mediation as a Precondition: Under the Code of Civil Procedure No. 6100 and Consumer Protection Law No. 6502, disputes arising from the substance of the property (concerning the transfer of ownership) fall outside the scope of mediation as a precondition to the case. A claim for title deed cancellation and registration may therefore be filed directly in court.
• Interim Legal Protection (Precautionary Measure): To prevent the contractor from transferring the independent unit to third parties or from having a mortgage or attachment placed on it during the proceedings, it is vitally important in Turkey to have a precautionary measure annotation entered on the land registry record together with the statement of claim.

2. Cases Concerning Claims, Compensation and Optional Rights in Turkey

Where the contractor carries out incomplete work, delivers defective workmanship or falls into delay in delivering the home, the actions to be brought are in the nature of a claim (a personal right).

The principal compensation and debt actions that may be brought against the contractor before the Turkish courts on this basis are as follows:

• Action for the Cost of Incomplete Work and Defective Workmanship (Performance in His Name / Repair Cost): This is a claim for the collection from the developer of the expenses needed for the buyer or the landowner to complete the work left unfinished or defective.
• Action for a Reduction in the Price in Proportion to the Defect (Compensation): This is a claim for the loss of value in the property to be established and deducted from the sale price and for repayment of the excess price paid.
• Action for Loss of Rent on Late Delivery (Delay Compensation): This is brought to collect the comparable market rents (TCO Art. 125/para. 1) lost during the period in which the property was not delivered.
• Action to Collect a Contractual Penalty: Where a special fixed penalty for delayed delivery has been agreed in the contract signed between the parties, collection of that amount is claimed.

3. Enforcement Proceedings Without a Judgment in Turkey

Before filing a case in Turkey, the creditor may start enforcement proceedings without a judgment (Sample No: 7) directly against the construction company for monetary claims such as delay compensation, comparable rent loss or the cost of incomplete work and defective workmanship. If the debtor contractor objects to the payment order within the statutory period and stops the proceedings, the creditor must bring an action to set aside the objection (Enforcement and Bankruptcy Law Art. 67); but for that action too, under Article 73/A of Law No. 6502, the mediation process required as a precondition to the case must have been carried out and have ended without agreement.

• Determining the Competent Court and Venue in Turkey

The rules on jurisdiction in the Turkish legal system are a matter of public policy and are considered by the court of its own motion at every stage of the proceedings. Filing a case in a court without jurisdiction leads to dismissal on procedural grounds and to lost time.

1. Consumer Court (Law No. 6502, Art. 73/1): The Consumer Courts have jurisdiction over all cases brought by consumers who buy the home from a developer for personal, non-commercial and non-professional purposes. Under CPL Art. 73/2: Consumers are exempt from court fees in cases they bring before the consumer courts.
2. Civil Court of First Instance: Because disputes between the landowner and the construction company based on a construction contract in return for land share are not consumer transactions, the competent court in those cases is the Civil Court of First Instance.
3. Court with Venue: Under CCP Art. 12, and because a site inspection and expert examination should be carried out on site as a matter of procedural economy, the court of the place where the property is located has venue for cases arising from the substance of the property.

• Consumer Arbitration Committee Monetary Limits in Turkey (2026)

In consumer disputes in Turkey, the obligation to apply to the Consumer Arbitration Committee before filing a case is subject to monetary limits. As of 2026, where the value of the dispute is below 186,000 TL, an application to the Consumer Arbitration Committee before filing is a mandatory precondition to the case. (That monetary limit was applied as 149,000 TL in 2025, and in line with the revaluation rate announced by the Ministry of Treasury and Finance it has been updated to 186,000 TL for 2026.) For disputes above the stated monetary limit, application must be made directly to the Consumer Court, and before the court the Mediation process required as a precondition to the case must be carried out.

• Is Mediation a Precondition to Every Dispute in Turkey?

The institution of mediation in consumer disputes in Turkey is often taken to be an absolute precondition to filing a case. However, Article 73/A of Consumer Protection Law No. 6502 (CPL) ties that rule to a mandatory framework by making it subject to certain exceptions.

Under CPL Art. 73/A of Law No. 6502, having applied to a mediator before filing a case in the consumer courts is as a rule a precondition to the case. The legislature has nevertheless kept the following situations outside that requirement:

1. Disputes Within the Remit of the Consumer Arbitration Committee: For 2026, in disputes below 186,000 TL that fall within the remit of the Arbitration Committee, mediation is not a precondition to the case.
2. Actions Objecting to Decisions of the Consumer Arbitration Committee: No application may be made to a mediator in objections lodged with the Consumer Court against decisions of the arbitration committee.
3. Disputes Arising from the Substance of the Property: Even where they are consumer transactions, disputes concerning the substance of the property fall outside the scope of mediation as a precondition to the case.

