Urban Transformation in Turkey: Rights and Legal Process

Urban Transformation in Turkey: Rights and Legal Process

Turkey's location in a major earthquake zone and the fact that a significant portion of its existing building stock does not comply with current seismic regulations make urban transformation an imperative necessity. Law No. 6306 on the Transformation of Areas Under Disaster Risk establishes the legal framework for the urban transformation process. This guide provides a detailed examination of all stages of urban transformation and the rights of right-holders.

Scope and Purpose of Law No. 6306

Law No. 6306, which entered into force on May 16, 2012, regulates the identification of areas under disaster risk and risky structures, and the transformation of these areas. The fundamental purpose of the law is to demolish risky buildings and construct safe structures in their place to ensure the safety of life and property.

The law encompasses two fundamental concepts:

• Risk Areas: Areas declared by Presidential decree that pose risk of loss of life and property due to ground structure or existing construction
• Risky Structures: Buildings determined through scientific and technical data to have completed their economic life or to carry risk of collapse or severe damage

Risk Assessment Process for Buildings

The first step in urban transformation is determining whether a building is classified as risky. This assessment process operates as follows:

Assessment Application

Risky building assessments are conducted by institutions licensed by the Ministry of Environment, Urbanization and Climate Change, upon application by property owners or their legal representatives. Any single owner may independently apply for assessment; unanimous consent of all owners is not required. The Ministry may also order assessments ex officio.

Assessment Report and Objection

The risk assessment report prepared by the licensed institution is communicated to the relevant land registry office and building owners. Following registration on the title deed, owners are formally notified. Objections to the risky building designation may be filed within 15 days of notification. Objections are evaluated by technical committees established within the Provincial Directorate.

If the objection is rejected, an annulment action with a request for stay of execution may be filed before the administrative court. However, the objection process does not halt the demolition timeline; therefore, obtaining a stay of execution is of critical importance.

Determination of Right-Holder Status

In the urban transformation process, the concept of right-holder is determined according to title deed records. Right-holders include:

• Ownership right holders: Persons registered as owners in the title registry, unit owners
• Land share holders: Holders of condominium ownership or condominium easement titles
• Co-ownership holders: Persons holding shares in shared ownership
• Usufruct right holders: Persons in whose favor usufruct rights have been established in the title registry

Tenants are not considered right-holders but may benefit from rental assistance and relocation aid. Occupants of unregistered buildings may benefit from limited rights only under certain conditions.

Rental Assistance Rights

During the demolition of risky buildings, rental assistance is provided to right-holders and tenants. The fundamental principles of rental assistance are:

• Right-holders: Monthly rental assistance is provided to owners who vacate the risky building until delivery of the new structure. The rental assistance period is generally 18 months, which may be extended if the construction period is prolonged.
• Tenants: Tenants receive a one-time relocation allowance equivalent to 2 months' rent.
• Limited real right holders: Holders of limited real rights such as usufruct also receive rental assistance.

Rental assistance applications are made to the relevant municipality or Provincial Directorate. For guidance on your rental assistance rights, we recommend seeking expert legal counsel.

Contractor Agreement Process

One of the most critical stages of the urban transformation process is the contracting phase between owners and the construction contractor. Key considerations include:

Agreement Types

• Construction-for-land-share agreement: The most commonly used type. The contractor constructs the building in exchange for land shares and delivers specified independent units to owners.
• Revenue sharing agreement: The contractor builds the structure and sales revenue is shared at a predetermined ratio.
• Floor-for-construction agreement: Construction is performed in exchange for delivering a specified number of floors or apartments to owners.

Essential Contract Elements

• Construction start and completion dates
• Penalty clause amounts for delays
• Specifications of units to be delivered to owners (square meters, floor, orientation)
• Common area arrangements
• Construction quality and material standards
• Security and guarantee provisions (bank guarantee letters)
• Contractor obligations during the rental assistance period
• Contract termination conditions

Having contractor agreements reviewed by an experienced construction law attorney is essential to preventing loss of rights.

