Recording in a written instrument the qualities to which a dwelling is to be built, the materials to be used and the date on which it is to be delivered is no longer the exception but the rule in the acquisition of real property. That instrument, signed between the construction company and the purchaser, serves as the basic document against which the parties’ mutual obligations are measured should a dispute later arise.
Whether such an agreement may be assessed under the Consumer Protection Act No. 6502 (TKHK) depends on two conditions: the seller must carry out the transaction as part of its commercial activity, and the other party must acquire the property without pursuing a commercial purpose. Where these two elements come together, the relationship takes on the character of a consumer transaction and the purchaser benefits from a protective regime going beyond the general provisions.
Proceeding below on the assumption that the sale agreement falls within the scope of consumer legislation, we assess which claims the purchaser may bring where the property delivered does not possess the promised features, and how, alongside those claims, the possibility of seeking damages arises.
The Property Sale Agreement Concluded Between the Parties
The purchaser and the seller regulate in a sale agreement such matters as the qualities of the property, the mutual obligations and the payment schedule. This type of agreement may also be encountered in respect of completed buildings; its principal field of use, however, is real property still under construction or existing only at the project stage. Because the building is not yet there, and the purchaser therefore has no opportunity to see and inspect what is being bought, setting out in detail in the agreement the qualities to which the property is to be brought into existence is of vital importance, particularly for the purchaser.
In practice, the following matters are seen to be regulated in these agreements:
- The day specified as the date on which handover of the keys is to take place
- The size of the independent unit, expressed in square metres
- The internal layout in terms of the number of bedrooms, living rooms and wet areas
- The brand and quality class of the concrete and reinforcing steel to be used in the load-bearing system
- Interior features such as the materials to be preferred for flooring, wall and joinery works
- The standard to which the building is to be brought in terms of sound and thermal insulation
- The handing over of the electricity, water and natural gas infrastructure ready for use
- The conformity of the building with its approved project, its building permit and the conditions for an occupancy permit
- The landscaping works to be carried out in the immediate surroundings of the plot
- The location in which the property is situated
None of these headings is a mandatory element for the validity of the agreement; the parties may narrow the list if they wish, and may equally add to the agreement many matters not listed here.
Where the Delivered Property Lacks the Qualities Set Out in the Agreement
If, when the keys are handed over, the property does not meet the features agreed upon by the parties, there is defective performance, and a dwelling transferred in this way is regarded in law as a defective good. The statutory definition of the concept is set out in Article 8 of the TKHK:
Consumer Protection Act No. 6502, Art. 8
“A defective good is a good which, at the moment of its delivery to the consumer, is contrary to the agreement because it does not conform to the sample or model agreed upon by the parties or does not possess the features which it objectively ought to possess.”
As the definition shows, the yardstick is not the text of the agreement alone; the absence of features objectively to be expected by reason of the nature of the property likewise gives rise to a defect. In such a case the purchaser may raise the defective performance against the seller and invoke the claims afforded by the Act.
The Consumer’s Elective Rights in the Event of Defective Delivery
Article 9 of the TKHK imposes on the seller the obligation to transfer the good in conformity with the terms of the agreement. Where that obligation is breached — that is, where the dwelling is delivered with qualities differing from those agreed — the purchaser has two separate avenues: the elective rights listed in Article 11 of the Act and, in addition to them, a claim for damages which may be brought under the general provisions of the Turkish Code of Obligations No. 6098 (TBK).
Whichever of these rights the consumer duly elects, the seller is bound to give effect to the right chosen. Moreover, under TKHK Art. 11(6), all costs arising from the exercise of the elective right fall on the party performing that right; no further sum may be demanded from the consumer.
The Right to Withdraw from the Agreement
Article 11(1)(a) of the Act affords the consumer, where the good turns out to be defective, the possibility of withdrawing from the contractual relationship by declaring readiness to return the thing sold. In the context of housing sales, this means that the purchaser unwinds the contractual relationship by declaring that the property will be returned.
The fifth paragraph of the same article provides that, where the route of withdrawal is chosen, the entirety of the price paid by the consumer is to be returned to them immediately.
The Right to Demand a Reduction in the Sale Price
The second possibility is the right regulated in Article 11(1)(b), which rests on the consumer keeping the good and demanding a reduction in the price in proportion to the defect. Without returning the dwelling taken into possession, the purchaser may request that the sale price be reduced by an amount corresponding to the shortcoming established in the property.
Where this route is chosen, Art. 11(5) likewise comes into play: the sum corresponding to the reduction is deducted from the price paid and returned to the consumer without delay.
