How Can Foreign Property Owners Choose a Safe Contractor for Urban Transformation in Turkey? (2026 Updated Guide)

Learn how foreign property owners can choose a reliable contractor for an urban transformation project, including authorization checks, financial due diligence, previous projects, guarantees, title-transfer risks, construction deadlines and contractor agreements.

For a foreign property owner, selecting the contractor is one of the most important decisions in an urban transformation project. A contractor may offer a larger replacement apartment, higher temporary rent or an attractive architectural design, but these promises have limited value if the contractor lacks the legal authorization, financial capacity or organizational strength to complete the project.

The risk becomes particularly serious after the existing building has been vacated and demolished. At that stage, owners may no longer have a usable property and can become dependent on the contractor’s ability to obtain permits, finance construction, maintain temporary-rent payments and complete the new building.

Foreign owners living abroad face an additional challenge. They may participate through a representative and may not be able to visit the construction site regularly. Contractor due diligence should therefore take place before the reconstruction agreement is signed and before valuable title rights are transferred.

Official guidance confirms that contractor information can be checked through the relevant contractor-information system, while construction contractors are subject to authorization and classification requirements.

Lawyer Fırat Fesih Kaya assists foreign property owners with contractor due diligence, reconstruction agreements, title-transfer structures and disputes arising when urban transformation contractors fail to perform their obligations.

First Verify That the Contractor Is Legally Authorized

Do not rely solely on a company brochure, website, business card or statement that the company has been operating for many years.

The contractor’s authorization status should be verified through the official contractor-registration system.

Official guidance states that contractors responsible for permit-required construction must have a contractor authorization number. The authorization system also classifies contractors according to professional, technical, economic and financial criteria.

The authorization number and current status can be checked electronically using the relevant identifying information for the contractor.

This should be one of the first checks performed before owners seriously negotiate a redevelopment agreement.

Check the Contractor’s Authorization Group

Having an authorization number does not automatically mean that every contractor is suitable for every project.

Contractors are divided into authorization groups according to criteria including professional, technical, economic and financial capacity. Different groups are permitted to undertake construction within different limits.

Therefore, owners should check not only whether the contractor exists in the system but also whether its authorization classification is appropriate for the proposed project.

This distinction becomes especially important for large apartment complexes or projects with substantial construction value.

A contractor capable of legally undertaking a small project should not automatically be assumed to have the capacity required for a significantly larger redevelopment.

Do Not Confuse Regulatory Eligibility With Financial Safety

Official authorization is important, but it is only the beginning of due diligence.

A contractor may satisfy regulatory qualification requirements and still present significant commercial risk.

Owners should separately investigate whether the company appears financially capable of completing the proposed project.

Urban transformation projects can continue for several years. The contractor may need substantial working capital before revenue from contractor-owned units becomes available.

A project that depends on constant advance sales or immediate transfers of owner property can become vulnerable if market conditions deteriorate.

Owners should therefore ask a second question after verifying authorization:

Can this contractor realistically finance this particular project until completion?

Investigate the Contractor’s Previous Projects

Past performance can provide useful evidence of practical capacity.

Owners should identify projects the contractor claims to have completed and distinguish completed developments from projects that are merely advertised as references.

Where possible, investigate whether the previous buildings were actually completed, whether completion was significantly delayed and whether the contractor delivered the promised project.

Official guidance for certain redevelopment financing programs itself requires particular contractor categories to provide evidence of completed previous projects, demonstrating the relevance of actual completion history when contractor capacity is assessed.

Owners should therefore look beyond photographs in marketing presentations.

Visit Completed Projects Where Possible

A completed project can reveal information that cannot be obtained from promotional material.

Owners or their technical representatives can consider the apparent construction quality, common areas, façade, parking, elevators and general condition of previous developments.

Where appropriate, speaking with owners in previous projects may also provide practical information about construction delays, post-delivery defects and whether the contractor complied with important promises.

This should not replace formal legal and technical due diligence, but it can help owners identify questions that require further investigation.

Investigate Ongoing Projects as Well

A contractor may have an impressive history but currently be overloaded.

Owners should therefore investigate ongoing projects.

How many construction sites is the contractor currently managing?

How large are they?

Are they progressing?

Are several projects delayed simultaneously?

Does the contractor appear dependent on obtaining money from one project to finance another?

