Construction Agreements In Return For Land Share

A construction agreement in return for land share is a contract concluded between the land owners and the contractor, the subject of which is construction. Here, the land owners allocate the land they own to the contractor by contract for the construction of a building on it. The contractor is under the obligation to build a building (construction) on the land allocated to him in return. The land owners are under the obligation to transfer some of the independent sections located in the constructed building to the contractor. In practice, this contract, also known as the construction contract in return for flat, is a kind of work contract. In work contracts, the contracting party undertakes to create a work, and the counter party pays a fee for it. In construction agreements in return for land share, the land owners transfer their independent parts to the contractor with land shares instead of paying a fee.

In this bulletin, the characteristics of construction contracts for land share provision, the debts of the parties and the validity condition of the contract are discussed.

1.    The Subject and Legal Characteristics of Construction Agreements In Return For Land Share

The main subject of construction agreements in return for land share is construction. The contractor is the contracting party to this agreement and undertakes to build a building such as a house, hotel, workplace. Construction agreements in return for land share, which are similar to a work contract in this aspect, are similar to the preliminary contract for real estate sale from the point of view of land owner. Because the land owners are under the obligation to transfer the ownership of some of the independent sections located in the multi-storey building to the contractor in exchange for the work done by the contractor. Such contracts, which collect various elements of more than one contract within their own structure, are called mixed contracts. If a problem has occurred in any part of the mixed contract related to a typical contract, the problem should be resolved by applying the provisions of that typical contract.

Construction agreements in return for land share are an agreement in which both parties are under mutual debt. Such contracts are called synallagmatic contracts, which impose debts on both parties, and this is characteristic in terms of the implementation of the default provisions.

2.    The Form Requirements in Construction Agreements In Return For Land Share

In our law, contracts for the transfer of immovable property are subject to the formal form requirement . Since the construction agreements in return for land share also contain the transfer of real estate in their content, they must be done in officially at a notary or in land registry office. The fact that the contract is drawn up and signed in the presence of a notary in such a way that the parties are also present is a condition of the form sought for the validity of the contract. The notarization of the signatures contained in the contract is not a sufficient measure for this agreement to be valid. In addition, if the contract is formed between the parties in writing and signed, the contract will be invalid and will not have any provisions and consequences.

Although the rules are in this way, in some cases it can be assumed that the contracts are valid even though they do not comply with the form requirement. For example, if the construction agreements in return for land share are drawn up in plain writing, it is possible that a share transfer has been made in the title deed or that it will be deemed valid if the construction has been completed in whole or in part. In such cases, according to the established judicial opinion of the Supreme Court, the subsequent assertion of the invalidity of the contract is considered an abuse of the right, and the contract can be considered valid even if the contract has not been regulated in accordance with the terms of the figure. Below are examples of the decisions of the Supreme Court on this issue.

Since the deed contains a commitment to transfer of shares, the validity of construction agreements in return for land share depends on the fact that they are made in an official way. In order for contracts signed without complying with the form to become valid later, either the transfer of shares must be made in the title deed or the execution must be completed.”[1]

“The flat construction agreement in return for land share between the parties has been arranged externally. Construction was started by the contractor on the real estate delivered to him on the basis of this contract, which was initially invalid in terms of shape, and the rough part of the construction was completed by the date of the lawsuit. Ongoing construction work performed during this time, in return for a portion of the contractor and the contract to the contractor and the contractor which must have belonged to the part of the apartments that sold on disposal of land by the owner on behalf of the people by reciting deed, the parties in accordance with the shape unedited of the contract, partially fulfilling and mutually agreed by acts that apply to them. The assumption that a partially or fully fulfilled contract is invalid in some way is an abuse of the right.”[2]