WHAT CAN BE DONE IN TURKEY IF THE CONTRACTOR HAS ABSCONDED OR GONE BANKRUPT?

The ending of the construction company’s legal personality, the cessation of its activities or its bankruptcy does not automatically extinguish the claim. The legal and procedural routes to be followed do, however, differ under the Enforcement and Bankruptcy Law.

• The Procedure to Follow in Turkey Where the Contractor Is Liquidated or Goes Bankrupt

If the contractor’s company organs have not yet been dissolved but the company has entered liquidation, creditors should notify their claims for unfinished work or defective workmanship or for compensation for delay directly to the liquidators. On the basis of that notification the claim is entered in the liquidation balance sheet. Under Turkish commercial law, the liquidators are obliged to call on known creditors and to have their claims entered in the liquidation balance sheet. Paying those claims, or providing security for disputed claims, before the liquidation surplus is distributed is a statutory requirement.

Once the Commercial Court of First Instance declares the construction company bankrupt, the whole of the company’s assets legally form the bankruptcy estate and individual enforcement proceedings are as a rule stayed (Enforcement and Bankruptcy Law Art. 193). At this stage creditors must apply to the Bankruptcy Office and register their claims with the bankruptcy estate for the cost of the unfinished work, the loss of value in proportion to the construction defect and the compensation for delay.

• The Protection Regime of Building Completion Insurance Against Bankruptcy (Law No. 6502, Art. 42)

The strongest statutory security mechanism protecting consumers in pre-paid housing sales from the developer’s financial collapse, liquidation or bankruptcy is building completion insurance. This regime, laid down under Article 42 of Consumer Protection Law No. 6502 (CPL), gives consumer claims a mandatory legal guarantee going beyond the general law of bankruptcy and enforcement:

1. The Principle That They Cannot Be Included in the Bankruptcy Estate (CPL Art. 42/2): Under paragraph 2 of Article 42 of the Law, the building completion insurance indemnity, the securities and the progress payments provided in pre-paid housing sales cannot be included in the bankruptcy estate. Nor may attachment, precautionary attachment or a precautionary measure be placed on those amounts for the claims of third parties.
2. Privileged and Direct Right of Collection: Thanks to this mandatory rule, where the developer goes bankrupt or the project is left half-finished because of a financial crisis, the consumer is not dependent on the ranking table or on the participation of other third-party creditors (banks, suppliers, attachment creditors) in the estate. The consumer has the right to collect the amounts he has paid, or the financing needed to complete the project, from the insurance company, the letter of guarantee or the progress-payment account directly and in priority under Turkish law, or to demand completion of the home.

• The Contractor Trying to Escape the Debt in Turkey by Setting Up Another Company (Proving the Organic Link)

Where the contractor puts the existing company into liquidation, stops its activities and immediately afterwards tries to escape the debt by setting up a new company in Turkey at the same address, in the same field of activity, with a similar shareholding structure or in the name of close relatives, the question of an organic link arises.

Under the settled case law of the Court of Cassation;

• similarity of the shareholding and management structure,
• the company addresses, contact details and fields of activity being the same,
• the old company’s assets and business volume having been transferred to the new one,
• similarity of name or trade name

where circumstances such as these exist, the corporate veil is pierced under Turkish law. Creditors may then also direct an action or enforcement proceedings against the newly formed company (or ask for it to be held liable for the debt) and collect their claims for incomplete work, faulty construction or compensation from the assets of the new company.

IS THE LANDOWNER LIABLE IN TURKEY FOR SALES MADE TO 3RD PARTIES UNDER CONSTRUCTION CONTRACTS IN RETURN FOR LAND SHARE?

Whether third parties who buy an independent unit (a flat or shop) from the developer under a land-for-flat agreement can turn to the landowner where the contractor is in debtor’s default, delays delivery or carries out incomplete or defective work is assessed within the framework of the principles of assignment of a claim (TCO Art. 183 et seq.) and the principle of privity in the law of obligations in Turkey.

1. Transfer of the Personal Right and the Principle of Succession Under Turkish Law

The contract for the sale of the independent unit between the contractor and the buyer (or the promise to sell) has, by its legal nature, the effect of transferring to the buyer the personal right the contractor will acquire in the future from the landowner (the right to demand transfer of the title deed) (assignment of a claim – TCO Art. 183).

