The biggest concern of a landowner who signs a flat-for-land (land-share-for-construction) contract is that the flats will not be delivered on time. So, if the contractor delays delivery, can the landowner claim rent compensation in a flat-for-land construction project even if the contract contains no provision on this point? The short answer: yes. This is a right that arises directly from the law, not from the contract. In this article, we explain in simplified form the legal basis of rent compensation for late delivery, the period for which it is calculated and the settled approach of the Court of Cassation (Yargıtay).
Rent Compensation in Flat-for-Land Construction: Can It Be Claimed If the Contract Is Silent?
By its legal nature, a land-share-for-construction contract is a contract for work. The contractor is obliged to complete the agreed independent units within the period set in the contract and deliver them to the landowner. If the contractor fails to perform this obligation on time, the landowner may claim rent compensation (loss of rent) in respect of the independent units that should have been handed over.
The key point is this: it is not necessary for the contract to contain a specific provision on rent compensation for this right to exist. This claim arising from late performance is a right that arises directly from the law (the optional right under Turkish Code of Obligations (TBK) Art. 125/I — formerly Art. 106/II of the repealed Code of Obligations). In other words, even if the parties did not address this issue in the contract at all, when the contractor delays delivery the landowner may claim rent compensation from the date on which delivery should have taken place.
Of course, the parties may agree on the amount of rent compensation in advance in the contract; such a clause is valid. However, the absence of such a provision does not remove the landowner’s right. Furthermore, unless the contractor can prove that it was not at fault for the delay, it remains liable for the loss resulting from late delivery.
For Which Period Is Rent Compensation Calculated?
The scope of rent compensation for late delivery is limited to the period between two dates:
- Start: The date on which the independent units should have been delivered under the contract (the date on which the delivery obligation became due).
- End: The date on which the independent units were actually delivered. If delivery has not yet taken place, the calculation is made up to the date the action was filed.
In other words, compensation accrues for each month of delay in delivery. In practice, the court-appointed expert determines the comparable market rent of the independent unit for the relevant period and multiplies it by the number of months of delay. Extending the calculation beyond the date the action was filed is not correct; the Court of Cassation treats expert reports doing so as a ground for reversal.
Delivery Must Conform to the Contract: The Occupancy Permit (Iskân) Requirement
For rent compensation to stop, the delivery must be in conformity with the contract. The fact that the contractor has physically placed the independent unit at the landowner’s disposal does not always amount to a valid delivery.
For example, if the contract provides that the independent units will be delivered with an occupancy permit (iskân / building use permit) already obtained, physical delivery of a building without an occupancy permit is not considered a genuine and valid delivery. In this case, rent compensation continues to accrue until delivery in conformity with the contract takes place. Accordingly, whether the delivery meets the qualities required by the contract is critical in determining the compensation period.
Can a Landowner Who Sold the Independent Unit Receive Compensation?
The landowner can claim rent compensation only for the period during which they were the owner of the relevant independent unit. Loss of rent is a loss linked to ownership; the landowner cannot claim rent compensation from the contractor for a period in which they were not the owner.
Accordingly, if the landowner has sold the independent unit allocated to them to a third party, they cannot claim rent compensation for the period after the date of sale. In this case, compensation is calculated from the date on which delivery should have taken place up to the date of sale. A claim for the period after the sale is unfounded.
What Do Court of Cassation Decisions Say?
The Court of Cassation has clarified the scope and duration of rent compensation for late delivery in many decisions. Below is the essence of two precedent decisions that shed light on the subject:
In the event of sale, compensation is calculated up to the date of sale
In the decision of the 15th Civil Chamber of the Court of Cassation dated 30.09.2019, E. 2018/2304, K. 2019/3707, it was emphasised that where the landowner has sold the independent unit, rent compensation must be calculated from the date on which delivery should have taken place up to the date of sale. Relying on an expert report that calculated compensation to cover the period after the sale as well (extending it to the date the action was filed) was considered a ground for reversal.
The calculation covers the period between the date the delivery obligation became due and actual delivery
In the decision of the 15th Civil Chamber of the Court of Cassation dated 02.05.2019, E. 2018/5620, K. 2019/2056, it was stated that rent compensation must be calculated for the period between the date on which the delivery obligation became due and the date of actual delivery. Making the calculation in a way that goes beyond the date the action was filed was accepted as a ground for reversal.
Frequently Asked Questions
If the contract says nothing about rent compensation, can I still claim it?
Yes. Rent compensation for late delivery is a right that arises directly from the law, independently of the contract. Even if the contract contains no provision on this point, when the contractor delays delivery the landowner may claim rent compensation from the date on which delivery should have taken place.
The contractor handed over the flat but there is no occupancy permit. Does compensation stop?
If the contract provides that delivery will be made with the occupancy permit (iskân / building use permit) obtained, physical delivery without an occupancy permit is not considered a valid delivery. In this case, rent compensation continues to accrue until delivery in conformity with the contract takes place.
Up to when is rent compensation calculated?
Compensation accrues from the date on which the independent unit should have been delivered until the date it was actually delivered. If delivery has not yet taken place, the calculation runs up to the date the action was filed; the calculation cannot extend beyond that date.
I sold my flat. Can I claim compensation for the period before the sale?
Rent compensation can be claimed only for the period of ownership. If you have sold the independent unit, you cannot claim compensation for the period after the date of sale; compensation is calculated from the date on which delivery should have taken place up to the date of sale.
Points to Note on Late Delivery and Rent Compensation
In actions for rent compensation for late delivery, technical issues such as correctly establishing the delivery date, whether the delivery conforms to the contract and determining the comparable market rent directly affect the outcome. To better understand the basics of the subject, you can also read our articles examining what type of contract a flat-for-land construction contract is and whether the contract can be terminated unilaterally, which becomes relevant when the delay becomes serious.
Legal Notice: This text has been prepared for general information purposes only and does not constitute legal advice. sophoshukuk.com makes no referral, guarantee or promise of outcome. Each case must be assessed on its own particular circumstances; for your specific dispute, please obtain professional advice from a lawyer.