Two-Thirds (2/3) Majority Rule

One of the most significant provisions of Law No. 6306 is the two-thirds majority rule. Under this rule:

• Decisions are made by at least two-thirds (2/3) of owners by share in the parcel containing the risky building.
• This majority applies to decisions regarding demolition, reconstruction, contractor selection, and determination of contract terms.
• Majority decisions are made through a notary public or within the framework of Ministry regulations and are notified to all owners.
• The decision is binding on all owners, including those in the minority.

Rights of Dissenting Minority Owners

The rights of minority owners who do not participate in the two-thirds majority decision are specifically regulated in the Law:

Participation Invitation

Owners who do not join the majority decision are given 15 days to either join the decision or sell their independent units. Written notification is made through a notary public during this period.

Sale of Land Share

If owners fail to join the decision or sell their units within the given period, their land shares are sold at public auction at the fair market value determined by the Ministry, primarily to other owners, and if no buyer emerges, to the Ministry or relevant administration.

Objection and Litigation Rights

Minority owners may file annulment actions before administrative courts against land share sale decisions. Individual application to the Constitutional Court is also reserved. Whether the fair value reflects the actual market value is frequently the subject of litigation within the context of property right protection.

Floor Area Ratio Adjustments

In urban transformation projects, floor area ratio increases are critically important for the economic feasibility of the project. Under Law No. 6306:

• Zoning plan modifications may be made in areas containing risky buildings
• Floor area ratio increases may be granted to ensure the financial sustainability of the project
• Increases are effectuated through municipal council decisions and Ministry approval
• Increased ratios generally enable the contractor to produce additional units, making the project feasible without additional cost to owners

Demolition and Reconstruction Process

Evacuation and Demolition

Following finalization of the risky building determination, the evacuation and demolition process commences. Owners are given a minimum of 60 days for evacuation. If the building is not evacuated within this period, administrative evacuation is carried out. Demolition is conducted under the coordination of the Ministry or by the authorized municipality.

Construction Process

Following completion of demolition, construction of the new building begins. The construction process typically takes 18-24 months. During this period, the following stages occur: obtaining the construction permit, foundation and structural works, finishing works and mechanical installations, building inspection controls, obtaining the occupancy certificate, transition to condominium ownership, and title deed registration.

Appeals Against Administrative Decisions

Various legal remedies are available against administrative decisions taken during the urban transformation process:

• Objection to risky building designation: Objection to the technical committee within 15 days, followed by annulment action in administrative court
• Objection to risk area declaration: Annulment action before the Council of State against the Presidential decree
• Objection to land share sale: Annulment action in administrative court against the sale transaction
• Objection to zoning plan amendment: Objection during the display period against the municipal council decision, followed by litigation in administrative court
• Objection to demolition order: Annulment action with a request for stay of execution against the demolition order

Timeline

The typical timeline for the urban transformation process is as follows:

1. Risk assessment: 1-3 months
2. Objection process: 1-6 months (may extend if litigation is initiated)
3. Contractor selection and agreement: 2-4 months
4. Evacuation process: 2-3 months
5. Demolition: 1-2 months
6. Design and permits: 3-6 months
7. Construction: 18-24 months
8. Occupancy certificate and title registration: 2-4 months

The total process generally takes 3-4 years to complete.

Compensation Options

Right-holders may benefit from various compensation options during the urban transformation process, including new apartment allocation, cash compensation at fair market value, alternative housing provided by TOKI or the municipality, and monthly rental support during construction.

Conclusion and Recommendations

The urban transformation process presents both opportunities and risks for right-holders. Obtaining legal support at every stage of the process is essential for protecting rights and preventing potential grievances. Professional legal counsel is indispensable, particularly for reviewing contractor agreements, participating in majority decisions, and managing appeal processes.

The Emir Law & Consulting real estate and construction law team provides comprehensive legal support to right-holders at every stage of the urban transformation process. For detailed information on risk assessment objections, contractor agreements, and administrative litigation, please contact us.