Flat-for-Land Construction Contract Disputes in Türkiye: Risks for Landowners and Buyers

A flat-for-land construction contract, where a landowner transfers development rights to a contractor in exchange for finished units in the completed building, creates risks for both sides if construction is delayed, defective, or abandoned, and for buyers who purchase units from the contractor before the building exists. Each of these parties should verify how the contract and any related sale promise agreements were structured, since this materially affects available remedies.

Flat-for-land construction contracts (kat karşılığı inşaat sözleşmesi) are a common Turkish development model in which a landowner allows a contractor to construct a building on their land, and in return receives an agreed share of the finished units, with the contractor retaining the rest to sell. Disputes arise when the contractor delays or abandons construction, delivers units that do not match the agreed specifications, becomes insolvent mid-project, or when third-party buyers who purchased units directly from the contractor find that the land is still registered solely to the original landowner and no proper mechanism exists yet to transfer their unit.

These contracts are treated under Turkish law as mixed contracts combining elements of works contracts and property transfer, and are governed primarily by general contract principles under the Code of Obligations for matters such as performance, delay and defects, together with the requirement under Land Registry Law that any transfer or promise to transfer real property be carried out in the prescribed official form. A promise to sell or transfer specific future units, made by the contractor to third-party buyers before construction is complete, similarly requires proper form to be enforceable against the land itself.

Turkish courts assess flat-for-land disputes by examining the contract's specifications (quality, timeline, unit allocation), any amendments, and the actual state of construction against those specifications, often relying on court-appointed technical experts to assess construction progress, defects and value. Courts also examine whether third-party unit buyers had any registered or notarised protection (such as an annotation on the land registry) for their purchase, since a buyer's remedy against the land itself is significantly stronger where such a registration exists than where the buyer relied solely on a private agreement with the contractor.

A significant area of debate concerns the position of buyers who purchased units directly from the contractor without any registered protection, and who then face the risk that the landowner may terminate the contract with the contractor for non-performance, potentially leaving the buyer without a direct claim to the land. Another debated issue is how termination of the underlying contract between the landowner and the contractor should affect completed or partly completed units already informally allocated to third parties.

A landowner seeking remedies for a contractor's delay or defective performance should document the contract's specifications, the construction timeline, and the actual state of the works. A unit buyer seeking to protect or enforce a purchase from the contractor should establish what, if any, formal registration or annotation protects their position, and should assess this before, not after, a dispute arises between the landowner and the contractor.

Claims for defects in construction are subject to statutory notice and limitation periods that begin running from delivery or discovery of the defect, and prompt notice to the responsible party is generally required to preserve these claims. Claims for delay or non-performance are subject to the general limitation periods applicable to contractual claims, which should be assessed against the specific facts and contract terms.

Disputes over flat-for-land contracts, including claims by landowners against contractors and by unit buyers seeking to protect their purchase, are heard by the civil courts of general jurisdiction at the location of the property. Technical disputes over construction quality and value typically proceed with court-appointed expert examination as part of the litigation.

• the flat-for-land construction contract and any amendments or addenda;
• architectural plans, specifications and the agreed unit allocation;
• any sale promise agreement or registered annotation protecting a unit buyer;
• construction site records, photographs, and progress reports;
• correspondence regarding delays, defects or disputes;
• title deed records for the land and, where applicable, the completed units.

Third-party buyers frequently purchase units directly from a contractor without registering any protective annotation on the land, exposing themselves to significant risk if the underlying contract between the landowner and the contractor later fails. Landowners sometimes fail to specify clear quality and timeline benchmarks in the original contract, making it difficult to prove non-performance later. Both parties sometimes assume informal amendments discussed but never documented in writing will be enforceable, which is often not the case for matters requiring official form.

Flat-for-land disputes often involve multiple parties with different levels of legal protection, and outcomes depend heavily on how the original contract and any unit sales were documented and registered. We recommend that landowners, contractors and unit buyers each obtain an independent review of their specific contractual and registration position, ideally before signing, and promptly if a dispute has already arisen.