Contractor Delays an Urban Transformation Project in Turkey: What Can Owners Do? (2026 Updated Guide)

Is an urban transformation contractor delaying construction? Learn what property owners can do about late completion, stopped construction, unpaid temporary rent, contractor default, termination, transferred land shares and replacement contractors.

Contractor delay is one of the most serious risks in an urban transformation project. Owners may have already vacated the building, demolition may have been completed, valuable land shares may have been transferred to the contractor, and families or businesses may be paying for temporary accommodation while waiting for the replacement property.

When construction slows or stops, owners should not focus only on the promised delivery date. They should determine why the project is delayed, whether the contractor is contractually in default, how much construction has actually been completed, what property rights have already been transferred, what security remains available, and whether the special termination mechanism under the urban transformation legislation can be used.

This last point is particularly important. Current legislation contains a specific mechanism for certain contractor-caused failures in projects covered by the urban transformation framework. Where the statutory conditions are satisfied, owners representing the required majority can seek termination of construction agreements through the competent authority.

For foreign property owners living abroad, early intervention is particularly important because a project that initially appears to be several months late can develop into contractor insolvency, an abandoned construction site or a dispute over ownership interests already transferred.

Lawyer Fırat Fesih Kaya assists foreign property owners with delayed urban transformation projects, contractor default, temporary-rent claims, termination procedures, transferred land shares and disputes concerning unfinished redevelopment projects.

First Determine Whether There Is Legally Relevant Delay

Not every slower-than-expected project automatically constitutes contractual default.

The reconstruction agreement must first be examined.

A contract may state that construction will be completed within 18, 24 or 30 months, but that number means little unless the agreement identifies when the period begins.

Does the period start when the agreement is signed? When the old building is demolished? When the construction site is delivered? When the construction permit is obtained? Or when another contractual condition occurs?

The answer can materially change whether the contractor is already late.

Owners should therefore calculate delay from the contractual starting event rather than from informal promises made during negotiations.

Check the Contractual Completion Date

The completion clause should be reviewed together with every provision allowing extensions.

A contractor may argue that the delivery date has been extended because of force majeure, permit delays, regulatory changes, owner conduct or another event.

That argument should not automatically be accepted.

The contract should be examined to determine whether the alleged event actually qualifies for an extension, whether the contractor complied with any notification requirement and how much additional time the clause genuinely allows.

A contractor cannot necessarily transform every commercial difficulty into a lawful extension of the construction period.

Construction Cost Increases Do Not Automatically Excuse Every Delay

Construction prices can increase substantially during a long redevelopment project. Contractors may experience higher labor, material and financing costs.

However, an increase in the contractor’s cost does not automatically mean that every delay is legally justified.

The allocation of cost risk should be examined under the agreement and applicable legal principles.

If the contractor accepted a particular commercial structure, owners should not automatically be required to absorb the consequences merely because the project later became less profitable for the contractor.

This becomes particularly important where the contractor demands additional money as a condition for restarting construction.

Determine Whether Construction Is Merely Slow or Has Effectively Stopped

A project progressing slowly and a project effectively abandoned by the contractor require different strategies.

Owners should document the actual construction status.

Is the contractor still maintaining a meaningful workforce?

Are materials arriving?

Are subcontractors active?

Has progress continued during recent months?

Has the site remained almost unchanged?

Have workers and equipment disappeared?

These factual questions can become legally significant.

Under the special statutory termination mechanism, contractor-caused failure to start the new construction within one year or stopping construction at a certain level without continuing for at least six months with the workforce and equipment necessary to complete the project can trigger a specific procedure.

The Urban Transformation Law Contains a Special Termination Mechanism

This is one of the most important protections available to owners in a seriously delayed project.

Under the current statutory framework, after unanimous agreement or the required share-based majority decision has been achieved, owners representing a simple majority according to their shares may decide to seek termination where, for reasons attributable to the contractor, construction of the new building has not begun within one year or construction has stopped at a certain level and has not continued for at least six months with sufficient workforce and equipment to complete the project.

This mechanism should be distinguished from an ordinary contractual termination claim.

It provides a specific statutory route for qualifying projects suffering serious contractor-caused inactivity.

How Does the Special Termination Procedure Work?

The required share-based majority of owners first decides to seek termination.

An application is then made to the competent authority for determination of whether construction has started or whether the work is continuing with the workforce and equipment necessary to complete the project.

If the authority determines that the statutory conditions exist, the contractor is given 30 days to begin or resume the work.

