info@ferhatkule.av.tr
+90 212 579 79 85

Single Blog Title

This is a single blog caption

Protection of Landowners in Cases of Seizure and Bankruptcy Arising from Debts

October 1, 2025
0

Protection of Landowners in Cases of Seizure and Bankruptcy Arising from Debts

1. Introduction

Construction contracts based on land share establish a mutually beneficial relationship between the landowner and the contractor. The landowner undertakes to transfer the land shares, while the contractor undertakes to deliver the constructed independent units to the landowner. However, the contractor's financial situation is not always as anticipated. foreclosure proceedings or bankruptcy , the landowner's interests are seriously jeopardized.

This article will examine the protection of landowners in foreclosure and bankruptcy proceedings within the framework of the Turkish Civil Code, the Turkish Enforcement and Bankruptcy Law, the Turkish Code of Obligations, and the principle of reliance on the land registry.

2. Legal Framework

  • Turkish Civil Code (TMK): Real estate ownership, formal requirements, annotation institution.

  • Turkish Code of Obligations (TBK): Contracts for work and performance of reciprocal obligations.

  • Enforcement and Bankruptcy Law (EBL): Seizure and bankruptcy proceedings, protection of the rights of third parties.

  • Land Registry Law: Transfer of immovable property and the principle of reliance on the land registry.

3. The Landowner's Position Regarding the Contractor's Creditors

3.1. Contractor's Liabilities and Seizure Risk

  • If the contractor has acquired the land shares, these shares become part of his assets.

  • Creditors can have the contractor's assets seized.

  • In this situation, the landowner may suffer a loss of rights over the property before fully receiving their intended benefits.

3.2. Contractor's Bankruptcy

  • If the contractor goes bankrupt, their assets go into the bankruptcy estate.

  • Land shares transferred to the contractor are also included in the table.

  • The landowner may have to fight for their rights on par with, or even behind, other creditors.

4. Tools for Protecting the Landowner

4.1. Annotation on the Title Deed

  • According to Article 1009 of the Turkish Civil Code, personal rights can be registered in the land registry.

  • It enables the landowner to assert their rights against the contractor against third parties.

4.2. Gradual Transfer

  • The entire land share should not be transferred in cash.

  • The handover should be phased according to the construction progress level.

  • Thus, the lien placed by the contractor's creditors only affects the transferred portion.

4.3. Guarantee Mechanisms

  • Bank guarantee letter,

  • Mortgage facility,

  • Penalty clause provisions.

4.4. Precautionary Measures

  • The landowner may request an injunction from the court to prevent the contractor from transferring their assets to third parties.

5. Rights of the Landowner in Case of Foreclosure

5.1. Land Share Not Yet Transferred

  • There is no risk of seizure because the share belongs to the landowner.

5.2. Transferred Land Share

  • Creditors can seize assets due to the contractor's debts.

  • If there is an annotation, the landowner's rights are protected.

  • If there is no annotation, the landowner's claim can only be directed to the contractor.

5.3. Action for Annulment of Disposition

  • If the contractor has acted with the intention of concealing assets from creditors, a lawsuit for the annulment of the transaction can be filed in accordance with Articles 277 et seq. of the Enforcement and Bankruptcy Law.

6. Rights of the Landowner in Case of Bankruptcy

6.1. Assets Included in the Bankruptcy Estate

  • The land shares transferred to the contractor also become part of the bankruptcy estate.

6.2. Landowner's Requirements

  • If a restriction has been placed on the property, the landowner can assert their right against the court.

  • If no annotation is made, it takes its place in the queue among the creditors.

6.3. Claim for Entitlement

  • The landowner can file a claim for ownership if they assert that they have the right of ownership.

7. Problems Encountered in Practice

  1. The transfer of the land share in advance results in all risks being passed on to the contractor.

  2. Lack of protection against third parties due to the absence of a note in the land registry.

  3. The landowner is placed in the same queue as the creditors in the event of the contractor's bankruptcy.

  4. The landowner suffers due to lengthy legal processes.

8. Solutions and Recommendations

  • Contracts a phased handover system .

  • A note must be added to the title deed.

  • Security measures should be taken to protect the landowner's interests .

  • A financial analysis of the contractor should be conducted, and risks should be identified.

  • Mediation and arbitration clauses should be added to the contract.

9. Conclusion

In construction contracts based on land share, the contractor's bankruptcy or insolvency can cause significant losses to the landowner. Therefore:

  • Institution for annotating the title deed,

  • Gradual rotation,

  • Guarantee mechanisms,

  • Interim injunction

Tools such as these should be used, and the landowner's interests should be protected.

To avoid problems encountered in practice, it is crucial for the parties to act consciously, draft detailed contracts, and seek professional legal assistance when necessary.

About Post Author

Leave a Reply

Call Now Button