A contractor’s historical success does not necessarily establish that it has sufficient current financial and organizational capacity for another major redevelopment.

Verify the Company That Will Actually Sign the Agreement

Foreign owners should pay particular attention to corporate identity.

A well-known business group may participate in negotiations, while the actual reconstruction agreement is signed by a different company within the group.

The legal identity of the contracting company matters.

Owners should determine which company assumes the construction obligation and which entity will receive property rights.

If another group company is expected to support the project, that support should not be assumed merely because the companies have similar names or common shareholders.

Where appropriate, additional corporate guarantees should be documented expressly.

Check Who Is Authorized to Sign for the Contractor

The person negotiating with owners may not necessarily have authority to bind the contractor.

Before the agreement is executed, the contractor’s representation and signature authority should be verified.

This becomes especially important where substantial title transfers, guarantees or financial obligations are involved.

A major redevelopment agreement should not depend on assumptions about the authority of a salesperson, project manager or intermediary.

Investigate the Contractor’s Corporate History

Owners should understand whether the contractor is a long-established operating company or a recently created entity established specifically for the project.

A newly incorporated company is not automatically unsafe.

However, its limited operating history may require stronger contractual protection and additional investigation of the people or companies standing behind it.

If the company has minimal assets but expects owners to transfer highly valuable land rights, the imbalance should be considered carefully.

Check Whether the Contractor’s Authorization Has Problems

Official sources explain that contractor authorization can be affected by serious regulatory violations. Examples identified by the competent authority include certain construction contrary to permits or approved projects and failures concerning relevant tax or social-security obligations.

Owners should therefore check the current status rather than relying on an old authorization document.

The authorization system itself has also been subject to enhanced control procedures intended to strengthen reliability, consistency and quality assurance in contractor qualification decisions.

A contractor’s status should be verified close to the time of contracting.

Check Whether the Contractor Can Legally Undertake the Proposed Project

The project’s size should be compared with the contractor’s authorization category.

Official rules classify contractors into groups and impose different capacity limits according to those groups.

This is not merely an administrative detail.

If a contractor is attempting to undertake a project beyond the appropriate authorization capacity, owners may encounter difficulties during implementation.

The contractor’s authorization classification should therefore be checked against the actual project rather than considered in isolation.

Do Not Choose a Contractor Only Because of the Highest Offer

Owners naturally compare economic proposals.

One contractor may promise larger replacement apartments. Another may offer more temporary rent. Another may request no additional payment.

The highest headline offer is not necessarily the safest offer.

An economically unrealistic proposal can itself be a warning sign.

If the contractor promises substantially more than competing contractors, owners should determine how the project will finance those promises.

A proposal that cannot survive realistic construction costs is not necessarily advantageous simply because it looks attractive at the owner meeting.

Test the Economic Feasibility of the Proposal

Owners should understand how the contractor expects to make money.

How many additional units will the project create?

Which units will belong to the contractor?

What is their realistic market value?

How much construction must be financed before those units can be sold?

What additional payments will owners make?

Is the proposal based on planning rights that actually exist?

These questions help determine whether the commercial model is credible.

A contractor promising an economically impossible project may later seek additional payments, reduce specifications, delay construction or attempt to renegotiate the agreement after demolition.

Verify Planning Assumptions

The contractor’s financial proposal may depend heavily on the amount of construction legally permitted on the parcel.

Owners should therefore avoid accepting statements such as:

“We will definitely obtain two additional floors.”

or

“The new project will certainly contain this many additional apartments.”

unless the underlying planning and project assumptions have been properly investigated.

If the legally approved project is smaller than anticipated, the entire financial balance can change.

The agreement should also explain who bears this risk.

Demand a Detailed Written Proposal

A contractor should not be selected solely on the basis of an owner-meeting presentation.

The proposal should provide sufficient detail concerning the replacement units, technical specifications, construction timetable, temporary rent, additional payments, contractor consideration and title-transfer structure.

Owners can then compare competing proposals on equivalent criteria.

Otherwise, one contractor may appear to offer more simply because important obligations have been left undefined.

Compare Replacement Units, Not Just Square Meters

A larger square-meter figure does not necessarily mean a better property.

Owners should compare net and gross area, floor, orientation, layout, parking, storage, balconies, terraces and other characteristics.

Commercial owners should consider frontage, access and visibility.