• Raising Defences Against the Third Party (TCO Art. 188): When the buyer, as the contractor’s successor, demands registration of the title from the landowner, he relies on the contractor’s rights. However, under Article 188 of the Turkish Code of Obligations, the debtor (the landowner) may also raise against the assignee (the buyer) all the defences and objections he held against the assignor (the contractor) at the moment he learned of the assignment.
• The Completion-Rate Condition: Unless the contractor has fully performed his obligation towards the landowner (the duty to finish the construction in accordance with the project, the permit and the contract), the buyer cannot force the landowner to transfer the title in Turkey. According to the settled case law of the Court of Cassation, unless the physical completion rate of the construction reaches a reasonable and acceptable level (generally above 90-95%), the landowner keeps the right to refuse to transfer the title (the defence of non-performance).
• The Landowner Has No Direct Liability for Defects: Because there is no direct contract between the buyer and the landowner, hidden or obvious defects in the home, incomplete work or compensation for loss of rent cannot be claimed directly from the landowner. For these monetary claims the buyer’s only counterparty is the contractor with whom he made the contract.

2. The Evidential Risks and Legal Consequences in Turkey of Declaring a Low Sale Price

Declaring the sale price at the land registry below the true economic value in Turkey in order to reduce the title deed fee or to avoid tax obligations (simulation as to price) produces serious consequences against the buyer where the developer falls into default or the contract is terminated.

• The Burden of Proving the Contrary of the Official Deed (CCP Art. 201): In actions for rescission, liquidation or repayment of the price, the developer will as a rule argue that he is obliged to return only the official price declared at the land registry. Under Article 201 of the Code of Civil Procedure No. 6100, a deed must be disproved by another deed. A buyer who claims the contrary of the sale price written in the official title deed must prove that he paid a higher price by a written document (a bank receipt, an approved supplementary contract, a collection receipt and so on); hearing witnesses is not legally possible in Turkey. Moreover, because under-declaring the sale price changes the tax bases for items such as value added tax, income tax and capital gains, the parties may also face tax penalties.
• Losses in Discount and Compensation Calculations: In actions for a price reduction in proportion to the defect or for the cost of incomplete work, there is a risk that the official sale price will be taken as the basis in the calculations made on the rates and figures adopted by the court. That creates losses that are hard to make good between the real price paid and the amount legally recoverable.

DO FOREIGNERS HAVE THE RIGHT TO SUE THE CONTRACTOR IN TURKEY FOR DEFECTIVE, INCOMPLETE OR LATE DELIVERY?

Foreign natural or legal persons who acquire property in Turkey have a full right to sue the developer and to use the legal remedies where the contractor fails to perform his obligations, delivers the home late, or the property contains defective or incomplete work. No distinction is drawn between citizens and foreigners as regards the right to seek justice in the Turkish legal system, and within the legislation in force the Turkish courts also have full jurisdiction over the contractual and ownership disputes that arise after foreigners acquire real estate in Turkey. However; navigating cross-border property disputes, strict statutory notice periods, and local court procedures can be highly complex for non-resident investors. Therefore, consulting an experienced English-speaking lawyer in Turkey is essential to fully understand the legal rights, avoid costly procedural errors, and secure remedies such as compensation or property repairs effectively.

1. The Right to Seek Justice and the Applicable Law in Turkey

Under Art. 40 of Law No. 5718 on Private International Law and Procedural Law (PILA), the international jurisdiction of the Turkish courts is determined by the domestic rules on venue. If the foreign buyer holds consumer status, he enjoys all the rights given by Law No. 6502 (rescission of the contract, a price reduction, free repair, or compensation for the construction defect or the delay) on equal terms with Turkish citizens.

2. The Obligation to Provide Security (PILA Art. 48) and Its Exceptions

Foreign natural and legal persons who bring an action before the Turkish courts are as a rule obliged to provide security. Where reciprocity agreements exist, however, or where the claimant owns immovable property in Turkey sufficient to cover the security requested, the court does not require security.

3. The Competent Court and Venue in Turkey

In disputes concerning the substance or the delivery of the property, under CCP Art. 12 the court of the place where the property is located has exclusive venue in Turkey. A foreign buyer may bring title deed cancellation and registration actions, or actions for compensation for defective workmanship or incomplete work, against the developer before the competent Consumer Court or Civil Court of First Instance in the place where the project is located.