The renewal of the building stock has for some time ceased to be a matter discussed in Türkiye in its engineering dimension alone. Bringing a building within the scope of transformation gives rise to serious legal headings as regards the limits of the right of property, the rules of living together and the obligations of the owners towards one another as well. That the persons holding rights in the same structure should unite around a single will on this question is, in practice, the exception; in a substantial proportion of files some of the owners reject the process from the outset.
Several questions come to the fore against such a background. How does the process proceed where no unanimity of view can be established among the residents of an apartment building or a housing estate? Where the majority required by the statute has been attained, must the dissenting owner also submit to the outcome? What means of recourse are available to a person wishing to protect the right he or she holds over the property?
In this briefing note we address the legal position of owners who did not join the transformation decision, through the review of the decision of the meeting, the questioning of the relationship established with the contractor and the actions that may be brought against the sale of the land share. Drawing also on judicial decisions, we aim to set out in plain terms which mechanism comes into play at each stage of the process.
Identification of a Risky Structure and the Decision
The starting point of transformation is the characterisation of the structure as risky. The legislation has laid down two criteria for a building to enter that status:
- Its being under the danger of suffering severe damage or of collapse
- Its having completed its economic life
The identification must be founded on scientific and technical data. The consent of all the owners is not required for this measure; an application by only one of the rightholders is sufficient to set the process in motion.
Any owner who considers that the identification has been made unlawfully may object to the risky structure report or bring an action for its annulment. Once the mechanism of objection has been concluded, or the statutory period allowed for an application has passed, the report becomes final and the transformation process formally begins to run.
The Meeting of Condominium Owners within the Scope of Urban Transformation
Where the identification of a risky structure becomes final, whether because the objection has been dismissed or because no objection was made at all, the Directorate of Urban Transformation requests the relevant Administration to effect the necessary service of documents and to have the structure demolished. The Administration allows the owners a period of at most ninety days for demolition; if the building is not vacated or demolished within that period, eviction and demolition are carried out compulsorily by the administrative authorities.
At this stage it becomes decisive that the owners come together and settle how the process is to be conducted. The sound progress of projects depends on the ability of the rightholders to act in concert.
Notice Convening the Meeting
In structures whose risky status has become final, the condominium owners must be convened to a meeting in accordance with the proper procedure before the process can be set in motion. Act No. 6306 has introduced no special provision on this matter; that gap does not, however, mean that no meeting is to be held in risky structures. The view adopted in the doctrine and in practice is that the existing gap is to be filled by applying the provisions of the Condominium Ownership Act No. 634 (KMK) by analogy.
The notice convening the meeting may be given at the request of the manager, of the auditor or of at least one-third of the condominium owners. The notice must reach the rightholders at least fifteen days before the day of the meeting, and this must be achieved by means of a notification to be signed for or by registered letter. The letter of invitation must clearly indicate the purpose for which the meeting has been arranged and what the agenda covers; the owners are thereby informed in advance of the matters to be discussed.
Where a departure from the proper procedure in the notice results in a breach of the provisions of the KMK, the validity of the meeting is subject to review by the Civil Court of Peace. Since there is likewise no special provision governing the meeting in the case of buildings held in shared ownership, recourse is had in the same way to the provisions of the KMK by analogy.
The text of the invitation must state that the meeting is held for the purpose of discussing and deciding upon the arrangements to be made within the scope of transformation in accordance with the risky structure decision. The owners thereby learn the content of the process in advance and are able to attend the meeting in a prepared manner.
The methods that may be used in effecting the invitation are as follows:
- The sending of a registered letter
- A written notification to be delivered to all co-owners against signature
- Where the need arises, service through a notary
Matters That May Be Decided at the Meeting
Once the identification of the structure as risky has become final, the fate of the building must be settled by an absolute majority (50% + 1) of the condominium owners. The direction in which the process is to proceed is determined at that meeting.
