Urban Transformation Project Is Unfinished in Turkey: Can Owners Terminate the Contractor Agreement? (2026 Updated Guide)

Is your urban transformation project unfinished or abandoned? Learn when property owners can terminate a contractor agreement, the one-year and six-month rules, majority requirements, transferred land-share risks, compensation claims and replacement-contractor options.

An unfinished urban transformation project can place property owners in an extremely difficult position. The original building may already have been demolished, owners may have been living elsewhere for years, temporary rent payments may have stopped, and valuable land shares may already have been transferred to the contractor.

Owners often ask whether they can simply cancel the contractor agreement and appoint another construction company.

The answer depends on why construction remains unfinished, how long the project has been inactive, the terms of the construction agreement and whether the special termination mechanism available under the urban transformation legislation applies.

Under the current framework, a specific statutory termination procedure can become available where, after the necessary owner agreement or majority decision, the contractor fails for contractor-related reasons to begin construction within one year, or where construction has stopped at a certain level and has not continued for at least six months with the workforce and equipment necessary to complete the project.

This procedure can be particularly valuable for foreign property owners trapped in an abandoned redevelopment project.

Lawyer Fırat Fesih Kaya assists foreign property owners with unfinished urban transformation projects, contractor default, termination procedures, transferred land shares, temporary-rent claims and the legal structuring of replacement-contractor arrangements.

An Unfinished Project Does Not Automatically Terminate the Contract

Owners should not assume that the construction agreement automatically disappears merely because the contractor stops working.

Until the agreement is legally terminated or otherwise brought to an end through an applicable legal mechanism, important contractual and property consequences may continue.

This becomes especially important where the contractor agreement has been recorded against the property or where ownership interests have already been transferred.

Before another contractor is appointed, the legal status of the existing agreement should therefore be clarified.

Attempting to sign a second redevelopment agreement while the first remains legally unresolved can create additional disputes rather than solve the original problem.

First Determine Why the Project Is Unfinished

The reason for the delay is critical.

The special statutory termination mechanism focuses on circumstances attributable to the contractor.

Owners should therefore determine whether construction stopped because the contractor lacks financing, abandoned the project, failed to maintain a workforce or otherwise failed to perform its obligations.

The position may be different where construction cannot continue because owners failed to perform necessary obligations, a binding judicial decision prevents construction, an administrative obstacle exists, or another legally significant circumstance outside the contractor’s responsibility prevents performance.

The termination strategy should therefore begin with evidence establishing why the project has not progressed.

The One-Year Rule: Construction Has Never Started

One of the statutory grounds concerns failure to begin construction.

Where the relevant statutory conditions have been established and the contractor, for reasons attributable to it, does not begin construction of the new building within one year, owners may be able to initiate the special termination procedure.

The calculation of the one-year period should not be guessed.

The underlying agreement, the finalization of the relevant transformation process, owner obligations and other legally relevant dates should be examined before concluding that the statutory period has expired.

This is particularly important where the contractor claims that construction could not begin because owners failed to deliver the site or because another external obstacle existed.

The Six-Month Rule: Construction Started but Was Abandoned

The legislation also addresses projects where construction actually started but subsequently stopped.

Where construction has reached a certain level and has not continued for at least six months with the workforce and equipment necessary to complete the project, the special termination procedure may become available if the failure is attributable to the contractor and the other legal conditions are satisfied.

The key question is not merely whether someone occasionally appears at the construction site.

A contractor should not necessarily be able to prevent termination by performing insignificant activity that does not amount to genuine continuation of the project.

The competent authority examines whether construction is continuing at a level of workforce and equipment appropriate for completion.

Owners Need Evidence That Construction Has Stopped

Owners should document prolonged inactivity before commencing the termination procedure.

Useful evidence can include dated photographs, construction-site records, technical progress reports, correspondence with the contractor and documentation from relevant public or construction-supervision records.

An independent technical report can be particularly valuable.

The objective is to establish not simply that construction appears slow but that the project has actually stopped or is not continuing with resources sufficient to complete it.

