The Turkish Court of Cassation has issued a landmark decision reinforcing the principle of reliance on the land registry.
The 6th Civil Chamber of the Court of Cassation ("Chamber") referred to the Grand General Assembly of the Unification of Judgments of the Court of Cassation ("Grand General Assembly") the question of whether third parties acquiring real property from a contractor—following a revocation of a revenue-sharing construction contract—could benefit from protection under Article 1023 of the Turkish Civil Code ("TCC"), provided that they acted in good faith. The Chamber expressed that its prior established case law, which held the contrary, should be abandoned.
On 16 May 2025, with its decision numbered 2024/1E., 2025/2K. ("Unification Decision"), the Grand General Assembly accepted the request to depart from the previous jurisprudence and ruled that the acquisition of rights by bona fide third parties must be protected under the principle of reliance on the land registry. This decision, published in the Official Gazette on 18 July 2025, marks a significant turning point, particularly for so-called "advance land title" practices.
Below is a summary of this critical decision and the developments underlying it:
Background
Revenue-sharing construction contracts (tr. "arsa payı karşılığı inşaat sözleşmeleri") are hybrid contracts frequently used in Turkish practice by both landowners and contractors. Under such agreements, the contractor undertakes the obligation to construct a building, while the landowner agrees to transfer designated shares of the land to the contractor upon fulfilment of certain conditions.
In practice, it is common for landowners to transfer land shares to the contractor either at the outset or at a later stage of construction. Contractors, in turn, often sell or mortgage these shares to third parties as a means of project financing—a practice known in the industry as "advance title transfer". However, in the event the contract is invalidated or terminated by the landowner, it has long been debated whether third parties who acquired property from the contractor in good faith would be protected under Article 1023 of the TCC.
In its prior settled case law, the Chamber took the position that such transfers fell within a chain of legal succession from the contractor and, therefore, third parties could not invoke the protection of Article 1023 of the TCC. The Chamber argued that upon revocation of the contract, the legal basis for the title transfer was eliminated, rendering the registration void (an "improper registration"), and that third parties could not claim protection under good faith, as they were deemed successors to the contractor. Accordingly, such third parties either knew or should have known that their rights depended on the contractor fully performing its obligations and bore the risk of non-completion.
Request to Depart From Settled Precedent and Rationale
Upon reevaluating its stance, the Chamber concluded that its prior approach was inconsistent with the principles of legal certainty and protection of good faith, especially considering the text, purpose, and practical implications of Article 1023 of the TCC. The Chamber emphasized the need to reassess its position considering evolving legal norms and the importance of protecting bona fide reliance on the land registry. Accordingly, it petitioned the Grand General Assembly to unify conflicting jurisprudence under Article 15/2-c of the Law on the Court of Cassation. In its petition, the Chamber noted:
"A majority opinion has emerged that, in cases where a revenue-sharing construction contract is retroactively terminated, and the land shares initially transferred to the contractor and subsequently to third parties are sought to be returned to the landowner via cancellation of the title registration, the good faith defense of third parties may be heard; and that such real properties may revert to the landowner only if the third parties are found to have acted in bad faith under the specific circumstances of the case."
The Unification Decision and Rationale
The Grand General Assembly's Unification Decision, rendered on 16 May 2025 and published in the Official Gazette on 18 July 2025 (No. 32959), accepted the Chamber's request to depart from its prior case law. The Grand General Assembly ruled that third parties acquiring title or limited real rights (including mortgages) from the contractor in good faith must be protected under Article 1023 of the TCC and the principle of reliance on the land registry. The Grand General Assembly emphasized that labelling all such entries as "improper registrations" causes irreparable harm to societal trust in the land registry and undermines the sense of justice. Importantly, the Grand General Assembly clarified that this protection is not absolute: where a third party is proven to have acted in bad faith at the time of acquisition, the real property may revert to the landowner. The decision states:
"Where, under a revenue-sharing construction contract, land is registered in the name of the contractor, and the contractor subsequently sells or mortgages land shares or independent units to third parties, the annulment or retroactive termination of the contract shall not preclude the recognition and protection of rights acquired by bona fide third parties relying on the land registry. However, where the specific facts indicate that the third party lacked good faith at the time of acquisition, reversion of the property to the landowner may be ordered. The decision was adopted unanimously at the Grand General Assembly's first meeting on 16 June 2025."
The Unification Decision held that the Chamber's former jurisprudence—in which title deeds transferred to third parties were cancelled and re-registered under the landowner's name without hearing the third parties' good faith defense—violated fundamental principles of civil and contract law, including the relativity of personal rights, the public nature of the land registry, and the protection of bona fide purchasers.
Assessment and Conclusion
This Unification Decision marks a major shift in Turkish real estate jurisprudence. By abandoning its former stance, the Court of Cassation has bolstered the principle of reliance on the land registry and strengthened the legal protection of real rights acquired in good faith. The ruling enhances legal predictability in the real estate market and brings the abstract principle of reliance on the registry into concrete legal practice. Nonetheless, the decision necessitates that landowners adopt a more proactive legal posture to safeguard their rights—through mechanisms such as annotations (tr. şerh), mortgages, and detailed contractual provisions. In this new legal landscape, landowners can no longer rely solely on the risk of invalidity or revocation but must actively protect their interests.
In conclusion, while the decision strengthens the position of third-party purchasers and reinforces reliance on the registry, it also imposes greater diligence obligations on landowners.
For the full text of the decision, click here.
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