The contractor is warned that otherwise the agreements will be terminated automatically at the end of that period.

If the contractor still fails to begin or continue construction as required, the construction agreements are deemed terminated at the end of the 30-day period without the need for another warning.

For owners trapped in a genuinely abandoned redevelopment project, this mechanism can be critically important.

Is Unanimous Owner Approval Required to Seek This Termination?

Not necessarily.

The current statutory provision allows the termination decision to be taken by owners representing a simple majority according to their ownership shares where the conditions of the provision are satisfied.

Therefore, one owner who refuses to cooperate does not necessarily prevent the remaining qualifying majority from pursuing the statutory procedure.

However, the ownership-share calculation should be checked carefully.

The relevant majority is based on shares rather than simply counting the number of owners.

What Happens to the Contract After Statutory Termination?

Where the statutory procedure results in termination, construction agreements recorded in the title register can be removed upon the request of the owners or the competent authority.

However, termination does not erase everything that happened before termination.

The legislation expressly provides that work already performed, shares transferred, payments made and other issues up to the termination date remain subject to general legal rules. It also states that temporary-rent assistance already paid by the contractor to rights holders up to termination cannot be reclaimed from them.

This is why owners should not assume that termination automatically restores every transferred property right without further analysis.

What Happens to Land Shares Already Transferred to the Contractor?

This is often one of the most difficult issues in a failed project.

If the contractor received land shares or other valuable property interests before default, the title history must be examined carefully.

The consequences depend on the contractual structure, the transfers already completed, subsequent transactions and the applicable legal rules.

The statutory termination provision itself recognizes this complexity by stating that transferred shares, payments and work completed before termination are governed by general legal principles.

Owners should therefore obtain an updated title record immediately when serious contractor default emerges.

Check Whether the Contractor Transferred Rights to Third Parties

A delayed contractor may have already transferred property interests, sold units or entered into transactions with third parties.

This can make the dispute considerably more complicated.

Owners should determine which rights remain registered in their names, which rights have been transferred to the contractor and whether subsequent title transactions have occurred.

The reconstruction agreement should also be examined for provisions concerning assignment, contractor sales and third-party transactions.

This is another reason why uncontrolled upfront title transfers can create serious risks.

What If the Contractor Has Financial Problems?

Construction delay may be a symptom rather than the main problem.

Warning signs can include repeated temporary-rent defaults, unpaid subcontractors, disappearing workers, requests for unexpected additional payments, pressure for accelerated title transfers and long periods with little physical progress.

Owners should not wait until formal insolvency becomes obvious before investigating.

The contractor’s financial deterioration can materially affect the value of contractual remedies.

The earlier owners understand the problem, the greater the possibility of protecting remaining property rights and arranging continuation of the project.

Can Owners Demand That the Contractor Resume Construction?

The available contractual remedies depend on the agreement and circumstances.

Where the contractor is failing to perform, owners may need to issue appropriate notices, document the breach and demand performance.

Where the special statutory termination conditions apply, the competent authority’s procedure includes a formal 30-day period requiring the contractor to begin or continue work before automatic termination takes effect.

Owners should coordinate contractual enforcement with any statutory termination strategy rather than sending inconsistent notices without understanding their legal consequences.

What If the Contractor Has Not Started Construction at All?

Failure to start can trigger particularly serious concerns.

Owners should determine whether the delay is attributable to the contractor or to another cause, such as unresolved title problems, missing owner cooperation or regulatory obstacles outside the contractor’s responsibility.

Where the delay is attributable to the contractor and the statutory one-year condition is satisfied, the special termination mechanism may become available.

The relevant dates and evidence should therefore be documented carefully.

What If Construction Started but Has Been Abandoned?

The current statutory framework also addresses this situation.

Where construction has reached a certain level but has effectively stopped and, for at least six months, the contractor has not continued with the workforce and equipment necessary to complete the project, the qualifying owner majority can pursue the special termination procedure, provided the statutory conditions are otherwise satisfied.

This requires factual evidence.

Photographs, technical progress reports, site inspection records and other contemporaneous documentation can become particularly important.

Owners Should Obtain an Independent Technical Progress Report

When delay becomes serious, owners should consider independent technical documentation.

A qualified technical professional can assess how much of the project has actually been completed and whether meaningful construction activity is continuing.

This can be valuable where the contractor claims that work is progressing while owners believe the site has effectively been abandoned.

Technical evidence can also help determine whether contractual construction milestones have been achieved and whether the contractor was entitled to receive particular payments or title transfers.

Can Owners Claim Contractual Penalties for Delay?