For foreign owners living abroad, a reliable local monitoring system can prevent months of inactivity from passing without documentation.

Is Unanimity Required to Terminate the Contractor?

Under the special statutory mechanism, unanimity is not necessarily required.

After the underlying redevelopment decision has been established in accordance with the applicable framework, owners representing a simple majority according to their ownership shares can decide to seek termination where the statutory contractor-default conditions exist.

This is important because abandoned projects frequently divide owners.

Some owners may want to continue waiting. Others may believe the contractor is financially incapable of finishing the project.

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

Current title records should therefore be obtained before calculating the majority.

The Majority Must Be Calculated According to Ownership Shares

Suppose a building has ten owners.

Six owners supporting termination do not necessarily establish the required majority if their combined ownership shares do not amount to the necessary share-based majority.

Conversely, fewer individuals may potentially represent the required majority if they collectively hold sufficient ownership shares.

The title record is therefore essential.

Inherited properties, multiple co-owners, previous transfers and changes in ownership should all be considered before the termination decision is documented.

How Does the Statutory Termination Process Begin?

Once the required owner majority decides to seek termination, the prescribed application should be made with the termination decision and supporting evidence.

The implementing framework requires information and documents supporting the asserted ground, such as evidence that failure to begin construction is attributable to the contractor or evidence demonstrating that construction has not continued for the relevant period with sufficient workforce and equipment.

The application is then examined by the competent authority.

This is not simply a private declaration by the owners that the agreement is cancelled.

The statutory mechanism contains an administrative determination process.

The Contractor Is Asked to Explain the Situation

Under the implementing procedure, where the application satisfies the initial requirements, information and documentation may be requested from the contractor concerning the reasons why construction did not begin or why meaningful construction activity has not continued.

The implementing regulation provides a fifteen-day period at this examination stage for the contractor to provide relevant information and documents.

The competent authority can then investigate the situation, including through inspection of the construction site and correspondence with relevant institutions.

This helps distinguish a genuinely abandoned contractor project from a delay caused by circumstances outside the contractor’s responsibility.

The Contractor Receives a Final 30-Day Opportunity

If the competent authority determines that the statutory termination conditions exist, the contractor does not necessarily lose the agreement immediately.

The contractor receives a final thirty-day period.

Depending on the ground for termination, the contractor is instructed to begin construction or resume work with the workforce and equipment necessary to complete the project.

The contractor is also warned that failure to comply will result in the construction agreements being terminated automatically when that period expires.

This thirty-day period is therefore a critical stage of the statutory procedure.

What Happens If the Contractor Still Does Not Restart Construction?

If the contractor fails to comply with the final notice, the agreements concerning construction are deemed terminated at the end of the thirty-day period without requiring another notice or the consent of the contractor.

The competent authority verifies whether meaningful construction has begun or resumed.

The implementing framework makes clear that the authority examining the matter assesses whether construction is continuing with workforce and equipment at a level sufficient for completion.

The contractor therefore cannot necessarily defeat the process by placing a token number of workers on the site without genuinely restarting the project.

Does the Contractor Have to Agree to the Termination?

Not under the special statutory mechanism where all legal requirements have been fulfilled.

One of the major advantages of this procedure is that termination does not depend on obtaining the defaulting contractor’s consent.

Once the statutory process is completed and the contractor fails to comply with the final thirty-day requirement, the relevant construction agreements are deemed terminated without requiring the contractor’s approval.

This can be crucial where a contractor refuses to cooperate despite having effectively abandoned the project.

What Happens to the Contract Annotation in the Title Record?

After statutory termination, construction agreements recorded against the property can be removed from the title record upon the appropriate request by the owners or competent authority.

This can be an important step before the project is reorganized with another contractor.

However, removal of the contract annotation should not be confused with automatic reversal of every title transfer previously made to the contractor.

Those are separate legal issues.

What Happens to Land Shares Already Transferred to the Contractor?

This is often the most difficult question in an unfinished urban transformation project.

Termination does not automatically mean that every ownership interest previously transferred to the contractor instantly returns to the original owners.

