Turkey: The Roles Have Changed In The Construction Projects In Turkey

Last Updated: 22 July 2015
Article by Egemen Egemenoglu

In this issue, based on the real estate industry with a significant share in our country's economy, we wanted to share a topic considered among our practices for the Law No. 6306 on Transformation of Areas under the Disaster Risk (Urban Transformation Law) regulating the practices within the scope of this industry.

We believe it will create a certain amount of awareness and serve to take some measures in the contracting process to reflect the conditions "withdrawal of the consent granted for construction license" or "dismissal of the deputy authorized pursuant to the agreement for the construction applications" by the malicious landowner after the immovable properties, which are determined as "risky building" and destructed pursuant to the Urban Transformation Law and gained a land quality, are subjected to a construction agreement in return for land share with the consent of all owners rather than 2/3 land share majority set out in the law, and to provide information about the results it creates against the owners/contractor.

We will be offering general solution alternatives in order to provide guidance within the scope of eliminating the negative results that the abovementioned possibilities may cause. As the implementation of the Urban Transformation Law contains several dynamics and each concrete case requires a separate assessment, we should say that our explanations are offered for providing information, and creating some perception about the matter.

Consent of the Landowner

In practice, considering the construction agreements in return for land share, it's been regulated that the independent sections will be segregated by establishing construction servitude based on the sharing principle agreed after obtaining the construction license.

Article 57 "Construction License Works" of the Type Zoning Regulation on Planned Areas bis no. 18916 published on 02.11.1985 says, '... No construction license can be issued and no alteration can be made on the approved projects without obtaining the consent of the parcel owner or owners for the license and enclosed approved projects. When the construction license and annex thereof are completed according to the projects, then the consent of all owners is not sought for the issuance of building use permit or the license procedures regarding time extension. For the constructions continuing according to the relevant agreement and the legislation, the license cannot be cancelled until all of the owners make an application. This rule applies when one or more than one owners are changed. ...' .

Thus,

a. The owner may withdraw their consent after giving a consent related to obtaining the construction license, but before the construction license is obtained. In such a case, the license procedures will be stopped.

b. The owner may not withdraw their consent after giving a consent related to obtaining the construction license and after the construction license is obtained. As a rule, this can be cleared by filing a lawsuit to the administrative court for the cancellation of the license.

c. In case it is given mistakenly, the Administration granting the license can withdraw or cancel this license. In case the license is cancelled unilaterally by the Administration, then the Administration has to indemnify the loss of the parties with vested right related to the license. "Mistakenly" means "clearly acting to the contrary to the legislation". "Owner's declaration for withdrawing the consent after the license is issued" is not included to the scope of the term "mistakenly".

Malicious Intention of the Landowner

The malicious acts of the owner can be listed as a) signing the agreement together with all other owners with a full commitment, b) having no disadvantageous situation in terms of the interest provided by the agreement, c) dismissing the deputies and announcing that they withdrew their consent without any concrete and legal ground after the construction license is issued although they have consented for obtaining the construction license, and d) preventing the operation of the process for establishing a construction servitude.

In the practice, the law and the doctrine describe the withdrawal of the power of attorney by the employer (not performing the preparations required for the realization of the performance) as 'creditor default for the performance liability', and as a result of this, it makes the claim for negative losses - in other words "withdrawal from the agreement" - possible and thus loss of profit is excluded from the scope. The minority opinion in the doctrine is that issuing a power of attorney is an essential part of the agreement, but if there is still dismissal, then there is an act on the contrary to the cooperation liability; the withdrawal of the power of attorney by the employer creates a situation similar to the termination of the agreement and grants a full indemnification right to the contractor. This interpretation also includes loss of profit to the scope of indemnification.

Establishment of Construction Servitude in Return for the Dismissal of the Deputy

If the malicious landowner dismisses the deputy authorized for the establishment of construction servitude despite the agreement, then the landowner should personally attend to the procedures for the establishment of construction servitude. If the landowner does not participate in the procedures for the establishment of construction servitude after the dismissal of the deputy and despite the invitation of the contractor and the other owners, this arises a responsibility for indemnification. The completion of the establishment of construction servitude and create free disposal on the independent section are what is required for either the contractor or the other owners. The method for this is to ensure that the owner not participating in the process is disabled.

Within this scope, it would be useful to remind about Additional Article 4 "Transition to Construction Servitude" of the Law No. 634 on Condominium. According to the article mentioned, "In case of a common acquisition of land in order to construct one or more than one buildings on it by five or more people and in case of a violation of the decisions taken by at least four out of five shareholders regarding the transition to construction servitude, the court of justice decides to allocate the shares of the shareholders of the immovable property in question and to inscribe those shares in the names of other shareholders on the following conditions: a) The acquisition of common immovable property with the purpose mentioned above must be proven; b) Failure in complying with the abovementioned majority decision of transition to construction servitude and the failure to comply with the liabilities related to this within two months despite the notification served by the notary public, c) The submission of the market price of the shares of the common owners determined by the court, who refrain from complying with the decision in question, to the treasury of the court."

In addition to this, the doctrine indicates that an indemnification for loss of profit within the scope of the claim "specific performance + damages for delay in performance" can be claimed for the rights within this scope, by considering that the said acts of the malicious owner (nonperforming the acts for being prepared to the performance) will constitute a debtor default rather than creditor default.

Termination of Agreement and Urban Transformation Law Execution

If the termination of agreement is brought in to the agenda, the execution of this law will be in question as the immovable property is destructed upon risky building report, in other words pursuant to the Urban Transformation Law. In this case, a property owners' meeting will be held and during this meeting, the majority corresponding to 2/3 land share will approve the contractor company and the general terms of the agreement. The decisions taken during this meeting will be notified to 1/3 minority, who did not attend to the meeting or attended but not agreed with the decision, and an official warning will be served through notary public for accepting this decision within 15 days. If no positive progress is obtained during this 15-day period, then the share of the owners who did not attend will be sold to the other owners through auction. An application will be made to the administration for the sales together with the board of property owners' decision, official notary public warning, and similar documents. Upon this application, the relevant Ministry will determine the value of the immovable property (on square meter basis) and inform the owners about the date and time of the auction. The immovable property share offered on the auction day will be awarded to the owner proposing the highest amount, otherwise awarded to the Treasury provided that the relevant amount is paid by the Ministry. One of the greatest risks considered in this section is that the malicious owner may invalidate the tender by declaring that they agree with the decision after the tender and before the commission decision, and then behave unjustly towards the other parties by preventing the operation of the process with different possibilities. This would become a method that will take months and particularly will not reach a conclusion in terms of urban transformation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Authors
Egemen Egemenoglu
 
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