The principal matters expected to appear on the agenda of the meeting may be listed as follows:
- The selection of the contractor and the essential terms of the contract to be concluded
- The choice between demolishing and rebuilding the structure and preserving it by strengthening
- The demolition timetable and the arrangements relating to the owners’ need for temporary accommodation
- The content of the project to be prepared and of the plans of the independent units
- The intention to make use of public support and of financing facilities
- The measures to be applied to owners who do not take part in the process or who dissent from the decision
- The putting up for sale of the land shares of dissenting owners
In addition to these, decisions to the effect that the parcels be consolidated (merged), subdivided, partitioned, relinquished or newly created and that registration at the land registry be carried out, or that implementation be undertaken on the basis of a zoning block, may likewise be taken by an absolute majority.
This meeting is the most critical stage determining the course of the transformation. The process must be managed with care so that the decisions taken conform to the legislation and so that no loss arises among the rightholders.
The Decision-Making Procedure and the Legal Conditions Required
In transformation decisions, the majority is calculated not by reference to the number of independent units but on the basis of the land share ratio held by the owners. For a valid decision, the approval of the owners holding an absolute majority (50% + 1) of the total land share is required.
Notification of the Decision and of the Offer to the Other Owners
The decision taken, together with the offer containing the terms of the agreement — or information as to where the offer may be examined — is communicated to the owners who did not join the decision, within the framework of Article 15 of the Implementing Regulation of Act No. 6306, by one of the following means:
- To those who have notified an electronic service address to the land registry → by electronic service
- To those who have not notified such an address → through a notary
- In risky areas and reserve building areas → by drawing up the Annex-10 form and posting it at the relevant mukhtar’s office for fifteen days
- In risky structures → by drawing up the Annex-8 form and posting it at the relevant mukhtar’s office for fifteen days
Consequences of the Notification for Owners Who Did Not Join the Decision
The notification made to dissenting owners announces that, within fifteen days beginning from the day on which service was effected or is deemed to have been effected, the offer must be examined and assessed and the decision taken by absolute majority together with the offer presented must be accepted.
Where the offer is rejected or is not examined at all, the following measure is applied:
- The land share of the owner concerned is sold by public auction to the other owners who have reached agreement, provided that it does not fall below the market value determined by the Presidency or determined at its instance.
If the sale among the co-owners is not concluded, the following possibilities come into play:
- In risky areas and reserve building areas, the Presidency, the Administration or TOKİ conducting the project purchases the share at the market value.
- In risky structures, a sale to third parties is possible, provided that the agreement reached is complied with.
- In areas where the project is conducted by the condominium owners themselves, the process is repeated, priority being given to the other owners, until a sale is achieved.
The Legal Remedies Available to Owners Who Did Not Join the Decision
Transformation decisions are put into effect in accordance with the will of the condominium owners. By contrast, dissenting owners who consider that the process has been conducted contrary to the legislation have more than one means of recourse available to them. These routes serve both the protection of the right of property and the correction of procedural errors in the process.
The principal routes that may be taken are as follows:
- An objection and an action for annulment directed against the sale and against the sale price determined
- A request for the annulment of the transformation decision taken by absolute majority
- An objection to the contractor’s contract where it upsets the balance between the parties and imposes disproportionate burdens on the owners
These actions are examined separately and in detail below.
Action for the Annulment of the Transformation Decision Taken by Absolute Majority
The first route the dissenting owner may raise is to seek the annulment of the decision taken at the meeting. The basis of that request is the Condominium Ownership Act No. 634 and subject-matter jurisdiction in disputes of this kind rests with the Civil Court of Peace. Each of the condominium owners who dissented from the decision or who was unable to attend the meeting at all may have recourse to this route in order to have decisions contrary to the legislation set aside.
Failure to Attain the Required Majority
For a transformation decision to be regarded as lawful, it must have been taken by an absolute majority (50% + 1) in proportion to the shares of the condominium owners. Where a decision has been produced without that threshold being exceeded, an irregularity exists and the owners acquire the possibility of requesting annulment.
