The great majority of disputes arising out of the sale and purchase of housing share the same common denominator: the flat delivered falls short of the qualities promised at the point of sale. In relationships established with a contractor, the failure of the dwelling to meet the expected characteristics gives the purchaser the possibility of claiming damages. Although the Turkish Code of Obligations No. 6098 confers several elective rights on a person who acquires a defective dwelling, the route most frequently taken in practice is a claim for damages advanced together with a reduction in the contract price for the work.
Where the relationship is regarded as a consumer transaction, the Consumer Protection Act No. 6502 comes into play and additional protective mechanisms operate in the purchaser’s favour. In what follows we dwell principally on the purchaser’s right to claim damages on account of a dwelling sold with defects.
The Concept of Defect
Consumer legislation defines defective goods as goods which, at the moment of their delivery to the consumer, do not conform to the sample or model agreed by the parties or do not meet the qualities they objectively ought to possess.
The scope of this definition should not be supposed to be a narrow one. Goods that lack one or more of the features announced in promotional brochures, in the user manual, on a website or in advertisements and notices; that fail to perform the function performed by their equivalents; or that harbour material, legal or economic shortcomings reducing or wholly eliminating the benefit the consumer reasonably expects, are likewise regarded as defective.
As will be seen, a defect cannot be reduced to a tangible fault alone; a legal shortcoming may produce the same result.
Cases in Which the Contractor Is Liable for Defects
Although the legislation defines the concept of defect within a general framework, how that framework is filled out in a given case varies from file to file. The criterion marking the boundary of liability in the sale of immovable property is the contract between the parties: if the dwelling transferred does not conform to the qualities agreed upon, the contractor’s liability for defects arises. That non-conformity may be physical in nature, but it may equally be legal.
Examples of a legal defect include the immovable not possessing the legal qualities undertaken, its occupancy permit never having been obtained, or the requisite licences and permissions not having been secured.
A physical defect, on the other hand, concerns the material condition of the structure. Construction carried out below the promised quality of materials, or the complete absence from the building of certain features set out in the contract, falls to be assessed within this group.
The Contractor’s Liability for Defects After Delivery
As regards the ascertainment of a defect, the law places a burden on the purchaser: that of inspecting the dwelling purchased. The purchaser is expected to examine the flat taken into possession as soon as the opportunity arises and, should a shortcoming engaging the contractor’s liability be identified, to notify the other party of it within a reasonable time. Neglect of the burden of inspection and notification produces the result that the item sold is deemed to have been accepted.
In respect of consumer transactions, however, a more protective rule has been adopted. Defects emerging within the six-month period following delivery are deemed to have existed at the moment the goods were transferred. The consequence of this presumption is a shift in the burden of proof: it falls to the contractor to establish that the goods were free of defects.
Where the fault is noticed only after a certain period of use, a latent defect is in issue. In dwellings containing a latent defect, the purchaser may resort to legal remedies from the moment the shortcoming comes to light.
The common consequence of these rules is this: the handing over of the keys does not bring the contractor’s liability to an end; in particular, the contractor’s liability continues in respect of defects emerging after a certain period of use.
The Purchaser’s Elective Rights in a Defective Immovable
Where the dwelling sold by the contractor proves to be defective, the law confers on the purchaser a set of rights that stand as alternatives to one another. The first of these is to withdraw from the contract by declaring readiness to return the dwelling. The second possibility is to continue holding on to the flat and to seek a reduction in the sale price in proportion to the defect. Thirdly, the purchaser may request that the dwelling be repaired free of charge, provided this does not give rise to excessive expenditure and with all costs borne by the seller. The fourth option is to request, to the extent possible, that the dwelling be replaced with a defect-free equivalent.
On encountering a defective immovable, the purchaser exercises one of these four possibilities against the contractor. If any further loss has been suffered beyond this, damages may additionally be claimed in respect of that loss.
The Action for Damages Against the Contractor
The purchaser’s right to damages may arise from two separate sources: in connection with one of the elective rights, or on the basis of pecuniary loss suffered under the general provisions.
Where a defective dwelling is in issue, the purchaser may seek a reduction in the contract price for the work on the ground that the immovable was acquired at a price above its true value. In that case the difference between the sum paid to the contractor and the current value the immovable has reached on account of the defect forms the subject of the claim.
If the purchaser has borne other pecuniary losses because of the defect, those too may be claimed from the contractor. The heads of loss in question differ from file to file. For instance, where an immovable acquired as business premises lacks the necessary permissions and licences, the purchaser may advance the expenditure made on the shop as a head of loss. Similarly, where a flat bought for residential purposes is unfit for occupation on account of the defect, the expenses incurred may be claimed. These damages are not one of the elective rights; they are a head that may be claimed independently, alongside the elective right.
