A construction contract in return for independent units is not merely a building contract; it is a complex structure in which the landowner undertakes to transfer part of the right of ownership over the immovable property to the contractor, and the contractor undertakes, in return for that share, to build and deliver independent units. It therefore also contains within it the obligation to “transfer ownership”.
1. Determining the Legal Nature and the Problem of the Competent Court One of the greatest problems in disputes arising from these contracts (KKİS) is determining the competent court. As clearly emphasised in the decision of the Board of Presidents of the Civil Chambers of the Court of Cassation with case no. 2014/1189 and decision no. 2014/1379, by the very nature of the dispute, claims for receivables arising from the contract may fall within the field of duty of different chambers depending on the subject matter of the contract and the capacity of the parties. In practice this leads to the action being brought before the wrong court and to the economy of procedure being undermined. Examining the current division-of-work communiqués of the relevant chamber before bringing an action is of vital importance.
2. Procedural Law and the Speed of Proceedings As Kasapoğlu (2015) states in the study entitled “Summary Proceedings in Administrative Jurisdiction”, the “simplified trial procedure” or accelerated procedures should make access to justice easier in resolving disputes without undermining the right to a fair trial. However, hearing files that are as technically and legally dense as these construction contracts before the general courts causes the process to lengthen.
3. The Right to Property and the ECtHR Perspective These contracts directly affect the right to property of the parties. As the European Court of Human Rights has underlined in its judgments, the restriction of the power to dispose of property, or the violation of contractual rights, is directly related to the individual’s right to an effective remedy. When the contract is drawn up, the “termination conditions” and “security mechanisms” (a bank letter of guarantee, construction completion insurance and the like) that will protect the landowner’s right of ownership in the event that the contractor cannot complete the construction should offer a guarantee of property at ECtHR standards.
4. Practical Recommendations: What Should the Text of the Contract Include?
- Impossibility of Performance and Compensation: the distinction as to “fault” must be drawn clearly so that the contractor is not exempted from the penalty clause where the contract ends in “impossibility of performance”.
- Sharing of the Independent Units: the stage of construction at which the sharing will take place (foundation, shell construction, occupancy permit) must be tied to a clear timetable.
- Annotation of the Contract: the greatest protection for the contractor is the annotation of the contract on the title deed. This does not prevent the immovable property from being transferred to third parties, but it makes it easier to prove that the third party acted in “bad faith”.
Conclusion Construction contracts in return for independent units are an investment in “future ownership”. Managing this process not as a mere piece of paper drawn up before a notary, but as a “legal project” extending from the technical specification of the construction to tax law, is the task of us lawyers.
This article has been written for general information purposes and does not have the character of legal advice; I would emphasise that, in order not to suffer a loss of rights in your particular disputes, you should obtain professional legal support directly from a lawyer.