The legislation expressly provides that work completed before termination, shares already transferred, payments made and other matters remain subject to general legal rules.

The title history must therefore be examined carefully.

Owners should determine what was transferred, when it was transferred, what contractual performance was expected in return and whether the contractor subsequently transferred or encumbered those rights.

What If the Contractor Sold Transferred Property to Third Parties?

This can substantially complicate the dispute.

Owners should obtain a current title record and identify every relevant transaction.

If the contractor acquired property interests and later transferred them, mortgaged them or otherwise used them in transactions with third parties, the legal position may require separate analysis.

This is one reason why staged title transfers can provide better protection in redevelopment agreements.

Owners who transfer the contractor’s entire economic consideration at the beginning may face significantly greater recovery problems if the project later collapses.

Can Owners Recover Money Paid to the Contractor?

Termination does not automatically answer every financial question.

Payments made before termination remain subject to the applicable contractual and general legal rules.

Owners should reconstruct the complete payment history.

This can include additional construction payments, project-related expenses and other sums transferred to the contractor.

The amount of work actually completed may also become relevant when financial claims between the parties are calculated.

What Happens to Temporary Rent Already Paid by the Contractor?

The statutory framework contains a specific protection concerning temporary-rent payments already made before termination.

Temporary-rent assistance paid by the contractor to rights holders up to the termination date cannot be reclaimed from those rights holders.

Therefore, a contractor cannot simply argue that owners must return all previously received temporary-rent payments because the construction agreement has subsequently been terminated through this mechanism.

Outstanding unpaid rent, however, is a separate issue and should be examined under the agreement and applicable legal rules.

Can Owners Claim Unpaid Temporary Rent?

Potentially, depending on the contractual terms.

If the contractor agreed to pay temporary rent until actual completion or for another defined period and failed to make the required payments, owners may have monetary claims.

Bank records and payment schedules should be preserved.

Owners should also retain written communications in which the contractor acknowledged outstanding payments or promised to pay them later.

For foreign owners, these amounts can become substantial where construction remains unfinished for several years.

Can Owners Claim Compensation for the Unfinished Project?

Potentially, depending on the circumstances.

Termination of the agreement and compensation for losses are related but distinct issues.

An unfinished project can cause owners to suffer additional accommodation expenses, lost rental income and other financial losses.

Whether those losses can be recovered depends on the contract, the nature of the contractor’s breach, causation and evidence.

Owners should preserve documentation of losses from the moment serious delay begins rather than attempting to reconstruct everything years later.

What About Contractual Penalties?

The reconstruction agreement may contain contractual penalties for delay or failure to complete construction.

Those provisions should be examined separately.

The amount, triggering event and relationship with other claims can become important.

Owners should not assume that the statutory termination procedure automatically determines every contractual penalty claim.

The statutory process addresses termination of the failed construction relationship; financial consequences remain subject to additional legal analysis.

Does Termination Automatically Solve the Project?

No.

Termination removes a failed contractual relationship, but owners are still left with an unfinished building.

They must determine how the project will be completed.

This may involve selecting another contractor, restructuring financing, obtaining updated technical assessments and dealing with the legal consequences of previous title transfers.

A termination strategy should therefore be accompanied by a completion strategy.

Ending the first agreement without planning the next stage can leave owners with the same unfinished structure and no realistic path forward.

Can Owners Appoint a New Contractor After Termination?

Potentially, yes, once the legal position of the previous agreement has been properly addressed.

Before appointing another contractor, owners should examine the existing construction, permits, title record, technical documentation and remaining project cost.

The new contractor should not be selected solely because it promises to take over quickly.

Fresh legal, technical and financial due diligence should be performed.

A failed redevelopment project can be more difficult and expensive to complete than a project beginning from an empty site.

The Replacement Contractor Must Be Checked Carefully

Owners who have already suffered one contractor failure are often vulnerable to aggressive rescue proposals.

The replacement contractor’s authorization, qualification, financial capacity, completed projects and current workload should be checked.