As of the content of the contract on which the main file plaintiff based his case on is a construction agreement in return for land share. These contracts are notarized in the form of an arrangement because of form requirement as well as they cannot be established as valid unless land owners do not have a signature, but according to decision of joinder of supreme court practice in the number 1983/2-1, 1984/1, dated 25.01.1984. the contract may also become valid if the land owners subsequently give their consent to the contract. In the concrete case, as far as it is understood from the file stage of … whose signature is not on the contact, it is understood that the contract was concluded and in this way the contract based on the case was established by the plaintiff as valid. While the dispute, which is considered to be a valid contract established by the court, should be resolved, the rejection of the case in writing on the erroneous grounds was not considered correct.” [3]

Construction contracts and contracts amending these contracts in return for land share must be made in an official form. However, even if the contract was made in a simple form, if the title deed agreed in the contract has been transferred or the construction subject to the contract has been completed at an irreversible rate, it is necessary to assert its invalidity because the lack of form of the contract has not been complied with is incompatible with the rule of honesty written in TCO Art. 2.”[4]

“Even the act or counter acts are not performed actually, in an invalid contract due to defect of form, one party; A)as prescribed by law for their own benefit or misleading movements that interfere with the realization of the shape, b) of the contract sees that is not for their own benefit wanting to get rid of it makes their the conscience hurt, is not for lack of the protective effect of the shape, on the contrary, simply using this as a reason to refrain from discharging their debts, c) the act will necessarily perform the contract in the event of understanding that after the contract has been made and confirmed as unfair and unjust toward the other party is strengthened his trust, by suggesting lack of form, to perform the act “to avoid a ban on the abuse of a right” is a contradiction, and in this case, as in the figure the current contract of the other party of the contract which is invalid due to lack of performance or non-performance damages can request it must be acknowledged that the lack of a positive nature.”[5]

3.    Different Forms of Arrangement of Construction Contracts in Practice for the Provision of Land

It may occur in different ways in the application of construction agreements in return for land share. Since the contractor does not receive any payment for the construction in construction agreements in return for a land share, it remains on himself to finance the construction. This situation may cause contractors to have problems economically. Because according to the law (TCO Art. 479), the time when the land owners will pay their debts by independent decommissioning is the time of completion of the construction. In practice, various solutions have been developed to eliminate such problems. In order to provide the financing that the contractor will need while he is still at the beginning of the work, construction contracts in return for land share can be made by the following conditions;

  • According to the state of completion when the construction is being carried out, the condition of progressive transfer is stipulated,
  • From the very beginning, by the share of the land plot is fully or partially transferred to the contractor and a mortgage is established in favor of the owner of the land plot, (then the mortgages are decommissioned gradually depending on the completion of the construction),
  • By promising in the contract the transfer of ownership of the share of the land plot, with the transfer taking place at the end of construction with decommissioning
  • The profit easement of the immovable property on which the building will be built will be established in advance, by giving the contractor the opportunity to sell,
  • By paying an advance to the contractor by the owner of the land plot (in this way, the contractor transfers his personal right, which he will acquire in the future, to third parties, creating an economic resource for him).

Since the principle of contractual freedom is adopted in our Code of Obligations, the parties have the opportunity to act to a certain extent in accordance with their will and wishes in terms of regulating the content of the contract. Therefore, it is possible for the parties to make changes and decisions in the construction agreements in return for the land share as above in the content of the contract as they wish.

4.    The Parties’ Rights In Construction Agreements In Return for a Share of the Land Plot And Their Debts

There are contractual rights and obligations of both parties in construction agreements in return for the land share. Therefore, it is necessary to study the contractual rights and obligations of the contractor and the owner of the land separately.