The principal grounds capable of leading to the annulment of the decision are as follows:
- Erroneous calculation of voting rights: The weight of the owners’ votes is determined according to the land share they hold. An error in the land shares leads to the votes of certain owners being assessed as greater or smaller than they are; this too may require the annulment of the decision.
- A decision being produced without the required majority: Transformation decisions must be taken by an absolute majority. Where attendance at the meeting has been insufficient, or where the vote has not reached the statutory ratio, the resulting outcome may be invalid in law.
Defects at the Notice and Service Stage
Procedural errors in the invitation to the meeting may render the owner’s participation in the decision-making process impossible in fact. A failure to effect service at all, a failure to convene the owner to the meeting, or the giving of incomplete and misleading information constitutes unlawfulness and may produce the annulment of the decision.
Objection to the Agreement Concluded with the Contractor
It is of great importance that the contract signed with the contractor in the course of the transformation process be framed so as to have regard to the rights of the owners. The provisions of the contract must not impose disproportionate obligations on the rightholders and must establish a fair balance between the parties. In practice, however, clauses drawn against the owners are frequently encountered. Owners faced with terms of this kind may have recourse to the courts and object to the contract; they may request its annulment or its rectification.
On What Grounds May the Contractor’s Contract Be Challenged?
Owners who take the view that the contract is not fair may apply to the court. The grounds most frequently encountered in practice are as follows:
- An agreement concluded with an insufficient number of signatures: Contracts made without the majority required in the general assembly of condominium owners may be invalid. If the document does not bear the approval of a sufficient number of owners, the court may question its validity and rule that it be annulled.
- Provisions placing the parties on an unequal footing: Where the clauses of the contract impair the owner’s right, confer an unfair advantage on the contractor or leave the rightholders aggrieved, the annulment of those provisions may be sought from the court.
- Disproportionate obligations: Arrangements loading economic and legal burdens contrary to equity onto the owners may constitute an irregularity. One-sided penalty clauses operating against the owner, or clauses conferring wide privileges on the contractor, are examples of this. The court may annul such provisions, and it may equally rule that the contract be rectified in favour of the owners.
Court with subject-matter jurisdiction: Actions directed against the contractor’s contract are heard before the Civil Court of First Instance. The court may examine whether the provisions of the contract are balanced and give judgment in terms that protect the rights of the owners.
Matters to Be Observed in the Course of an Objection
- Following the time limits: Certain periods run in actions to be brought against the contract. These periods must be followed with care if a loss of rights is not to be suffered.
- Review of the text before signature: It is of great importance that the owners have the contract they are to sign with the contractor examined by a lawyer before the stage of signature.
- Review of the options for settlement: It may be possible, without bringing an action, to conduct negotiations with the contractor and to have the problematic clauses amended.
The contractor’s contracts signed in the course of transformation are documents that directly shape the financial and legal obligations of the rightholders. It is therefore important that owners know the rights they hold in the face of unbalanced contractual terms and that they have recourse to the courts where necessary. The contract must be examined with care and the necessary legal steps taken in good time so that no grievance arises.
In its decision dated 22 December 2020, docket no. 2020/1495, decision no. 2020/3300, the 15th Civil Chamber of the Court of Cassation held;
"Having regard to the written material in the case file, to the evidence on which the judgment is founded and to the compelling reasons in conformity with the law, and in particular since it has been understood that, the contract falling within the scope of urban transformation under Law No. 6360 not having been made by the majority of shares and of co-owners, the contract was not validly formed, and since it has been understood that the decision of annulment in the counterclaim and the joined action is in the nature of a declaration that the promise to sell immovable property and the construction contract in return for land shares, drawn up in the form of a deed of arrangement, are invalid, and having regard to the fact that the landowners …, …, …, … have no claims for damages in the counterclaim and the joined action on account of the demolished structure, all the appeal objections of the claimant-counter-respondent, respondent in the joined file, …, and of the respondents-counter-claimants …, …, … and of the claimant in the joined file, …, being without foundation, are dismissed and the judgment, which is in conformity with procedure and with the law, is AFFIRMED,"
Such were the terms of the judgment.
