With its decision dated 16 May 2025 and case numbered 2024/1 and decision numbered 2025/2 ("Decision"), the Grand General Assembly of the Unification of Judgments of the Court of Cassation ("Court of Cassation GGUJ") rendered a unification of judgments concerning construction contracts in return for land share. The Decision establishes that, in cases where the immovable property subject to such contract is transferred to the contractor in the land registry, and the contractor subsequently sells or mortgages the land share or independent units to third parties, the claims of third parties who have acquired real rights by relying on the land registry in good faith must be heard, and the ownership or mortgage rights thus acquired must be protected, even if the contract is subsequently declared null and void or retroactively terminated. The Decision was published in the Official Gazette dated 18 July 2025 and numbered 32959.
Through this Decision, the Court of Cassation aimed to ensure uniformity in the application of law among the differing chamber decisions and clarified the legal status of third parties in cases where construction contracts in return for land share are declared invalid or retroactively terminated. The Decision emphasizes the necessity of protecting the principle of reliance on the land registry for both landowners and purchasers who transact with the contractor, while also underlining that such reliance is not absolute and that an assessment of good faith must be conducted.
In its reasoning, the Court of Cassation GGUJ held that third-party transferees cannot be deprived of their rights solely based on the invalidity of the underlying contract concluded between the landowner and the contractor. However, it stated that whether such third parties acted in good faith must be assessed considering the specific circumstances of each case.
According to the Decision, the acquisition of a bona fide third party who purchases a land share or an independent unit from the contractor shall be protected under Article 1023 of the Turkish Civil Code, which enshrines the "principle of reliance on the land registry." The Decision further notes that this protection may only be set aside upon proof that the third party acted in bad faith at the time of acquisition. Additionally, the Court indicated that the landowner may eliminate the good faith presumption of third parties by annotating the land registry's declarations section to reflect that the title transfer to the contractor was made pursuant to a contractual obligation.
Ultimately, the Decision confirms that real rights acquired in good faith through reliance on the land registry by third parties shall be protected. Conversely, if bad faith is proven, ownership of the immovable property may revert to the previous owner, i.e., the landowner.
The full text of the decision is available at the following link. (Only available in Turkish)
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