Obligations of the contractor arising from the contract;

  • Construction and delivery duty
  • The obligation to carry out the construction in person or to have it built under their own management,
  • Delivery of construction on time and without defect (complete, free from defect) delivery duty
  • The duty of care and loyalty
  • The duty for providing the necessary construction equipment and building materials for construction

The duties of the owner of the land plot or its owners arising from this agreement are as follows;

  • Transfer of shares corresponding to the independent part as the cost of construction
  • The obligation to deliver the land plot without any legal or actual obstacles on it
  • The obligation to cooperate with the contractor

“In construction agreements in return for the land share, the contractor is obliged to create a construction, and the employer is obliged to pay a price ”by transferring a share of the land” in return. In these contracts, the fee (cost) is paid in kind. The subject of the construction agreement in return for the land share is the construction of buildings on the land owned by the owner of the land. Construction refers to the work of a material nature. The first element in construction agreements in return for the land share is that “the contractor owes a construction (building) debt”. Because in these contracts, the contractor is obliged to create a building (construction) by providing its finances and using art, skills and labor if necessary. In general, in the contracts of works, the contractor undertakes to deliver it to the owner of the work by producing a certain result. In work contracts, the contractor’s “obligation to create the work” takes its basis from Article 470 of the Turkish Code of Obligations. It is the main debt of the contractor to create the work by doing the work and deliver the created work to the employer. The main thing is the full performance of the contract as agreed. Otherwise, the balance of benefits expected from the contract will be broken against one party. In such a situation, a party cannot ask the other party to perform its action because it will be deemed not to have performed its action. The obligation to start and maintain work on time in accordance with the contract is the result of the contractor’s obligation to perform the work faithfully and diligently.  The creation of the work in reality requires more or less time depending on its scope. The parties determine when the work will be started and when the completed work will be delivered. Unless otherwise agreed in the contract, the contractor must start work immediately, continue his work continuously, and deliver the work he will create within the time limit.”[6]

Conclusion

Construction agreements in return for the land share are one of the most common building laws contracts in practice. As for the content, these contracts, which show both the promise of the sale of real estate and the characteristics of the work contract, must be made in an official manner. Construction agreements in return for the land share that is not made in an official way will be invalid and will not have consequences The parties can not make claims on the basis of this agreement. However, in exceptional cases, construction agreements in return for the land share that has not been made in accordance with the figure, may be considered valid. Invalidity claims that are put forward as an abuse of the right are not taken into account by the courts, and the contract has provisions and consequences, just like a valid contract.

References

İlker Hasan DUMAN, İnşaat Hukuku, (2021), Seçkin Yayıncılık, Ankara (Access to some of the judicial decisions was provided from this work.)

Erhan GÜNAY, Arsa Payı Karşılığı İnşaat Yapım Sözleşmesinden Kaynaklana Uyuşmazlıklar, (2021), Seçkin Yayıncılık, Ankara.

İbrahim KAPLAN, (2013), İnşaat Sözleşmeleri Hukuku ve Endüstri Yatırım Sözleşmeleri, Yetkin Yayıncılık, Ankara.

23rd CIVIL CHAMBER OF THE SUPREME COURT, 15.11.2013, 3270/7118.

23rd CIVIL CHAMBER OF THE SUPREME COURT, 30.01.2014, 5641/557.

23rdCIVIL CHAMBER OF THE SUPREME COURT, 2016/4766 E., 2019/2317 K.

23rdCIVIL CHAMBER OF THE SUPREME COURT, E. 2016/4803, 2019/1958 K.

13th CIVIL CHAMBER OF THE SUPREME COURT, 22.11.1996, 8841/10366.

GENERAL ASSEMBLY OF THE SUPREME COURT OF LAW, 21.03.2012, 162/217.

[1] 23rd CIVIL CHAMBER OF THE SUPREME COURT, 15.11.2013, 3270/7118.

[2] 23rd CIVIL CHAMBER OF THE SUPREME COURT, 30.01.2014, 5641/557.

[3]23rdCIVIL CHAMBER OF THE SUPREME COURT, 2016/4766 E., 2019/2317 K.

[4]23rdCIVIL CHAMBER OF THE SUPREME COURT, 2016/4803 E., 2019/1958 K.

[5] 13th CIVIL CHAMBER OF THE SUPREME COURT, 22.11.1996, 8841/10366.

[6] GENERAL ASSEMBLY OF THE SUPREME COURT OF LAW, 21.03.2012, 162/217.

Leave a Reply

Your email address will not be published.