New Case Law from the Court of Cassation on Title Disputes: How Can the Rights of Those Who Purchase Apartments from Contractors Be Protected?

Attorney Aylin Esra Eren emphasizes that contracts, land registry records, and payment documents must be assessed together in actions for cancellation of title and registration arising from construction contracts in exchange for land shares.

The title rights of those who purchase independent units from contractors under construction contracts in exchange for land shares are among the most significant areas of dispute in real property law. In particular, failure to transfer title despite full payment of the purchase price, failure to complete construction, or contractual disputes between the landowner and the contractor can expose purchasers to serious legal risks.

A decision record of the 6th Civil Chamber of the Court of Cassation also brought attention to an action for cancellation of title and registration concerning an independent unit acquired from a contractor. According to the information in the record, the dispute concerns the transfer of independent unit No. 9 covered by a construction contract in exchange for land shares. The claimant alleged that they had paid TRY 600,000 as the transfer price of the property and sought cancellation of title and registration in their own name; they also sought compensation in the alternative, should that claim not be granted.

When assessing the legal significance of the decision, it is necessary to distinguish between the parties’ allegations and the matters conclusively accepted by the court. Without examining the full text of the decision and its operative part, no assessment should be made as to the grounds on which the case was resolved or whether a definitive legal principle in favor of the purchaser was established.

Is paying the price of a property sufficient to acquire ownership?

In her assessment of the matter, Attorney Aylin Esra Eren points out that making payment in a property sale and legally acquiring ownership are separate issues.

Although the land register and registration are fundamental to the transfer of ownership of real property, the legal nature of the contract between the parties, the contractor’s rights and obligations under the contract with the landowner, the legal status of the independent unit, and the third party’s good faith must be assessed together. Accordingly, full payment of the price of an apartment does not mean that title will be registered in the purchaser’s name in every case.

Payment receipts, contracts, handover documents, and correspondence between the parties may constitute important evidence in resolving the dispute. However, the existence of these documents alone may not demonstrate that ownership has been acquired. The legal transaction on which the purchaser bases their claim for registration and the extent of the contractor’s authority to dispose of the independent unit in question must also be examined.

Why is the contract between the landowner and the contractor important?

Under construction contracts in exchange for land shares, the landowner may undertake to transfer a land share or an independent unit to the contractor upon fulfillment of specified conditions. In return, the contractor is obliged to complete the construction in accordance with the contract.

However, failure to complete construction, the contractor’s failure to perform their contractual obligations, or a dispute between the parties over termination of the contract may also affect the legal position of third parties who purchase apartments from the contractor.

In such disputes, examining only the sale relationship between the purchaser and the contractor is insufficient. The terms of the contract between the landowner and the contractor, the conditions under which the contractor becomes entitled to the relevant rights, the stage at which the independent unit was transferred, and the existing entries in the land register must be considered together.

Nevertheless, a dispute between the landowner and the contractor does not mean that the rights of a third party who purchased property from the contractor are automatically extinguished. Whether the third party has acquired title, whether they have acquired a right in rem, and whether the conditions for good faith protected by law are met are assessed according to the circumstances of the particular case.

How are the rights of third parties who rely on the land register protected?

Article 1023 of the Turkish Civil Code is one of the fundamental provisions concerning the protection of an acquisition by a third party who acquires ownership or another right in rem in good-faith reliance on an entry in the land register. However, this protection does not apply automatically to every property purchase.

In particular, whether the person purchasing property from the contractor is registered as the owner in the land register, the existing state of the title record, the conditions of the transfer, and whether the person can be regarded as acting in good faith are significant. If title registration has not yet taken place, it cannot be directly concluded, solely on the basis of the sale contract, that the protection under Article 1023 of the Turkish Civil Code applies.

For this reason, each real property dispute must be assessed on the basis of its own contractual relationship, title history, and evidence.

What legal remedies are available to purchasers to whom title has not been transferred?

The legal remedies available to persons who have purchased an independent unit from a contractor but have not obtained a transfer of title may vary according to the circumstances of the case. Where the appropriate conditions are met, bringing an action for cancellation of title and registration or asserting contractual payment and compensation claims may be possible.

However, whether a claim for cancellation of title and registration will be granted depends on the legal nature of the contract, whether the contractor has become entitled to the relevant rights, the current status of the property in the land register, and the rights of other interested parties. Where registration is not possible, consideration of a compensation claim does not, in itself, produce an automatic and unconditional outcome either. The legal basis of the claim, the requirements of proof, and any applicable time limits must also be examined.

To avoid a loss of rights, it is important, when a dispute arises, to assess the sale contract, payment documents, land registry records, and the relevant provisions of the contract between the landowner and the contractor together.

A legal review should be conducted before purchasing real property

In light of Attorney Aylin Esra Eren’s assessment, those purchasing apartments, particularly in projects still under construction, should not focus solely on the price and delivery date. Examining the title record and encumbrances, investigating the contractor’s authority to dispose of the independent unit, assessing the relevant provisions of the contract with the landowner, and making payments in a manner that can be documented are of great importance.

A legal review conducted before purchasing real property may help prevent future disputes concerning cancellation of title and registration, payment claims, or compensation. This is because, in real estate transactions, determining in advance the legal conditions under which ownership will be acquired is just as necessary as paying the price.

In conclusion: The rights of those who purchase apartments from contractors cannot be determined solely by whether payment has been made. The terms of the contracts, the state of the land register, the contractor’s rights, and the purchaser’s legal position must be assessed together. The decision record of the Court of Cassation that has come to attention should likewise be followed as a development highlighting the importance of examining disputes in this area in light of the circumstances of the particular case and the applicable rules of law.