A contractor offering a slightly larger but materially less valuable replacement unit may not actually be making the better offer.

Examine the Technical Specification Before Selecting the Contractor

Construction quality should be part of contractor selection, not something discussed after the contractor has already been chosen.

The technical specification should identify the expected quality of structural and finishing elements with reasonable detail.

Owners should compare specifications across competing contractors.

One proposal may offer more square meters but substantially lower construction quality.

Another may include better insulation, façade systems, mechanical installations, elevators or common-area standards.

Economic comparison should therefore consider the complete package.

Ask How the Contractor Will Finance Construction

This question is particularly important.

Will the contractor finance construction from existing resources?

Will financing depend on bank credit?

Will the contractor sell its allocated units before completion?

Will owners’ land shares be transferred early so that the contractor can use them commercially?

Will additional owner payments finance construction?

Owners should understand the financing model before accepting the project.

A contractor unwilling to explain how construction will be financed deserves additional scrutiny.

Be Cautious If the Contractor Demands Immediate Title Transfers

A request for substantial upfront title transfers can significantly increase owner risk.

If the contractor receives valuable ownership rights before performing corresponding construction, owners may lose important leverage.

If the contractor later experiences financial distress, the legal situation can become substantially more complicated.

Owners should examine whether title transfers can instead be linked to objectively measurable construction milestones.

The value transferred to the contractor should not become disproportionate to the performance already completed.

Consider Staged Title Transfers

Depending on the transaction, staged transfers can provide a stronger risk-control mechanism.

The contractor may receive portions of its agreed property consideration only after defined construction stages are completed.

The milestones should be objectively verifiable.

Where valuable title rights depend on construction progress, independent technical verification may be appropriate.

The contractor should not have unilateral authority to declare that the required progress has been achieved.

Ask What Security Protects the Owners

Owners should identify what happens if the contractor does not complete the building.

Current official materials confirm that security requirements form part of the regulatory framework for relevant redevelopment applications. Official guidance also identifies mandatory contractor security in applicable risky-building redevelopment projects before the construction permit, subject to specified exceptions.

However, regulatory security should not automatically be assumed to eliminate all private contractual risk.

Owners should understand the amount, form and enforceability of available security and whether additional contractual protection is appropriate.

Security Is Not a Substitute for a Reliable Contractor

A guarantee is useful, but the best outcome remains successful completion.

Owners should not select a financially questionable contractor merely because some form of security exists.

The project may still experience long delays, litigation, additional financing needs and difficulties appointing a replacement contractor.

Contractor quality, financial capacity, contractual security and title-transfer controls should work together.

Ask What Happens If the Contractor Becomes Insolvent

A contractor should be evaluated not only for the best-case scenario but also for failure.

What happens if construction stops halfway?

What happens to title interests already transferred?

Can another contractor continue the project?

What security can owners enforce?

Who controls the project documents?

What happens to temporary-rent obligations?

These questions should be addressed in the reconstruction agreement before owners commit their property.

Check the Construction Timetable

A safe contractor proposal should include a realistic timetable.

Owners should know when permit work must be completed, when construction begins and when final delivery is expected.

The agreement should identify the event that starts the construction period.

A promise to complete construction “within 24 months” can be inadequate if the contract does not explain when those 24 months begin.

Check the Contractor’s Position on Delay

A reliable contractor should be prepared to accept meaningful consequences for unjustified delay.

The contract should regulate continued temporary-rent payments, compensation, contractual penalties or other appropriate consequences according to the negotiated structure.

A contractor offering an aggressive completion deadline while refusing any meaningful consequence for missing it should be examined carefully.

The contractual incentives should correspond with the promises made during negotiations.

Temporary Rent Should Be Financially Realistic

Foreign owners may need temporary accommodation throughout construction.

The contractor’s rent offer should therefore be evaluated both legally and financially.

An unusually high temporary-rent promise can be attractive, but owners should ask whether the contractor can realistically maintain those payments for the entire construction period.

The agreement should also explain whether payments continue when construction is delayed.

Check Whether the Contractor Accepts Meaningful Termination Rights

The reconstruction agreement should provide a practical response to serious contractor default.

Potential trigger events may include failure to obtain required approvals within agreed periods, failure to begin construction, prolonged suspension, serious delay, repeated failure to pay agreed rent or abandonment.

