1-) Urban Transformation Process and Its Legal Infrastructure
Urban transformation refers to the process of systematically liquidating unplanned urbanization, slum areas, and dilapidated buildings that pose a risk to life safety, and constructing modern and safe living spaces in their place. This process, carried out in our country with the aim of preventing unplanned urbanization and establishing disaster-resistant cities, is a multi-dimensional legal discipline closely concerning public order and property law. In this area where the constitutional guarantee of the right to property and the public interest must be protected, it is essential to protect the rights of rights holders and the contractors executing the project within the framework of laws.
1.1-) Risky Area and Risky Structure Determination Process:
There are two main risk determinations in urban transformation legislation: risky structure and risky area.
While a risky structure refers to buildings that have completed their economic life or whose risk of collapse or severe damage has been determined based on scientific data; a risky area covers regions that pose a danger due to soil structure or the construction upon it that could lead to loss of life and property.
In regions declared as risky areas, comprehensive projects are carried out by property owners or the administration. In this framework, resorting to judicial remedies against administrative decisions and preventing loss of rights carry great importance.
1.2-) Judicial Remedy Against Risky Area Decision:
A building being found technically unsafe directly affects property rights. However, these decisions rendered by administrative authorities may not always be flawless; the right of property owners to object to these determinations on legal grounds is reserved.
The objection and lawsuit process is carried out entirely within the framework of administrative law legislation. The first step is to make an official application to the relevant administrative bodies within the statutory limitation periods stipulated by law. The procedure of objection and evaluation criteria may vary depending on the local government taking the decision and the grounds presented. Since this process involves technical details, working with a lawyer specializing in the field of administrative law will directly affect the course of the process in order for transactions to proceed quickly and without error.
The determination of buildings as risky and the subsequent evacuation, demolition, or reinforcement stages grant various legal opportunities to rights holders. Within the scope of Administrative Law, property owners may exercise these rights granted to them according to the characteristics of the concrete situation.
The steps that rights holders must follow are generally as follows:
- First, a complete copy of the official determination report regarding the structure must be obtained from the relevant institution.
- Subsequently, an objection application must be submitted to the administrative institution with concrete grounds containing technical and legal deficiencies in the report.
- In case the objection is rejected, the judicial process must be initiated without missing the statutory period.
Due to the complexity of the process, it is of great benefit for property owners to receive professional legal consultancy in order to defend their rights more effectively.
Contesting risky structure determinations requires a high level of legal diligence. Attention should be paid to the following criteria for the process to conclude positively:
- Complete Documentation: All technical and legal documents forming the basis of the objection must be prepared without deficiency.
- Time Management: Full compliance with the application periods specified in Administrative Law is procedurally mandatory. An objection can be made within 15 days from the date of notification of the Risky Structure Decision, or an action for cancellation can be filed directly in administrative judiciary within 30 days.
- Justification: The allegations in the objection petition must be stated in clear language and, if necessary, legal grounds must be clearly specified by including expert opinions.
Creating a strong defense in accordance with the legislation can enable the administration to review its decision. Receiving professional support at this stage prevents loss of rights.
1.3-) Zoning Amnesty and Resolution of Property Problems:
Temporary legal regulations aimed at resolving property and licensing problems of structures built contrary to slum and zoning legislation are called “zoning amnesty or zoning peace” (imar barışı veya imar affı). With these statutory regulations, illegal and unsupervised construction is classified legally, and the termination of property disputes is aimed. Rights holders wishing to benefit from the zoning amnesty are required to ensure that the technical and legal information they declare regarding their structures reflects the truth. In the application process carried out via E-Devlet (e-Government), if the fees determined over the plot property tax value and the approximate cost of the building are paid on time, a Building Registration Certificate (Yapı Kayıt Belgesi) is issued. However, it is observed that many documents can be canceled and administrative fines can be imposed due to reasons such as missing the payment period or making false statements.
2-) Importance of Contracts in Urban Transformation Law:
Concluding urban transformation projects smoothly, in accordance with legal certainty, and in a manner satisfying both sides is only possible with fully prepared contracts. Construction contracts in return for land share or urban transformation joint decision protocols are the fundamental legal texts regulating the relationships, obligations, and sanctions to be applied in potential cases of default between condominium owners and contractors. Establishing the contract with incomplete or erroneous articles from the beginning may cause projects to remain unfinished, property owners to become homeless, and contractors to enter a financial bottleneck.
2.1-) Content of Contracts and Balancing the Rights of the Parties:
A contract in accordance with the law, specifying the mutual rights and obligations of the parties with clarity leaving no room for doubt, is the foundation of urban transformation. The contract must contain in detail the delivery period of construction, penal clause and rental compensation amounts to be paid in case of delay, technical specifications stating the qualities of materials to be used, and the financing model of the project. In order to remedy potential victimizations, special protective provisions allowing parties to demand their material and moral damages through an equalization compensation lawsuit (denkleştirme tazminatı davası) must be added to the contract.