Potentially, depending on the agreement and applicable legal principles.

Many redevelopment agreements contain provisions addressing late completion.

The contract may provide for a contractual penalty, continued temporary-rent payments, compensation or another financial consequence.

The wording should be reviewed carefully.

The agreement should identify when delay begins, whether any grace period exists, how the amount is calculated and whether the contractor claims a valid extension.

Owners should not assume that termination is the only possible remedy.

Can Owners Claim Compensation for Contractor Delay?

Potentially.

A delayed redevelopment can create substantial financial loss.

An owner may continue paying for alternative accommodation, lose rental income, suffer commercial losses or incur other expenses because the replacement property has not been delivered.

Whether and to what extent those losses can be recovered depends on the contract, causation, evidence and applicable legal principles.

Owners should therefore preserve invoices, rental agreements, payment records and other evidence of losses arising during the delay.

What Happens to Temporary Rent During the Delay?

The reconstruction agreement should be examined first.

If the contractor agreed to pay temporary rent until actual delivery, prolonged construction may extend that obligation according to the contractual wording.

If the agreement instead provides a fixed period, the position may require closer legal analysis.

Owners should not rely solely on the contractor’s verbal statement that rent obligations ended on the originally planned completion date.

The actual contractual language is critical.

What If the Contractor Stops Paying Temporary Rent?

Repeated non-payment should be documented immediately.

Owners should preserve bank records, payment schedules and correspondence.

The contractor should be notified appropriately where required.

Temporary-rent default may support contractual monetary claims and can also provide evidence of broader financial distress.

However, failure to pay rent should not automatically be confused with the specific statutory conditions for termination based on failure to start or prolonged stoppage of construction.

Each remedy has its own legal basis.

Can Owners Hire Another Contractor Immediately?

Owners should be cautious.

A new contractor should not simply enter the project while the existing construction agreement remains legally effective and unresolved.

The existing contract, title records, permits and property rights must first be examined.

Where the statutory termination mechanism is successfully completed, the legal position of the former agreement can be clarified and owners can consider how the unfinished project will proceed.

A replacement contractor should then be selected only after reviewing the unfinished construction, existing permits, title structure, remaining costs and obligations inherited from the failed project.

Do Not Replace One Risky Contractor With Another

Owners under financial pressure may accept the first contractor willing to take over an unfinished project.

That can create a second failure.

The replacement contractor should undergo fresh due diligence concerning authorization, financial capacity, completed projects, current workload and the feasibility of completing the unfinished structure.

The new agreement should also correct weaknesses in the original arrangement.

If early title transfers contributed to the first failure, the replacement structure should not simply repeat the same mistake.

Can the New Contractor Demand Additional Money?

An unfinished project can cost more to complete than owners originally expected.

The replacement contractor may need to inspect the existing structure, determine what work can be retained and calculate the remaining cost.

Owners should not accept an additional payment demand without understanding the technical and financial basis.

An independent assessment can be valuable.

The legal responsibility of the former contractor for losses should also be considered separately from the commercial terms required to complete the project.

Check Contractor Security and Completion Protection

Owners should identify what security was provided for the original project.

Current official materials confirm that contractor security remains part of the regulatory structure for relevant urban transformation applications. The applicable framework has also been amended in recent years concerning the required security ratio.

Owners should determine whether security exists, its current status and whether it can be used in connection with the contractor’s failure.

The presence of security does not automatically resolve every loss, but it can become important in a failed project.

What If the Project Uses Public Financing or Support?

The applicable support program should be examined separately.

For example, official guidance for certain supported transformation projects links contractor payments to verified construction progress rather than transferring the entire amount at once. The same guidance states that termination may be possible where construction is delayed or not completed under the relevant program.

Owners should therefore determine whether their project is governed only by the private reconstruction agreement or also by a specific public financing or support framework.

The available procedures may differ.

Can One Owner Terminate the Contractor Agreement Alone?

This depends on the legal basis relied upon.

Individual contractual rights must be assessed under the particular agreement and applicable general legal rules.

The special statutory mechanism discussed above, however, operates through a decision by owners representing the required simple majority according to their shares.

Therefore, owners should distinguish an individual contractual claim from a collective statutory termination procedure.

What If Some Owners Still Support the Contractor?

Disagreement among owners is common.

Some may believe the contractor only needs more time. Others may have stopped receiving temporary rent and want immediate termination.

The relevant share distribution should be established.

For the special statutory termination mechanism, the legislation refers to a simple majority according to ownership shares.