The Right to Demand Free Repair
The third option appears in Article 11(1)(c) and concerns demanding that the thing sold be repaired free of charge, at the seller’s exclusive expense, provided that this does not give rise to excessive cost. By exercising this right, the purchaser of a dwelling may require that the missing and defective works in the property be remedied without the cost being passed on to them.
For repair to be available, the work to be carried out must not give rise to a disproportionate expense or one exceeding the value of the good. If that limit is exceeded, the purchaser must turn to one of the other two options open to them, namely withdrawal or a reduction in the price. The Act provides as follows on this point:
Consumer Protection Act No. 6502, Art. 11(3)
“Where free repair or replacement of the good with a defect-free equivalent would entail disproportionate difficulties for the seller, the consumer may exercise either the right to withdraw from the agreement or the right to a reduction in the price in proportion to the defect. In determining disproportionality, regard shall be had to such matters as the defect-free value of the good, the significance of the defect and whether recourse to the other elective rights would present a problem for the consumer.”
In sales of real property there is also a time limit. Running from the moment the demand for repair is communicated to the seller, the producer or the importer, that demand must, in the case of dwellings and property intended for holiday use, be met within sixty working days.
The Right to Demand Replacement of the Thing Sold with a Defect-Free Equivalent
The last elective right afforded by the Act is regulated in Article 11(1)(d) and concerns demanding, where this is possible, that the thing sold be replaced with a defect-free equivalent. Within this framework, the delivery of another independent unit having the same qualities in place of the dwelling transferred in a defective condition may be requested.
Replacement may be demanded only where it does not give rise to a disproportionate difficulty for the seller. Where such a difficulty exists, two routes again remain open to the purchaser: withdrawal from the agreement or a reduction in the price. The provision of TKHK Art. 11(3) set out above applies identically to this possibility.
The demand for replacement with an equivalent is likewise subject to a time limit. Once the demand has been addressed to the seller, the producer or the importer, it must, in the case of dwellings and property intended for holiday use, be satisfied within a period of sixty working days.
Claiming Damages Alongside the Elective Rights
The four possibilities listed above are directed at unwinding the direct consequences of defective performance. Where the purchaser has suffered other losses beyond these, a purchaser of real property in the position of a consumer may additionally claim damages on the basis of the general provisions of the Turkish Code of Obligations. That possibility does not preclude the exercise of one of the elective rights; the two may be raised together.
Consumer Protection Act No. 6502, Art. 11(6)
“…Together with one of these elective rights, the consumer may also claim damages under the provisions of the Turkish Code of Obligations No. 6098 of 11 January 2011.”
The general provision forming the basis of the claim for damages is as follows:
Turkish Code of Obligations No. 6098, Art. 112
“Where an obligation is not performed at all or is not performed duly, the obligor is liable to make good the loss arising therefrom to the obligee, unless the obligor proves that no fault whatsoever can be attributed to them.”
A seller who transfers a defective property is not regarded as having duly performed the obligation of delivery. The seller must therefore make good the purchaser’s losses arising from that non-conformity within the framework of the general provisions of the TBK; unless able to prove the absence of fault, the seller cannot escape that liability.
Independent Legal’s Assessment
In disputes over defective dwellings, what determines the outcome is often not so much the existence of the defect as which elective right has been chosen. A process conducted on the basis of withdrawal produces the economically most severe result, since it requires the return of the property and the recovery of the entire price; a reduction in the price, by contrast, is the route more frequently taken in practice, because it allows the purchaser to continue living in the dwelling. Making the right choice at the outset forestalls a position that is difficult to reverse at later stages.
Regard must also be had to the fit between the nature of the defect and the nature of the claim. Shortcomings of a legal character, such as the absence of an occupancy permit, and physical shortcomings relating to the quality of materials call for different treatment, both as regards the method of proof and as regards the heads of damages that may be claimed.
In a specific file, the following headings should be assessed as a matter of priority:
- Clarifying, by reference to the capacities of the parties, whether the sale relationship counts as a consumer transaction
- Compiling the technical specification, project drawings and promotional documents annexed to the agreement so as to support the allegation of defect
- Deciding at the outset which of the elective rights suits the economics of the particular case
- Placing on record the running of the sixty-working-day period where repair or replacement with an equivalent is to be demanded
- Documenting separately the additional heads of loss that may be sought alongside the elective right
- Making the date on which the demand was communicated to the seller capable of proof by means of a formal notice or similar written notification
Independent Legal provides advisory services and conducts litigation across the whole of this process, from the review of housing sale agreements to the pursuit of disputes arising from defective performance.