2.2-) State Supports: Rent Allowance and Urban Transformation Loan:
Various conveniences are provided to property owners and tenants by the state during the urban transformation process. Prominent among these is the rent allowance aimed at meeting the temporary housing needs of property occupants during the demolition and reconstruction process. For rights holders who cannot benefit from rent allowance, low-interest urban transformation loan opportunities are offered through banks. Interest support rates for these loans are determined by statutory legislation, and it is a fundamental rule that rent allowance and urban transformation loan cannot be used together simultaneously.
2.3-) Joint Decision Protocol and Processes of the Board of Condominium Owners:
After the determination of a risky structure, condominium owners must hold meetings in accordance with procedure in order to make decisions regarding the reconstruction or sale of the building. According to the legislation, decisions in the urban transformation process are no longer taken by a 2/3 majority, but generally by a simple majority (%50.01) according to the land share. However, it cannot be said that the same majority ratio is valid for every decision (regulated in Article 6 of Law No. 6306 on Transformation of Areas Under Disaster Risk). Processes such as sending legal notices to owners who do not participate in this majority, remain in opposition, or vote negatively, notifying the decision in accordance with procedure, and selling property shares through public auction must be executed flawlessly. Otherwise, lawsuits to be filed with the request for cancellation of taken decisions may bring the project to a complete halt.
3-) Minority Shareholder Rights, Right to Property, Contractual Security, and State Supervision
3.1-) Minority Shareholder Rights in Urban Transformation and Ways of Protection:
Within the scope of Law No. 6306 on Transformation of Areas Under Disaster Risk, protecting the property rights and legal interests of minority shareholders who do not join the decision of the majority of land shares (%50.01) requires great legal sensitivity. The basic rights and ways of protection possessed by minority owners against the majority decision are as follows:
- Rule of Good Faith and Prohibition of Abuse of Rights (TMK Art. 2): Decisions taken by the simple majority must not carry the intent to cause harm to the minority and must comply with the rule of good faith. Decisions taken by the majority with the purpose of acquiring the minority shareholder’s share at a cheap price or imposing unfair conditions are legally defective.
- Objection to Contract Conditions and Principle of Equality: The contract to be signed with the contractor must not contain exorbitant inequalities against minority owners in terms of independent section distribution, square meter losses, or goodwill/location (şerefiye) differences. The minority shareholder may resort to judicial remedies against contract terms contrary to the rule of good faith and the principle of equality.
- Right of Preemption (Priority Sale) in the Sale of Share by Public Auction: Before the share of the minority owner not participating in the majority decision is sold ex officio, it is offered to other shareholders through public auction. While the determination of the market value in this process is made by the administration, in case the value remains below market conditions, an action for cancellation and stay of execution can be filed in administrative judiciary against the determination transaction and sale decision.
- Condition of Procedurally Proper Notification and Legal Warning Notice: It is mandatory that the decision taken by the majority and the offered contract terms be notified to the minority owner through a notary public or in accordance with procedure. In case of improper notification, sale and tender transactions become invalid.
3.2-) Constitutional Right to Property and Principle of Proportionality:
Pursuant to Article 35 of the Constitution, the right to property can only be restricted for the purpose of public interest and by law. In urban transformation, the balance between public interest (ensuring safety of life and property) and individual property right must be established within the framework of the “principle of proportionality”. Disproportionately restricting the minority shareholder’s right to property, touching the essence of the right, or depriving them of property without paying a reasonable compensation/share value constitutes a constitutional violation.
3.3-) Contractual Security and Risks of Typical/Excessive Exploitation:
Construction Contracts in Return for Land Share (APKİS) are synallagmatic (doubly binding) mixed-nature contracts. To ensure contractual security in urban transformation projects, attention should be paid to the following matters:
- Transparent and Fair Contract Text: Preparing the contract unilaterally in favor of the contractor, failing to include penal clauses and mortgage mechanisms that protect land owners in cases of incomplete performance or defective performance damages contractual security.
- Guarantees and Mortgage System: Against the risk of the contractor being unable to complete the construction, a guarantee mortgage should be established in favor of land owners, or the principle of title deed transfer based on progress payments should be adopted.
4-) Importance of Expert Lawyer in the Urban Transformation Process
Urban transformation is a multi-disciplinary, complex process covering administrative law, law of obligations, property law, and zoning legislation. Protecting the rights of condominium owners and construction firms in the full sense, avoiding missing administrative application periods, and minimizing future risks at the contract stage are only possible with the support of jurists specialized in the field of urban transformation. Beyond ordinary legal consultancy, participating in boards of condominium owners, conducting technical negotiations with contractors, and filing property-protecting lawsuits when necessary are among the fundamental activity areas of an expert lawyer.