Owners should therefore calculate support using current title records rather than merely counting people at a meeting.

Foreign Owners Should Not Rely Only on Building-Group Messages

A foreign owner may receive conflicting information from other owners.

One person may say construction has stopped completely. Another may say the contractor will restart next month.

The foreign owner should obtain objective evidence.

Useful documents can include the reconstruction agreement, construction permit, current title record, construction-progress reports, photographs, meeting records, contractor correspondence and payment records.

Where the project is seriously delayed, independent legal and technical review is preferable to relying solely on informal messaging groups.

Check Whether Your Power of Attorney Is Still Appropriate

A foreign owner who originally issued a power of attorney merely to sign the redevelopment agreement may need different authority once a contractor dispute begins.

Obtaining documents, issuing notices, participating in owner decisions, making administrative applications and commencing litigation may require appropriate authority.

The existing power of attorney should therefore be reviewed before urgent action becomes necessary.

At the same time, owners should avoid granting unnecessary powers over remaining property rights merely because the project is in difficulty.

Do Not Transfer More Land Shares to “Save” the Project Without Review

A contractor experiencing financial difficulty may ask owners for additional title transfers so that construction can continue.

This request requires extreme caution.

Owners should determine how the transferred rights will generate financing, what construction will be completed in return and what happens if the additional transfer still fails to save the project.

Independent technical and financial analysis may be necessary.

Owners should avoid increasing their exposure merely because previous transfers have already been made.

What If the Contractor Requests Additional Money to Finish?

The contractor may claim that construction costs have increased so substantially that completion is impossible without additional owner contributions.

The agreement should be reviewed before owners accept this demand.

Does the contract permit price adjustment?

How is it calculated?

Did the contractor assume the relevant cost risk?

What additional amount is genuinely required to complete the building?

Would payment actually solve the project’s financing problem?

Owners should distinguish between a commercially reasonable restructuring proposal and an attempt to transfer the contractor’s losses entirely to property owners.

Can Owners Terminate and Claim Damages at the Same Time?

The available claims depend on the legal basis, contractual provisions and circumstances.

Termination addresses the future of the contractual relationship, but it does not necessarily resolve losses already caused by contractor default.

The statutory termination provision expressly recognizes that work performed, transferred shares, payments and other matters up to termination remain subject to general legal rules.

Therefore, the financial consequences of the failed project require separate analysis even after the construction agreement has ended.

Does Termination Automatically Return Everything to the Owners?

No such automatic result should be assumed.

This is particularly important where the contractor has already received land shares, money or other valuable rights.

Termination determines the contractual relationship going forward, but earlier transactions may require separate legal resolution.

The title register and complete payment history should therefore be reviewed immediately.

Owners should avoid assuming that a termination document alone reverses every earlier transfer.

What Happens to Temporary Rent Already Paid Before Termination?

The special statutory provision expressly states that temporary-rent assistance paid by the contractor to rights holders up to the termination date cannot be demanded back from those rights holders.

This provides an important protection where the contractor later argues that earlier temporary-rent payments should be refunded because the agreement has ended.

Other outstanding monetary issues remain subject to their own contractual and legal analysis.

Can Owners Sue Without Terminating the Agreement?

Depending on the circumstances, owners may have claims concerning unpaid amounts, delay or other contractual breaches even while the agreement remains in effect.

Termination is not necessarily the only response to every delay.

For a project that remains economically viable and continues to progress, enforcing performance and financial obligations may sometimes be more practical than ending the relationship entirely.

For a genuinely abandoned project, however, continuation may no longer be realistic.

The strategy should therefore be based on the actual condition of the project.

Preserve Evidence Before the Dispute Escalates

Evidence becomes particularly important when the contractor claims that owners caused the delay.

Owners should preserve correspondence, meeting minutes, notices, payment records and construction photographs.

A dated photographic record can help demonstrate prolonged inactivity.

Technical reports can document progress percentages and site conditions.

Foreign owners should maintain these records digitally so they can be accessed immediately even while abroad.

2026 Practical Legal Strategy

The first priority is read the completion and extension clauses before accusing the contractor of legal delay. Identify the contractual starting date and calculate whether the agreed period has actually expired.

The second priority is document construction progress objectively. Determine whether the project is merely slow or has effectively stopped.

The third priority is check the title record. Identify which land shares or independent-unit rights have already been transferred to the contractor and whether subsequent transactions have occurred.

The fourth priority is document unpaid temporary rent and other financial defaults.

