Action for Authorization of Performance in One’s Own Name in Construction Contracts in Return for Land Share

ACTION FOR AUTHORIZATION OF PERFORMANCE IN ONE’S OWN NAME IN CONSTRUCTION CONTRACTS IN RETURN FOR LAND SHARE

Introduction

In construction contracts concluded in return for land share, landowners undertake to transfer a certain portion of their land shares to the contractor, while the contractor undertakes to construct the independent sections in accordance with the contract and the project and to deliver them to the landowners. In the event that the parties fail to perform their respective obligations, one of the statutory rights available to the parties is the institution of “performance in one’s own name (nama ifa)” regulated under the Turkish Code of Obligations No. 6098, which enables the creditor, in cases of non-performance of the obligation, to perform the obligation personally or through a third party.

The Concept of Performance in One’s Own Name, Its Legal Basis and Nature

Performance in one’s own name is a legal institution that allows the creditor, in cases where the debtor fails to perform an obligation to do or not to do something, to perform the obligation personally or through a third party at the debtor’s expense. Article 113 of the Turkish Code of Obligations states as follows:
“If an obligation to do is not performed by the debtor, the creditor may request authorization for the obligation to be performed by himself or by another person at the debtor’s expense; any right to claim damages is reserved. A debtor who acts in violation of an obligation not to do is obliged to compensate the damage caused by such violation. The creditor may also request the removal of the situation contrary to the obligation or authorization to do so at the debtor’s expense.”
This provision enables the creditor to keep the contract in force and to ensure performance of the obligation. Performance in one’s own name is an effective legal tool that may be used to protect the rights of the creditor and to ensure completion of the obligation in cases of non-performance.

Conditions for Granting Authorization for Performance in One’s Own Name

Certain conditions must be met for a request for authorization of performance in one’s own name to be granted:
The contract must still be valid and in force,
The construction must be carried out in compliance with zoning legislation,
The debtor must have failed to perform an obligation to do or not to do,
The request for performance in one’s own name must comply with the principle of good faith,
It must be possible and necessary to remedy incomplete or defective works,
Completion of the construction in accordance with the permit and the project must be achievable.
Even after authorization for performance in one’s own name is granted, the contract remains valid. This is because, even if the debtor’s obligations are performed by a third party or directly by the landowners within the scope of performance in one’s own name, the contractor’s responsibility to complete the construction continues. Accordingly, if the contract has been terminated prior to the filing of the action for authorization of performance in one’s own name, the court shall dismiss the case.
Situations such as failure to complete the construction, construction not being carried out in accordance with the contract, permit or agreed conditions, defective performance, or failure to obtain the building use permit (occupancy permit) even if the construction is completed are all considered as non-performance of the contractor’s obligation. Moreover, although specific deadlines are usually stipulated in construction contracts in return for land share, in cases where deadlines are not specified or have not yet expired but the work has been defectively performed, the contractor must also be put in default by way of a formal notice.

Parties in Actions for Authorization of Performance in One’s Own Name

In construction contracts in return for land share, a request for performance in one’s own name may be asserted by both landowners and contractors, as these contracts impose obligations on both parties.
Landowners may request authorization for performance in one’s own name in cases where the contractor is in default or has performed incomplete or defective work. For example, if the contractor has failed to complete the construction in accordance with the contract or has altered the project before completion, the landowner may request authorization for performance in one’s own name pursuant to Article 113 of the Turkish Code of Obligations. In this case, the creditor may request completion of the incomplete works and imposition of the expenses on the debtor. In addition, together with authorization for performance in one’s own name, the landowner may also claim compensation for damages suffered.
It should also be noted that third parties who are not landowners but have subsequently acquired ownership of independent sections do not have the right to request authorization for performance in one’s own name.
Likewise, the contractor may also request authorization for performance in one’s own name in cases where the landowner fails to fulfill his obligations. For instance, if the landowner unjustifiably revokes the power of attorney granted to the contractor or prevents continuation of the construction, the contractor may request authorization for performance in one’s own name under Article 113 of the Turkish Code of Obligations. This provides the legal basis necessary for the contractor to fulfill his obligation and secures the continuation of the contract.

Procedure and Points to Consider in Actions for Authorization of Performance in One’s Own Name

An application must be filed before the competent civil court of first instance to obtain authorization for performance in one’s own name. The claimant is the party requesting authorization for performance in one’s own name, and the defendant is the party who has failed to perform its obligation. The court determines the incomplete works, calculates the expenses and costs, and imposes them on the debtor.
In practice, two alternatives are considered for covering these expenses. These are completion of the incomplete and/or defective works through the proceeds obtained from the sale of independent sections, or depositing the expenses by the contractor. Indeed, during the proceedings, the claimant, namely the landowners, may request authorization for the sale of the independent sections allocated to the contractor. The proceeds obtained from such sale are then used to have the incomplete obligations performed by a third party. After offsetting the expenses, any remaining amount will give rise to a receivable in favor of the contractor.
The other alternative, as stated above, is the deposit of the expenses with the court by the contractor. Courts generally prefer the deposit of expenses rather than the sale of the contractor’s independent sections. However, if the expenses are not deposited by the contractor or if it is concluded that they will not be covered, the court may grant authorization for the sale of the independent sections upon the request of the landowners.

Legal Consequences of Authorization for Performance in One’s Own Name

With a decision granting authorization for performance in one’s own name, the creditor may personally complete the incomplete or defective works or have them completed by a third party. The expenses incurred in this process are imposed on the debtor. Pursuant to Article 113 of the Turkish Code of Obligations, expenses and risks are borne by the debtor. The Court of Cassation states that it is not necessary for all landowners to jointly file an action for performance in one’s own name, and that each landowner has an individual right of action. The institution of performance in one’s own name ensures elimination of grievances while preserving the effectiveness of the contract.

Conclusion and Evaluation

In construction contracts in return for land share, performance in one’s own name functions as a central legal tool in resolving performance-related issues. Article 113 of the Turkish Code of Obligations grants the creditor the opportunity to perform the obligation against a non-performing party while maintaining the balance of legal interests. Performance in one’s own name keeps the contract in force, protects the rights of the parties, and remedies grievances.
In practice, when the process of performance in one’s own name is carried out meticulously, legal certainty between the parties is enhanced. In particular, remedying incomplete or defective works and imposing expenses on the debtor enable effective protection of contractual rights for both landowners and contractors. Moreover, the scope of a request for performance in one’s own name is not limited solely to completion of the work, but may also include compensation for damages suffered by the parties, remedying incomplete works, and authorizations regarding financing of such works. In this respect, Article 113 of the Turkish Code of Obligations grants broad powers to the creditor while defining the responsibilities incumbent upon the debtor within a legal framework.

Yours sincerely,

Atabay Law Office