Action for Annulment Against the Sale and Against the Sale Price
The putting up for sale of the shares of owners who have not joined the process is conducted within the framework of a particular procedure. Where, however, an irregularity is identified in the sale, or where the price determined is thought to fall below the market value, the owner concerned may bring an action for annulment. That action ensures that whether the sale process has been conducted fairly and in conformity with the legislation is subjected to judicial review.
In What Circumstances May the Sale Be Annulled?
Owners who take the view that the sale has been carried out contrary to equity or improperly may apply to the court. The grounds most frequently advanced in this context are as follows:
- The price being assessed below the market value: If no loss of rights is to be suffered, the sale price must reflect genuine market conditions. Where the sum determined falls below market values, the owner may bring an action for the annulment of the sale or for the completion of the shortfall in the price.
- The sale process being conducted contrary to procedure: Where the measures have been advanced contrary to the relevant legislation, or where a situation impairing the rights of the owners has arisen, the annulment of the sale may be sought.
The Court’s Examination and the Decisions It May Give
The court assesses both the lawfulness of the sale and whether the price has been determined fairly. At the conclusion of its examination, judgment may be given along the following lines:
- If an irregularity is identified in the process, the sale may be annulled.
- If it is understood that the price has been calculated short, it may be ordered that the difference be paid to the former owner.
Time limit for bringing the action: The dismissal of an application relating to the sale of a share, the assessment of the price, the announcement of the sale and the sale itself are all in the nature of administrative acts. Owners may therefore bring an action for annulment before the administrative courts against those acts within thirty (30) days of the date of service.
The protection of the owners’ rights depends on the sale measures being conducted in conformity with the legislation. Where it is considered that there is an irregularity in the process or that the price has not been fairly determined, the possibility of seeking redress by way of an action for annulment is available. In these actions, close monitoring of the process and the taking of steps in good time are decisive in preventing a grievance.
Related Topics
The following headings may also be examined in relation to the other stages of the urban transformation process:
- The Urban Transformation Process in Risky Structures
- Objection to and Action for Annulment of a Risky Structure Decision
- What Is a Risky Structure? How Is a Risky Structure Identified?
- Termination of Construction Contracts Relating to Urban Transformation
- The Urban Transformation Process in Risky Areas
- Decisions to Strengthen Risky Structures
Independent Legal Assessment
A substantial proportion of transformation disputes arise not from the content of the decision but from the procedure by which it was taken. A failure to give notice in time, an erroneous calculation of the land shares or a failure to serve the offer in accordance with the proper procedure produces consequences that are difficult to remedy afterwards. The critical point for the dissenting owner is that it be correctly determined at the outset which branch of the judiciary is to be approached against which measure, and within what period; for the decision of the meeting is reviewed in the ordinary courts, whereas the administrative acts relating to the sale of the share are reviewed in the administrative courts.
In drawing up a road map in a concrete file, the following headings should be given priority:
- Reviewing the letter of notice for compliance with the fifteen-day period and with the obligation to give notice of the agenda
- Verifying the quorum for the decision by reference to the land share rather than to the number of independent units
- Documenting the date on which the offer was served and the fifteen-day period for assessment
- Not missing the thirty-day period for an administrative action against the sale
- Investigating whether the contractor’s contract was concluded by the majority of shares and of co-owners
- Advancing in good time any requests for interim protection capable of preventing the process from advancing
Independent Legal provides advisory and litigation services in urban transformation processes in disputes ranging from an objection to the identification of a risky structure to the review of the sale of a share.