Official guidance directs property owners to the relevant contractor-information system when researching contractors.

The replacement agreement should also address why the original project failed.

If uncontrolled title transfers, weak security or vague completion deadlines contributed to the first failure, the new agreement should not repeat those weaknesses.

Can the Replacement Contractor Demand More Money?

Possibly.

Completing an abandoned project can be more expensive than completing a project from the beginning.

The new contractor may need to evaluate existing structural work, correct defective construction, complete unfinished elements and assume risks associated with the previous project.

Owners should obtain an independent technical assessment before accepting a large additional payment demand.

The cost of completing the project should also be distinguished from any claims owners may have against the original contractor.

What If the Existing Construction Is Defective?

This should be investigated before another contractor continues the project.

An independent technical assessment may be necessary to determine whether the existing construction can safely be retained.

If defective work must be removed or reconstructed, the financial consequences can be significant.

Evidence should be preserved before the replacement contractor changes or covers the original work.

Otherwise, proving the first contractor’s defective performance may become more difficult.

Can One Foreign Owner Terminate the Agreement Alone?

The special statutory mechanism should be distinguished from individual contractual remedies.

The statutory procedure operates through the required share-based majority of owners.

An individual owner may have separate contractual or judicial claims depending on the agreement and circumstances, but those should not be confused with the collective termination mechanism available under the urban transformation legislation.

A foreign owner who wants termination should therefore first establish the current ownership shares and determine whether sufficient support exists among the other owners.

What If Other Owners Refuse to Terminate?

This can create a strategic problem.

Some owners may believe the contractor will eventually finish. Others may have separate financial arrangements with the contractor or may simply fear the cost of appointing a replacement.

The foreign owner should obtain objective technical and financial evidence.

A documented construction-progress report, unpaid-rent history and contractor correspondence can help owners evaluate the project based on evidence rather than promises.

Where the statutory majority cannot be achieved, individual legal rights may need to be considered separately.

Foreign Owners Should Check Their Power of Attorney

A foreign owner living abroad may have originally issued a limited power of attorney for the initial reconstruction process.

That document may not necessarily cover a later contractor-termination dispute.

The authority required to obtain documents, participate in owner decisions, make administrative applications, issue contractual notices or commence litigation should be checked.

At the same time, the owner should avoid granting unnecessary powers over remaining property interests.

A contractor dispute should not become a reason to issue an uncontrolled general authority over valuable real estate.

Do Not Sign a New Agreement Before Reviewing the Old One

This is particularly important.

The existing contractor agreement may contain rights, annotations, transfer mechanisms, dispute-resolution provisions or continuing obligations that must first be addressed.

The title record may also contain transactions arising from the original project.

Owners should therefore avoid signing a replacement agreement before establishing the legal position of the old contractor and the unfinished development.

A new agreement should be built on a clear title and contractual analysis.

Evidence Owners Should Collect Immediately

When construction appears abandoned, owners should create a comprehensive file.

It should include the reconstruction agreement and all annexes, current and historical title records, powers of attorney, owner-meeting documents, construction permits, architectural plans, technical specifications, payment records, temporary-rent records and correspondence with the contractor.

Dated photographs and videos of the construction site should also be preserved.

An independent technical report can document the construction percentage, unfinished work, defects and whether meaningful construction activity continues.

The objective is to preserve evidence before the site changes or another contractor begins work.

2026 Practical Legal Strategy

The first priority is determine whether the project is merely delayed or legally qualifies as seriously inactive. Review the construction agreement, contractual completion date and actual site progress.

The second priority is identify the cause of the failure. The special statutory mechanism focuses on circumstances attributable to the contractor.

The third priority is document the one-year or six-month condition where applicable. Current legislation addresses contractor-caused failure to begin construction within one year and projects stopped at a certain level where meaningful construction has not continued for at least six months.

The fourth priority is calculate the ownership-share majority correctly. The statutory termination decision can be taken by owners representing a simple majority according to their shares when the legal requirements are satisfied.