The Claim for Remedy of the Defect in Construction Contracts
Where the shortcoming in the dwelling is capable of being remedied, the purchaser may also request that the contractor eliminate the defect.
The Turkish Code of Obligations No. 6098 makes this claim subject to a condition: the alteration and maintenance work to be carried out must not require excessive expenditure. Where that condition is met, the person who has acquired a defective dwelling may request that maintenance and repair be carried out on the immovable, with all costs borne by the contractor.
The repair and maintenance works undertaken by the contractor must likewise be completed in conformity with the legislation. Otherwise the contractor’s liability for defects arises anew in respect of those works.
Remedies Available to Landowners Aggrieved by a Contractor
As set out above, since a defect in the dwelling purchased renders the contractor legally liable, the purchasing party may claim its loss through the courts.
This liability for defects applies equally in respect of construction contracts concluded in return for a land share. If, while construction is under way, it becomes apparent that the contractor is producing a defective structure, notice should be given without delay and legal remedies pursued. At this stage, termination of the construction contract concluded in return for a land share may also come into question. For details, the note entitled Termination of the Construction Contract in Return for Flats may be consulted.
Where the defects are noticed only after the building has been completed, the landowners may first request compensation for their loss by way of a notice; if no result is obtained by that route, they may bring an action for a defective dwelling and obtain compensation for their loss before the courts.
Limitation in Disputes Over Defective Immovables
Limitation in the sale of a defective immovable is dealt with separately both in the Turkish Code of Obligations and in the Consumer Protection Act.
Under the provision in the Code of Obligations, actions concerning liability arising from a defect in the item sold become time-barred on the expiry of two years from the transfer of the item to the purchaser, even if the defect has come to light later. Where, however, the contractor is grossly at fault in respect of the defect existing at the time of transfer, the possibility of relying on the two-year period falls away.
While this is the general rule, where the immovable has been acquired within the scope of a consumer transaction the Consumer Protection Act applies to the dispute and the limitation regime under that Act governs. That Act has in essence adopted the provision in the Code of Obligations, but has raised the upper limit to 5 years in respect of immovables acquired for residential or holiday purposes.
The nature of the dispute is therefore decisive in calculating limitation: in dwellings purchased by consumers, the contractor’s liability for defects is subject to a limitation period of 5 years.
The Court with Subject-Matter and Territorial Jurisdiction
In a claim for damages directed at the contractor on account of a defective dwelling, subject-matter jurisdiction is determined by the nature of the dispute. In dwellings acquired by consumers, the courts with jurisdiction are the Consumer Courts. Where the immovable has been purchased for commercial purposes, jurisdiction lies with the Commercial Courts pursuant to the Turkish Commercial Code No. 6102.
As regards territorial jurisdiction, the Code of Civil Procedure No. 6100 is taken as the measure; in actions for damages brought on account of a defective dwelling, the court of the debtor’s place of residence is regarded as having territorial jurisdiction under the general rule of jurisdiction. In actions to be brought by a consumer, recourse to mediation is a procedural requirement. On this subject, the note entitled Mandatory Mediation in Consumer Actions may be consulted.
Independent Legal’s Assessment
Two technical headings stand out as decisive in defective-dwelling files: whether the defect is latent or apparent, and the regime by which limitation is to be calculated. In the case of apparent defects, failure to discharge the burden of inspection and notification in time may render even a substantively well-founded claim ineffective. In the case of latent defects, by contrast, since the start of the period is tied to the moment the shortcoming was noticed, documenting that moment directly affects the fate of the file.
As to the amount of the claim for damages, the expert examination is decisive. Setting out, as separate heads, both the diminution in the value of the immovable caused by the defect and the additional expenses borne by the purchaser is important if the claim is not to go unmet.
The matters to be given priority in a concrete dispute are as follows:
- Clarifying, through the occupancy permit and licence records, whether the defect is legal or physical
- Fixing the date of delivery and the moment the defect became known by means of documentary evidence
- Assessing whether the six-month presumption may be relied upon
- Monitoring the running of the 5-year upper period in immovables intended for residential and holiday use
- Claiming the reduction in price and the additional heads of loss separately in the statement of claim
- Completing the pre-action mandatory mediation stage in due form
Independent Legal provides advisory services and litigation representation in disputes arising from defective dwellings and construction contracts, from the notice stage through to the conclusion of the proceedings.