A contractor that demands extensive owner obligations while resisting meaningful consequences for its own default may create an unbalanced arrangement.

Termination consequences must also be addressed.

Ask What Happens After Termination

Replacing a failed contractor can be difficult.

The agreement should address the position of transferred property rights, project documents, permits and unfinished construction.

Owners should understand whether another contractor can practically continue the project.

This is another reason to avoid transferring excessive property rights at the beginning.

The more value owners retain until performance occurs, the stronger their position may be if replacement becomes necessary.

Check Insurance and Construction-Risk Protection

Construction creates risks affecting workers, owners, neighboring properties and third parties.

The contractor’s insurance arrangements should therefore be considered.

Where relevant, owners should understand what coverage will exist during demolition and construction and whether the contractor is required to maintain that coverage throughout the project.

Insurance cannot replace proper contractor selection, but it can form part of the project’s broader risk-management structure.

Use an Independent Technical Adviser

Contractor selection should not be based only on legal and financial review.

An architect, engineer or other appropriate technical professional can help compare competing proposals.

Technical review can identify unrealistic construction schedules, problematic specifications, differences in replacement-unit area and questionable project assumptions.

This becomes especially important where owners are comparing several sophisticated proposals containing architectural and technical details.

Foreign Owners Should Appoint Their Own Representative Carefully

A foreign owner living abroad may need a representative to participate in contractor negotiations and owner meetings.

That representative should understand the owner’s priorities and should not rely exclusively on information supplied by the contractor.

The scope of the power of attorney should also be controlled.

Authority to participate in meetings does not necessarily require unrestricted authority to transfer title, mortgage property or accept additional financial obligations.

Avoid Conflicts of Interest

Foreign owners should know who is advising whom.

A person introduced by the contractor should not automatically be assumed to represent the owner’s interests.

Likewise, an intermediary receiving compensation from the contractor may have commercial incentives that differ from those of the property owner.

Owners should understand the relationships among the contractor, intermediaries, consultants and representatives involved in the transaction.

Independent legal and technical review can be particularly valuable in this situation.

Do Not Sign the Contractor’s Standard Agreement Without Review

A contractor’s standard agreement is usually drafted to support the contractor’s preferred commercial structure.

That does not automatically make it unacceptable, but owners should not assume that it adequately protects them.

The contract should be examined for replacement-unit allocation, additional payments, construction deadlines, temporary rent, project modifications, security, title transfers, delay, insolvency, termination and post-termination consequences.

A strong contractor and a weak agreement can still create substantial risk.

Check the Majority Decision Separately

Contractor selection may occur through the urban transformation owner-decision process.

Where unanimity cannot be achieved, the applicable statutory framework allows the relevant new-development decision to proceed through the required simple majority calculated according to registered ownership shares.

Owners should verify the title records and majority calculation rather than accepting statements such as “most owners voted for this contractor.”

The legal threshold concerns ownership shares, not merely the number of individuals supporting the proposal.

A Foreign Owner Should Not Ignore a Majority-Selected Contractor

A foreign owner may believe that the selected contractor is unsafe and therefore refuse to participate.

That decision should be made only after understanding the statutory consequences.

Where the applicable majority validly approves the new development and the required notification procedure is completed, an owner who remains outside the arrangement can ultimately face the statutory dissenting-share process.

Refusing the contractor and challenging the legality of the majority process are therefore different matters.

The owner should investigate both the contractor risk and the procedural position promptly.

Warning Signs Foreign Property Owners Should Take Seriously

Several circumstances justify additional investigation: pressure to sign immediately without receiving the complete agreement, refusal to disclose authorization information, unclear corporate identity, unrealistic promises substantially exceeding competing proposals, requests for extensive title transfers before meaningful construction, vague additional-payment clauses, refusal to accept measurable completion deadlines, weak consequences for delay, unwillingness to provide technical specifications and reluctance to explain project financing.

No single warning sign necessarily proves that a contractor will fail.

However, several warning signs appearing together should substantially increase the level of due diligence before owners transfer valuable rights.

2026 Practical Legal Strategy

The first priority is verify the contractor through official systems. Contractor authorization numbers and status can be checked electronically, and official guidance specifically directs property owners toward the relevant contractor-information system.

The second priority is check the authorization category against the proposed project. Contractor classifications reflect professional, technical, economic and financial criteria and affect the construction work contractors can undertake.

