Information Note Regarding the Decision of the Grand General Assembly of the Court of Cassation for the Unification of Judicial Decisions Dated 16/05/2025 and Numbered 2024/1 E., 2025/2 K.

Gizem Şimşek co-authored this article.

The decision of the Grand General Assembly of the Court of Cassation for the Unification of Judicial Decisions (the “Assembly”) dated 16/05/2025 and numbered 2024/1 E., 2025/2 K. (the “Decision”) was published in the Official Gazette dated 18/07/2025 and numbered 32959. With this Decision, essential evaluations were made regarding whether the rights acquired by third parties who obtained real rights from the contractor may be protected under Article 1023 of the Turkish Civil Code (“TCC”) in cases where a contract for construction in return for land share is declared null and void or terminated retroactively. The key points of the Decision are summarized below:

I. Subject Matter of the Request for Unification of Judgments

According to the established case law of the 6th Civil Chamber of the Court of Cassation (the “Chamber”), in lawsuits for invalidity or termination filed due to the contractor's failure to perform its obligations in a timely manner, transfers of immovable property made to third parties based on such contracts lose their legal basis. Within this scope, a consensus had been reached that third parties could not rely on claims of good faith under Article 1023 of the TCC.

In the Chamber’s decisions, the title transfers made pursuant to the contract between the contractor and the landowner were characterized as “advance payments”; and it was held that if the contract was declared invalid, the transfers made by the contractor to third parties would lack legal validity, and thus, the good faith defenses of those third parties should not be accepted.

However, due to a divergence of opinion that later emerged within the Chamber, a different view was adopted — namely, that the good faith defenses of third parties who acquired immovable property from the contractor could be considered, but the landowner would have the right to reclaim the property if bad faith could be proven. Accordingly, a request was submitted for the unification of conflicting precedents.

II. Evaluation and Decision of the Grand General Assembly of the Court of Cassation

The Assembly, considering the legal nature of construction contracts in return for land share and the governing principles of the land registry system, reached the following conclusions:

1. Legal Nature of Construction Contracts in Return for Flat Ownership

Although construction contracts in return for land share are not explicitly regulated under the Turkish Code of Obligations No. 6098 (“TCO”), they are classified as bilateral and composite contracts imposing reciprocal obligations on both parties. Under these contracts, the contractor undertakes to construct a specific building, while the landowner assumes the obligation to transfer certain land shares to the contractor in return. In other words, the contractual consideration is fulfilled by the landowner through in-kind performance by transferring land shares to the contractor.

Pursuant to Articles 97 and 479/1 of the TCO, the landowner’s obligation under such contracts generally becomes due and enforceable only once the contractor completes the construction work and delivers it. However, in practice, it is frequently observed that landowners transfer land shares to the contractor even before the construction is completed. As a result, the contractor acquires the status of legal owner in the land registry. Acting as the registered owner, the contractor often sells the land shares corresponding to the future independent units — or the independent units for which a condominium easement (kat irtifakı) has already been established — to third parties in order to finance the construction.

At this point, when the landowner has authorized such disposition through an early transfer, the question arises as to whether the rights acquired by third parties from the contractor can be legally protected in the event that the underlying contract is later declared null and void or retroactively terminated. In particular, how these third-party acquisitions are to be evaluated within the framework of the land registry reliability principle and the concept of good faith has significant practical implications.

2. Constitutive Effect of Registration

Pursuant to Articles 705 and 1022 of the TCC, real rights over immovable properties may only be acquired through registration in the land registry. Registration is of constitutive nature with respect to the establishment of real rights.

3. Principle of Publicity

According to Article 1020 of the TCC, the land registry is public — it is “open to everyone.” Therefore, it is not legally valid to claim ignorance of a registered right, as the entries in the land registry constitute the strongest presumption in determining the rightful owner.

4. Principle of Reliance on the Land Registry

Under Article 1023 of the TCC, a person who acquires a real right in reliance on the land registry in good faith is protected. This protection applies even if it is later revealed that the person registered as the owner was not actually the rightful owner at the time of registration. The burden of proof regarding the absence of good faith lies with the party asserting such allegation.

5. Reasoning and Conclusion

The Assembly concluded that third parties who acquired land shares or independent units from the contractor must be protected under Article 1023 of the TCC, within the framework of the principles governing the land registry. It emphasized that treating every registration made in the contractor’s name as unlawful from the outset leads to significant loss of rights in practice and undermines legal certainty and the sense of justice. Additionally, it was noted that if the landowner ensures that the transfer based on the contract is annotated in the declarations section of the land register, third parties’ claims of good faith may be precluded.

In this regard, the Assembly found that the established jurisprudence permitting the return of immovable properties to the landowner without considering the good faith of third parties was inconsistent with the principles of publicity, reliance on the land registry, and the protection of good faith.

Accordingly, the Assembly ruled that, in the event of nullity or retroactive termination of the contract, real rights acquired by third parties who relied on the land registry and acted in good faith must be protected. However, if the landowner is able to provide concrete proof of bad faith on the part of the third party, the return of the property may be possible.

In conclusion, the Assembly unanimously decided, in its first meeting held on 16 May 2025, that the real rights acquired by third parties from the contractor should be protected on the basis of good faith and reliance on the land registry, and that the contrary is only possible if bad faith is proven.