With the increase in urban transformation and real estate investments in Turkey, one of the most commonly used methods is construction contracts in exchange for land shares. In this type of contract, the landowner transfers their land to the contractor, and the contractor undertakes to give certain independent sections to the landowner in return.
However, one of the biggest problems encountered in practice is the bankruptcy of the contractor. When a contractor goes bankrupt, both landowners and third parties who have purchased apartments in the project may suffer serious losses. Therefore, it is of great importance to know how rights can be protected and what legal avenues can be pursued in the event of contractor bankruptcy.
Legal Nature of Land Share Construction Contracts
A construction contract in exchange for a share of the land is a mixed contract under the Turkish Code of Obligations and the Condominium Law. It encompasses both a promise of sale and a work contract. Therefore, it involves both the transfer of real estate and the timely and complete construction of the building.
The contractor’s obligation is to complete the construction undertaken on the land by completing the construction on the land a9> owner independent sections delivery is. The land owner’s obligation is to enable the construction to be carried out by the contractor to transfer the land to the contractor. When this balance is disrupted, especially in the event of the contractor’s bankruptcy serious legal issues arise may arise.
Protection of Rights in the Event of Contractor Bankruptcy
The bankruptcy of a contractor poses significant risks for landowners. Upon declaration of bankruptcy, all of the contractor’s assets enter into liquidation and are distributed among creditors. Landowners then become creditors of the contractor.
In such a situation, landowners may resort to various legal means to complete the project. Options such as filing for bankruptcy, terminating the contract, or reaching an agreement with another contractor may be considered. However, the choice of which option to pursue depends on the specific circumstances of the case.
Legal Remedies to be Pursued in the Event of Contractor Bankruptcy
In the event of the contractor’s bankruptcy, landowners can take the following steps:
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Bankruptcy Table Receivables Record: Contractors file for bankruptcy and register their claims in the bankruptcy proceedings with the bankruptcy court.
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Termination of the Contract Termination: The Contractor is unable to fulfill its obligations and therefore cannot fulfill its obligations, land owners may request termination of the contract .
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Continue with a New Contractor: A contract can be signed with another contractor to complete the project.
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Claim for Compensation: Legal action may be taken to recover material damages.
Taking these steps correctly and in a timely manner will prevent landowners from losing their rights. land owners rights loss suffering prevented.
The Situation of Landowners
When a contractor goes bankrupt, one of the parties most affected is the landowners. This is because landowners have usually transferred part of their land to the contractor in exchange for apartments or commercial premises.
In the event of bankruptcy, it is possible for the landowner to suffer losses on the property and not be able to take possession of the apartments. For this reason, landowners should intervene in the process quickly and register with the bankruptcy file to secure their rights. In addition, entering into an agreement with a new contractor is also one of the most common methods.
The Situation of Third Parties (Recipients)
Land share in exchange for construction projects, contractors most of the time time yet a9> construction has been completed independent sections third parties sell. In this situation, the contractor’s bankruptcy apartment purchased by individuals also leads to their disadvantage.
The rights of third parties are subject to their contracts and the rights they have registered in the land registry. Sales contracts that have not been registered in the land registry may lose their validity in the event of bankruptcy. Therefore, it is very important for buyers to register their contracts in the land registry in order to protect their rights. In the event of bankruptcy, buyers must also register with the bankruptcy estate.
Supreme Court Decisions in Contractor Bankruptcy Cases
The Court of Cassation has issued numerous precedent decisions regarding contractor bankruptcy. These decisions generally include interpretations aimed at minimizing the harm suffered by landowners and third parties. In particular, it is evident that sales promise agreements registered with the land registry are protected in favor of buyers.
As of 2025, the Supreme Court also accepts the contractor’s bankruptcy as contrary to the debt. as a breach of contract continue with a new contractor or or claiming compensation from the contractor is recognized by law. For this reason lawsuits processes Supreme Court precedents following is extremely important.
Precautions to Protect Against Risks
Contractor bankruptcy may cause damage to protect for both land owners and also buyers should take certain precautions to avoid:
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Contracts must be executed in the presence of a notary public.
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Registration of a lien on the title deed,
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Investigation of the contractor’s financial strength,
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Obtaining a bank guarantee letter, if necessary,
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Obtaining legal advice.
These measures in the future prevent potential harm from occurring and provide significant benefits in this regard.
The Importance of Legal Support
Land share construction contracts and contractor bankruptcy cases are extremely complex processes that require technical knowledge. Incorrect steps can lead to serious rights losses for both landowners and apartment buyers.
At Atakan Ayhan Law Firm, we provide our clients with professional consulting and litigation services in such disputes. Our goal is to protect our clients’ rights in the strongest possible way in difficult situations such as contractor bankruptcy.
Land share construction contracts, when implemented correctly, are a profitable method for both landowners and contractors. However, the contractor’s bankruptcy makes the process complicated and risky. In such a case, landowners, buyers, and other parties need to act quickly.
Bankruptcy table registration, termination of the contract termination, new contractor continuation or or compensation lawsuit such as legal measures, the parties’ damages may be remedied. However, since each specific case has different characteristics, professional legal assistance is the most appropriate solution.