The fifth priority is prepare evidence before making the termination application. The implementing procedure contemplates documentary evidence concerning contractor-caused failure and prolonged lack of meaningful construction activity.

The sixth priority is follow the administrative procedure rather than assuming the contract has already ended. If the competent authority determines that the termination conditions exist, the contractor receives a final thirty-day period to start or meaningfully resume construction.

The seventh priority is check the title record before and after termination. Contract annotations may be removed following termination, but transferred ownership shares require separate analysis.

The eighth priority is calculate financial claims separately, including unpaid temporary rent, contractual penalties, additional payments and documented losses.

The ninth priority is obtain an independent technical assessment before selecting a replacement contractor.

The tenth priority is structure the replacement agreement more safely, particularly regarding staged title transfers, contractor security, measurable construction milestones and practical termination provisions.

The central principle is clear: property owners do not necessarily have to remain indefinitely tied to a contractor who has failed to begin or has effectively abandoned an urban transformation project. Current legislation provides a specific termination mechanism where defined contractor-caused conditions are met. However, terminating the agreement is only one part of the solution. Owners must also address transferred land shares, financial claims, unfinished construction and the legal and technical structure required to complete the project with a replacement contractor.

Frequently Asked Questions

1. Can owners terminate an urban transformation contractor because the project is unfinished?

Potentially, yes. A special statutory termination mechanism exists where the relevant legal conditions are satisfied, including certain contractor-caused failures to begin or continue construction.

2. What is the one-year rule?

Where construction has not begun within one year for reasons attributable to the contractor, the statutory termination mechanism may become available if the other legal requirements are satisfied.

3. What is the six-month rule?

Where construction has stopped at a certain level and has not continued for at least six months with workforce and equipment sufficient to complete the project, the statutory mechanism may apply, subject to the other requirements.

4. Do all property owners have to agree to terminate the contractor?

No. Under the special statutory mechanism, the decision can be taken by owners representing a simple majority according to their ownership shares where the statutory requirements are met.

5. Does the contractor receive another opportunity to continue construction?

Yes. If the competent authority determines that the termination conditions exist, the contractor is given thirty days to start or meaningfully resume construction. Failure to comply results in the agreements being deemed terminated at the end of that period.

6. Does termination require the contractor’s consent?

Not under the special statutory procedure once all requirements have been satisfied and the final thirty-day period expires without the required performance.

7. Do transferred land shares automatically return after termination?

No automatic return should be assumed. The legislation provides that transferred shares, completed work, payments and other pre-termination matters remain subject to general legal rules.

8. Can the contractor demand back temporary rent already paid?

Temporary-rent assistance paid to rights holders up to the statutory termination date cannot be reclaimed from them under this mechanism.

9. Can owners appoint another contractor after termination?

Potentially, yes, but the previous agreement, title position, permits, unfinished construction and existing financial obligations should first be reviewed. The replacement contractor should undergo fresh due diligence.

10. Can a foreign owner participate in the termination process while living abroad?

Yes. Appropriate legal representation can be arranged, subject to the required authority. Foreign owners should ensure that their representative can obtain the necessary records, participate in owner decisions and pursue the relevant administrative or judicial procedures.

Legal Assistance for Unfinished Urban Transformation Projects

An unfinished urban transformation project can leave property owners without their original building and without the replacement property they were promised. The problem becomes even more serious when land shares have already been transferred, temporary-rent payments have stopped or the contractor is experiencing financial distress.

Owners should not assume that they must wait indefinitely.

Where the statutory requirements are satisfied, the current urban transformation framework provides a specific mechanism through which the required share-based majority can seek termination of a failed contractor relationship.

However, termination should be planned together with the next stage of the project. Transferred ownership interests, financial claims, construction defects, unfinished works and the selection of a replacement contractor all require separate attention.

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

Lawyer Fırat Fesih Kaya assists property owners with contractor-agreement termination, statutory termination applications, ownership-share calculations, unfinished construction disputes, transferred land shares, unpaid temporary rent, contractual penalties, compensation claims, contractor insolvency, technical evidence and replacement-contractor arrangements.

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