Construction Contracts in Return for Land Share – Lawsuit for Permission to Perform in One’s Own Name

CONSTRUCTION CONTRACTS IN RETURN FOR LAND SHARE

LAWSUIT FOR PERMISSION TO PERFORM IN ONE’S OWN NAME

Introduction

In construction contracts in return for land share, landowners undertake to transfer a certain portion of their land shares to the contractor; in return, the contractor undertakes to construct the independent units in accordance with the contract and the project and to deliver them to the landowners. In the event that the parties fail to fulfill 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, 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, to perform the obligation personally or through a third party at the debtor’s expense. Article 113 of the Turkish Code of Obligations states:

“If an obligation to do is not performed by the debtor, the creditor may request permission for the performance of the obligation by himself or by another person at the debtor’s expense; the right to claim any damages is reserved.

A debtor who acts in breach of an obligation not to do is obliged to compensate for the damage caused by such breach.

The creditor may also request the removal of the situation contrary to the obligation or to be authorized to do so himself at the debtor’s expense.”

This provision provides the creditor with the opportunity to keep the contract in force and to ensure the performance of the obligation. Performance in one’s own name is an effective legal instrument that may be used to protect the creditor’s rights and to ensure the completion of the obligation in cases of non-performance.

Conditions for Granting Permission to Perform in One’s Own Name

For a request for permission to perform in one’s own name to be granted, certain conditions must be met:

• 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 the incomplete or defective works,
• It must be feasible to complete the construction in accordance with the permit and the project.

Even after permission to perform 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. In this context, if the contract has been terminated prior to filing the lawsuit for permission to perform in one’s own name, the court will dismiss the case.

Situations such as failure to complete the construction, construction not being carried out in accordance with the contract, permit, or conditions agreed upon by the parties, defective performance, or failure to obtain the building occupancy permit (habitation permit) even if the construction is completed are all considered as non-performance by the contractor. In addition, although definite time periods are generally stipulated in construction contracts in return for land share in practice, where the periods are not specified or have not yet expired but the work has been defectively performed, it is also necessary to put the contractor in default by notice.

Parties in the Lawsuit for Permission to Perform 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 the landowners and the contractor, as these contracts impose obligations on both parties.

Landowners may request performance in one’s own name in cases where the contractor is in default or has carried out incomplete/defective works. For example, if the contractor has not completed the construction in accordance with the contract or has altered the project without completion, the landowner may request performance in one’s own name pursuant to Article 113 of the Turkish Code of Obligations. In this case, the creditor may request the completion of the incomplete works and the imposition of the costs on the debtor. In addition, together with permission for performance in one’s own name, the landowner may also request compensation for damages suffered from the court.

It should also be noted that third parties who are not landowners and who have subsequently acquired ownership of independent units do not have the right to request permission to perform in one’s own name.

Likewise, the contractor may also request performance in one’s own name if the landowner fails to fulfill his obligations. For example, if the landowner unjustifiably revokes the power of attorney granted to the contractor or prevents the continuation of construction, the contractor may request performance in one’s own name under Article 113 of the Turkish Code of Obligations. This provides the necessary legal basis for the contractor to perform his obligation and safeguards the continuation of the contract.

Procedure and Matters to Be Considered in the Lawsuit for Performance in One’s Own Name

For permission to perform in one’s own name, an application must be made to the competent and authorized civil court of first instance. The claimant is the party requesting performance in one’s own name, and the defendant is the party that has failed to perform its obligation. The court determines the incomplete works, calculates the costs and expenses, and imposes them on the debtor.

In practice, two possibilities are considered regarding the coverage of these costs. These are the completion of the incomplete and/or defective works using the proceeds obtained from the sale of independent units, or the deposit of the costs by the contractor. Indeed, during the proceedings, the claimant, namely the landowners, may request authorization for the sale of the independent units falling to the contractor’s share. The proceeds obtained from such sales are used to have the remaining obligations performed by third parties. After offsetting the expenses, the remaining amount will give rise to a receivable right for the contractor.

Another possibility is, as stated above, the deposit of the costs with the court by the contractor. Courts generally prioritize the deposit of the costs rather than the sale of the independent units belonging to the contractor. However, if the costs 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 units upon the request of the landowners.

Legal Consequences of the Request for Performance in One’s Own Name

With a decision permitting performance in one’s own name, the creditor may complete the incomplete or defective works personally 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, the costs and risks are borne by the debtor. The Court of Cassation states that it is not necessary for all landowners to file the lawsuit for performance in one’s own name, and that each landowner has the right to file such a lawsuit. The practice of performance in one’s own name ensures the effectiveness of the contract while remedying the grievances of the parties.

Conclusion and Evaluation

In construction contracts in return for land share, performance in one’s own name functions as a central legal instrument in resolving performance-related issues. Article 113 of the Turkish Code of Obligations grants the creditor the opportunity to perform the obligation against the non-performing party, while observing the balance of legal interests. Performance in one’s own name keeps the contract alive, protects the rights of the parties, and remedies grievances.

In practice, when the process of performance in one’s own name is conducted meticulously, the legal security between the parties is enhanced. In particular, the remediation of incomplete or defective works and the imposition of costs on the debtor enable the effective protection of contractual rights for both landowners and contractors. Moreover, the scope of the request for performance in one’s own name is not limited solely to the completion of the work, but may also include compensation for damages suffered by the parties, remediation of incomplete works, and permissions related to the financing of such works. In this context, 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