INFORMATION NOTE ON THE TERMINATION OF CONSTRUCTION CONTRACTS IN EXCHANGE FOR LAND SHARE IN URBAN TRANSFORMATION BY ADMINISTRATIVE MEANS
- In what ways can a construction contract in return for land share be terminated?
Construction contracts in return for land share can be terminated through the agreement of the contractor and the landowners, if only one party wants to withdraw from the contract and the other party opposes it, through a lawsuit to terminate the contract to be filed in court, and as a result of the application of the landowners to the administration.
- What is the Administrative Termination of a Construction Contract in Return for Land Share?
In construction contracts in return for land share subject to urban transformation, in accordance with Article 24 of the Law No. 7181 on the Amendment of the Land Registry Law and Certain Laws and Article 6, paragraph 14 of the Law No. 6306 on the Transformation of Areas at Disaster Risk, if the construction of the new building has not started due to reasons originating from the contractor or if the construction of the building has started but the necessary team and equipment are not used to complete the project, the Ministry of Environment and Urbanization shall be contacted to determine the situation and, as a result of the decision of the Ministry, the contractor shall be notified to start or continue work. If the contractor does not start work, the contract shall be terminated.
The conditions for terminating construction contracts in return for land share through administrative means will be explained in detail below.
- Why Should Administrative Action Be Taken in Terminating Construction Contracts in Return for Land Share?
It is not very common for the parties to agree on the termination of construction contracts in return for land share. Usually, since the contractors do not consent to the termination of the contract, the landowners or stakeholders are forced to file a lawsuit in court to terminate the contract. However, since the decision in the lawsuit for termination of the contract filed in court takes many years to be given and finalized, the parties suffer. Due to the continuation of the lawsuit, the contractor does not continue construction activities and the landowners are in a difficult situation due to the unfinished projects. In order to prevent all these negativities, a new method has been introduced by the legislator for the termination of the contract. Terminating the contract by applying to the administration is in the interest of the landowners both in terms of being concluded in a short time and in terms of being less costly.
- Who can apply for the administrative termination of a construction contract in return for land share?
An application can be made to the Ministry of Environment and Urbanization to terminate the contract, with the decision of two-thirds of the owners in proportion to their shares.
- What are the Application Conditions for Administrative Termination of a Construction Contract in Return for Land Share?
- Firstly, the contractor's delay in starting the construction due to reasons arising from her own fault.
After the contractor reaches an agreement with all owners or after a decision is made by at least two-thirds majority of the shareholders in proportion to their shares and the shares of those who do not agree with this decision are sold, the contractor should not have started the construction of the new building within one year due to reasons arising from the contractor.
When calculating the beginning of the one-year period, the second paragraph of Article 13 f.11/b of the Law Implementation Regulation No. 6306 is taken into consideration.
- What are the details regarding the start time?
The fact that the start date of the work has not been specified does not affect the validity of the contract.
If the start date of the work is clearly stated in the contract and the contractor does not start the work on this date despite not having any obstacles that can be attributed to the landowner, it can be easily determined that there was a delay in starting the work. On the other hand, if the start date of the work is not specified in the contract, it is accepted that the contractor must start the work immediately, in accordance with Article 90 of the TCC.
The start date of the work in the contract can be linked to a date or an event that will occur in the future.
- In what cases can it be said that the failure to start the work is due to the contractor?
In order for the contract to be terminated due to the contractor not starting the work in accordance with the Implementation Regulation of Law No. 6306, the contractor must not have been prevented from starting the work by the right holders or the administration according to the contract provisions.
However, if there are preparatory actions and obligations that should have been fulfilled by the right holders before the contract according to the Regulation, if these are not fulfilled, the construction contract in return for land share will not be terminated administratively.
It is also stated that there will be no delay in starting the work in the event of a court decision, administrative decision, administrative practice or similar valid reason that prevents the start of the construction work.
- Another condition for the application for the termination of a construction contract in return for land share through administrative means is the contractor's delay in carrying out the work.
According to the regulation, in order for contracts to be terminated on this ground, it must be demonstrated through information and documents such as the relevant administration's findings, minutes and records, records in the building inspection system, photographs, satellite images, etc. that the construction work has been stopped and that the project has not been completed with the necessary team and equipment for at least six months.
- What are the legal consequences of delays in both starting and carrying out the work due to reasons originating from the land owner?
The contractor has the right to assert a non-payment defense based on Article 97 of the TCC: In this case, if the work cannot be delivered on time due to the contractor slowing down or stopping the work, or if it is not done as much as it should have been done according to the contract, the contractor will not be in default.
The landowner may fall into creditor default: If the landowner does not fulfill the preparatory acts in question, the contractor either cannot start the work at all or cannot continue the work he has started.
Some other reasons that can be attributed to the landowner may extend the construction period: If the landowner requests the contractor to do additional work or change the work, the delay that will occur is a justified delay since it is directly caused by the landowner. Even if there is no provision in the contract regarding the extension of the period, the delivery period is, as a rule, considered to be extended automatically.
- What are the procedures carried out by the Ministry upon termination application?
- Determination by the Ministry
Upon termination application, it is examined whether the application meets the necessary conditions. If a suitable application is made, the contractor is given a period of 15 days according to the reason for termination and information and documents are requested. At the end of the period, all kinds of examinations and research are carried out to determine whether the termination conditions have been met.
- Warning by the Ministry
If it is determined as a result of the investigation conducted by the Ministry that the termination conditions have not been met, the owners are informed. If it is determined that the termination conditions have been met, the contractor is given a period of thirty days and is warned that, according to the reason for termination, he must start the construction work/continue the work with the team and equipment at the level required to complete the project, otherwise the contracts will be terminated ex officio as of the expiration date of this period. At the end of the thirty-day period, it is checked on site whether the contractor has started the work/continued the work with the team and equipment at the level required to complete the project. If the contractor does not start the work or does not continue the work with the team and equipment required to complete the work within the 30-day period, the contract is deemed to have been terminated ex officio and this situation is notified to the relevant parties.
- What Legal Remedies Can Be Taken Against the Decision Made by the Administration?
If the contractor does not start the work on time or does not continue the work that has been started despite the determination made by the administration or directorate, the contract is automatically terminated. The contractor or the landowner who thinks that this determination is wrong may apply to the administrative court in order to cancel the determination decision.
It is important to have an expert lawyer follow this entire process in order to prevent possible loss of rights.
You can contact us for detailed information
Best regards
This legal information text has been prepared for informational purposes and has not been prepared for the purpose of advertising or establishing a lawyer-client relationship. Nothing in this information text is legal advice and should not be understood as legal advice.