Frequently Asked Questions (FAQ)
Q1) What does “Reserve Structure Area” mean in urban transformation?
A1) Reserve structure area refers to vacant or built-up areas designated by the Ministry of Environment, Urbanization and Climate Change to be used as new residential areas in urban transformation projects. When a region is declared a reserve area, all zoning and planning authorities in that area pass directly to the ministry.
Q2) What can be done legally against the declaration of a region as a Reserve Structure Area?
A2) Declaration of a reserve structure area is an administrative transaction that directly affects property rights. Property owners who think this decision is unlawful can file an action for cancellation of the administrative transaction with a request for stay of execution within the statutory period from the date the decision is announced.
Q3) If the contractor leaves the construction unfinished or fails to fulfill their commitments in urban transformation projects, what are the rights of condominium owners?
A3) Condominium owners can demand delay penalties and penal clauses specified in the contract. In case of default by the contractor, material and moral compensation lawsuits can be filed for termination of the contract and compensation of damages pursuant to the provisions of the law of obligations. Furthermore, an equalization compensation lawsuit (denkleştirme tazminatı davası) can be instituted for losses in market value of the unfinished construction.
Q4) What happens to the property rights of condominium owners who do not join the majority decision?
A4) The property shares of independent sections belonging to minority owners who do not join the decision taken by majority or fail to sign the project despite legal warning notice are put up for sale among other shareholders through public auction by having their market value determined by the ministry or administration. If the sale does not occur, property can be registered in the name of the treasury or expropriation can be pursued.
Q5) Can urban transformation rent allowance and urban transformation loan be used at the same time?
A5) No, according to current legislation, it is not possible for a rights holder to both use an interest-supported urban transformation loan from the state and receive monthly rent allowance for the same real estate. It is a legal obligation for the property owner to choose only one of these two support mechanisms (Paragraph 6 of Article 7 of Law No. 6306).
SOME PRECEDENT DECISIONS ON THE ISSUES WE HAVE EXPLAINED ABOVE
COURT OF CASSATION 6TH CIVIL CHAMBER, E. 2024/3152 K. 2025/1604 D. 21.04.2025
“While the defendant contractor is a merchant and, as a prudent merchant, ought to have obtained the powers of attorney and letters of consent during the signing of the contract, they failed to obtain them, and the defendant contractor, being in default (at fault/delayed) themselves, cannot put the opposing party in default… during the discovery conducted, it was determined that the defendant contractor did not construct the building committed in the contract upon the real estates subject to the lawsuit, and from the examination of the zoning file, it was determined that executive activities regarding building construction were not initiated; on these grounds, it was decided to retroactively terminate the construction contract in return for land share…”
- COUNCIL OF STATE 6TH CHAMBER, E. 2019/20325 K. 2021/1987 D. 17.02.2021
“…It was concluded that there is public interest in taking an urgent expropriation decision in order to prevent owners who express an intention not to agree from prolonging the process, that the condition of urgent expropriation specified in Article 27 of Expropriation Law No. 2942 has materialized, and that there is no unlawfulness in the transaction subject to lawsuit… Rejection of the lawsuit filed with the request for cancellation of the Presidential Decision dated 17.09.2019 and numbered 1553 subject to lawsuit in terms of the real estates subject to dispute…”
- COUNCIL OF STATE, 6TH CHAMBER, E. 2019/17902 K. 2021/12687 D. 17.11.2021
“…In risky structure determination transactions originating from soil, taking into consideration that no special procedure is regulated in the Principles Regarding Determination of Risky Structures (RYTEİE) regarding the soil study to be performed by geological engineers who will take part, it was concluded that the absence of a training and exam requirement to which geological engineers who will prepare the soil study report that can be arranged at the end of examining under general procedure would also be subject will not lead to a deficiency in risky structure determination transactions and in the Regulation subject to lawsuit which is the basis of these transactions.”
- COURT OF CASSATION, 6TH CIVIL CHAMBER, E. 2023/2039 K. 2024/2903 D. 24.09.2024
“…It was understood that the defendant property owner … continued to reside in the old house located on the real estate subject to contract until July 2015 in order to receive rent allowance within the scope of urban transformation, thus the defendants consented to the urban transformation work on the real estate subject to contract, and since it was understood that the defendant property owners were also at fault in the delay of the work by not delivering the real estate subject to contract to the plaintiff contractor to build until July 2015, it is required to accept that the parties are jointly at fault… In this case, useful and necessary expenses incurred by the contractor due to the contract must be determined by the court.”