The fifth priority is investigate contractor financial distress early, particularly where construction slowdown is accompanied by disappearing workers, unpaid obligations or requests for additional owner financing.

The sixth priority is consider the special statutory termination mechanism where its conditions are satisfied. Current legislation permits owners representing a simple majority according to their shares to pursue termination where contractor-caused failure means construction has not started within one year or has stopped and has not continued for at least six months with sufficient workforce and equipment.

The seventh priority is follow the statutory procedure correctly. Where the authority confirms the relevant conditions, the contractor receives 30 days to begin or resume work; failure to do so results in the construction agreements being deemed terminated at the end of that period.

The eighth priority is do not assume termination automatically restores transferred land shares. Work performed, transferred shares, payments and other pre-termination matters remain subject to general legal rules.

The ninth priority is investigate security and available financial protection before concluding that losses are unrecoverable.

The tenth priority is perform fresh due diligence before selecting a replacement contractor.

The central principle is clear: owners should not wait indefinitely for a delayed contractor merely because the existing building has already been demolished. Serious contractor-caused inactivity can trigger contractual remedies and, where the statutory conditions are satisfied, a specific urban transformation termination mechanism. The strongest strategy combines early documentation, title review, technical evidence, majority coordination and prompt action before the contractor’s financial position or third-party transactions make recovery substantially more difficult.

Frequently Asked Questions

1. When is an urban transformation contractor legally late?

The reconstruction agreement must first be reviewed to determine the contractual start date, completion period and permitted extensions. A project that appears late may not yet be contractually overdue if the agreed starting event occurred later.

2. Can owners terminate a contractor who never starts construction?

Potentially. Under the special statutory mechanism, contractor-caused failure to begin the new construction within one year can support termination where the other statutory conditions are satisfied and the required share-based majority acts.

3. What if construction started but then stopped?

The statutory mechanism can also apply where construction has stopped at a certain level and, for at least six months, has not continued with the workforce and equipment necessary to complete the project, subject to the other legal conditions.

4. Is unanimous owner approval required to terminate under this procedure?

The relevant statutory provision allows the decision to be taken by owners representing a simple majority according to their ownership shares.

5. Does the contractor receive a final opportunity to restart construction?

Yes. If the competent authority determines that the statutory conditions exist, the contractor is given 30 days to begin or continue the work. If the contractor fails to do so, the agreements are deemed terminated at the end of that period.

6. Can owners claim unpaid temporary rent?

Potentially, depending on the reconstruction agreement and applicable legal principles. Owners should preserve payment records and contractual evidence.

7. Does termination automatically return land shares transferred to the contractor?

No automatic restoration should be assumed. The statutory provision states that transferred shares, payments, completed work and other pre-termination matters are governed by general legal rules.

8. Can the contractor demand repayment of temporary rent already paid before statutory termination?

The special statutory provision states that temporary-rent assistance paid to rights holders up to the termination date cannot be reclaimed from them.

9. Can owners appoint another contractor immediately after construction stops?

The legal status of the existing agreement, title transfers, permits and unfinished construction should first be resolved. A replacement contractor should then undergo new legal, financial and technical due diligence.

10. Can a foreign owner deal with a delayed project without returning personally?

Appropriate representation can be arranged. The existing power of attorney should be reviewed to ensure that it covers the necessary document retrieval, owner decisions, administrative applications and legal proceedings.

Legal Assistance for Delayed and Abandoned Urban Transformation Projects

A delayed urban transformation project can quickly become more than a construction problem. Owners may face unpaid temporary rent, an unfinished building, transferred property rights, contractor creditors and uncertainty about whether another contractor can complete the project.

The earlier the problem is investigated, the more options may remain available.

Owners should establish the contractual delivery date, document actual construction progress, examine the contractor’s financial position, check the current title record and determine whether the statutory termination conditions have been reached.

For foreign owners living abroad, continuous monitoring is particularly important because months of inactivity can materially change the legal and financial position before the owner becomes aware of the problem.

Fırat Fesih Kaya Law Office provides legal assistance to foreign property owners and investors dealing with delayed, suspended and abandoned urban transformation projects.

Lawyer Fırat Fesih Kaya assists property owners with contractor-default analysis, construction-delay claims, unpaid temporary rent, technical progress documentation, statutory termination procedures, transferred land shares, contractor insolvency, contractual penalties, compensation claims, replacement-contractor arrangements and disputes concerning unfinished urban transformation projects.

Phone: +90 312 434 22 22
WhatsApp: +90 532 769 22 22
Email: info@firatfesihkaya.av.tr