The third priority is investigate actual performance, including completed and ongoing projects.

The fourth priority is verify the exact contracting company and its authorized signatories. Do not rely on the reputation of another company within the same business group.

The fifth priority is test the economic feasibility of the proposal. A contractor promising more than every competitor should be able to explain how those promises will be financed.

The sixth priority is review the technical proposal independently. Replacement-unit dimensions, planning assumptions and construction specifications should be technically realistic.

The seventh priority is understand the financing model. Owners should know whether construction depends on owner payments, early title transfers, third-party sales or external financing.

The eighth priority is control property transfers. Valuable ownership rights should not be transferred casually before corresponding performance.

The ninth priority is verify security and default protection. Official rules impose contractor security requirements in relevant urban transformation applications, but owners should also evaluate the private contractual protections appropriate for the project.

The tenth priority is prepare for failure before signing. The agreement should regulate delay, insolvency, abandonment, termination and replacement of the contractor.

The central principle is straightforward: a safe contractor is not simply the company offering the largest apartment, highest rent or lowest additional payment. Foreign property owners should look for a contractor whose legal authorization, project capacity, financial structure, previous performance and contractual obligations collectively provide a realistic path to completing the new building.

Frequently Asked Questions

1. How can I check whether an urban transformation contractor is authorized?

The contractor’s authorization number, status and relevant classification can be checked through the official contractor-information system. Official guidance expressly directs owners to this system when searching for contractors.

2. Is an authorization number enough to prove that the contractor is safe?

No. Authorization is an important legal check, but owners should separately investigate financial capacity, completed projects, current workload, project feasibility and contractual protections.

3. Should I choose the contractor offering the largest replacement apartment?

Not automatically. A larger promise may be less valuable if the proposal is financially unrealistic or the contractor cannot complete the project.

4. Should I investigate the contractor’s previous projects?

Yes. Previous completion history can provide useful evidence of practical experience and performance. Certain official qualification procedures themselves consider evidence of completed projects relevant.

5. Should the contractor explain how construction will be financed?

Owners should understand the project’s financing model, particularly if construction depends on early owner title transfers, additional payments or advance sales.

6. Is it safe to transfer land shares to the contractor before construction begins?

Early transfers can substantially increase owner risk. The transfer structure should be reviewed carefully, and staged transfers linked to objectively verifiable performance may be considered where appropriate.

7. Does the contractor have to provide security?

The applicable regulatory framework contains contractor security requirements for relevant urban transformation projects, subject to the rules and exceptions governing the particular project.

8. What happens if the contractor becomes insolvent?

The outcome depends on construction progress, property rights already transferred, available security and the reconstruction agreement. Insolvency risk should therefore be addressed before signing.

9. Can the majority select a contractor even if I disagree?

A relevant redevelopment decision can proceed through the applicable share-based majority mechanism where statutory requirements are satisfied. A dissenting owner should therefore review both the contractor and the legality of the majority procedure rather than simply ignoring the decision.

10. Can I have the contractor checked while I remain abroad?

Yes. A foreign owner can arrange appropriate legal and technical representation to investigate contractor authorization, corporate status, the proposed agreement, project structure and other relevant risks without personally monitoring every stage.

Legal Assistance When Selecting an Urban Transformation Contractor

Selecting the wrong contractor can turn an urban transformation opportunity into a multi-year property dispute. Once the old building has been demolished and valuable ownership rights have been transferred, owners may have significantly less bargaining power if construction stops.

Contractor selection should therefore involve more than comparing apartment sizes and temporary-rent offers.

The contractor’s official authorization, appropriate classification, corporate identity, completed projects, ongoing workload, financial capacity, project feasibility, financing structure, technical proposal, security package and contractual obligations should be examined together.

For foreign owners living abroad, early due diligence is particularly important because correcting a poor contractor selection after construction fails can be substantially more difficult than identifying the risk before signing.

Fırat Fesih Kaya Law Office provides legal assistance to foreign property owners and investors during contractor selection and urban transformation projects.

Lawyer Fırat Fesih Kaya assists foreign property owners with contractor due diligence, reconstruction agreement review, contractor authorization checks, corporate review, title-transfer structures, contractor security, construction deadlines, temporary-rent provisions, additional payment risks, contractor default, insolvency, termination and disputes arising from failed urban transformation projects.

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