Construction-for-land-share agreements are one of the most common real estate development models in Türkiye, particularly in urban transformation areas and large-scale residential projects. From a contractor’s standpoint, this structure provides a major advantage: the ability to develop a project without paying upfront land acquisition costs. However, these projects also involve significant legal exposure if the contract is not properly drafted and the legal process is not professionally managed.
At Bayraktar Attorneys, we regularly represent contractors, developers, and investors in construction-for-land-share projects across Türkiye. This guide explains how these agreements work, what risks contractors face, and how to structure a contractor-friendly agreement that protects the contractor’s land share rights through a clear legal framework.
What Is a Construction-for-Land-Share Agreement?
A construction-for-land-share agreement is a contractual model where the landowner contributes the land and the contractor undertakes construction in exchange for a predetermined share of the completed independent units. This is generally referred to as “arsa payı karşılığı inşaat” in Turkish practice, but in international terminology it is best explained as a land share-based development agreement.
Unlike simple construction contracts, these agreements involve property rights, title transfer obligations, and technical construction performance simultaneously. For that reason, the agreement must be designed not only as a commercial deal but also as a legally enforceable structure that secures the contractor’s rights throughout the legal process.
Why Contractors Prefer Land Share Projects in Türkiye
The main commercial attraction of the land share model is financial efficiency. Contractors can launch projects without purchasing land and can allocate capital to construction, marketing, and operational expenses instead. This model is particularly valuable in high-cost urban zones where land prices would otherwise prevent development opportunities.
Additionally, land share projects allow contractors to scale faster. By avoiding land acquisition expenses, contractors can manage multiple developments at the same time, which increases profitability and market share. However, the same scalability also increases risk exposure if the contract structure is weak or if the legal process is delayed due to title or zoning issues.
Key Legal Risks for Contractors
The greatest risks in construction-for-land-share projects usually arise from legal uncertainty rather than technical construction problems. Contractors often face disputes due to unclear title transfer mechanisms, zoning-related limitations, delayed permits, and disagreements over the allocation of units under the land share structure.
A contractor may invest heavily into construction only to encounter legal obstacles at the end of the project, such as refusal of title transfer, disputes over unit allocation, or enforcement challenges. Therefore, risk prevention begins at the contract drafting stage and continues throughout the legal process.
Title Transfer and Land Share Security
Title transfer is one of the most critical elements of these agreements. If the contractor’s land share rights are not secured contractually, the contractor may become financially dependent on the landowner’s cooperation. In practice, many disputes arise when landowners delay title transfer, refuse to sign documents, or attempt to renegotiate after construction progresses.
A contractor-friendly contract should regulate title transfer timing, conditions, and security tools. The agreement must clearly state whether transfers will occur at the beginning, progressively through construction milestones, or only after completion. A properly designed legal process often includes legal safeguards such as annotations, staged title transfers, or other mechanisms that ensure the contractor’s rights remain enforceable.
Zoning, Permits, and Municipality-Related Risks
Even a well-negotiated land share agreement may fail commercially if zoning conditions do not allow the intended project. Contractors sometimes sign agreements based on assumptions regarding floor area ratio, building height, or unit count, but municipal practices and zoning restrictions may reduce construction volume significantly.
If permits are delayed or the project must be redesigned due to zoning limitations, contractors may suffer substantial financial loss. For this reason, zoning and permit feasibility checks must be part of the pre-contract legal process. The agreement should also include clauses allocating responsibility for zoning-related losses and delays, preventing unfair liability exposure for the contractor.
Land Share Allocation: The Most Common Dispute Area
Many conflicts arise not because parties disagree on the percentage split, but because the agreement fails to define how the land share will be applied in practice. Contractors may later face disputes regarding which units belong to them, whether premium units are distributed fairly, and how differences in size, floor level, or view value will be compensated.
To avoid such disputes, the agreement must include a clear distribution mechanism, ideally supported by architectural plans and unit allocation schedules. The more transparent the land share structure is, the lower the risk of litigation during the final delivery stage.
Construction Timeline, Delivery, and Acceptance Procedures
Contractors often face legal pressure through delay penalties and delivery disputes. Many agreements contain strict deadlines but fail to define what constitutes valid delay, what events qualify as force majeure, and how time extensions will be granted. This creates serious risk for contractors, particularly in projects affected by permit delays or economic conditions.
Delivery and acceptance procedures must also be legally defined. If acceptance is not regulated properly, the landowner may refuse handover or claim incomplete performance. A professional legal process includes detailed acceptance protocols, defect notice procedures, correction periods, and final delivery documentation that protects the contractor against arbitrary claims.
Cost Inflation and Economic Adjustment Clauses
Türkiye’s construction sector is sensitive to inflation, currency volatility, and sudden price increases in materials and labor. If the agreement does not include cost adjustment mechanisms, contractors may become trapped in financially unsustainable obligations, even when they perform in good faith.
For this reason, contractors should ensure that the agreement includes clear rules on extraordinary economic changes. A properly structured contract reduces the risk of disputes and prevents contractors from facing project collapse due to market conditions outside their control.
The Legal Process in Land Share Projects
The legal process in a land share project begins before the contract is signed. Contractors should treat the early stage as a due diligence phase involving title review, zoning feasibility, and legal risk mapping. After signature, the legal process continues through permit applications, construction compliance, staged title transfer procedures, and delivery documentation.
If disputes arise, the contractor’s ability to enforce rights depends largely on how the contract was drafted. A professionally structured legal process minimizes litigation risk, strengthens negotiation power, and provides enforceable legal remedies in case of landowner breach.
How Bayraktar Attorneys Supports Contractors and Developers
At Bayraktar Attorneys, we provide end-to-end legal support for construction-for-land-share projects in Türkiye. Our services include contract drafting and negotiation, title and zoning due diligence, structuring land share security mechanisms, and managing disputes arising from delivery, delays, title transfer, and allocation conflicts.
Because these projects involve both real estate law and construction law, contractor success depends on legal protection as much as technical execution. A clear land share structure and a properly managed legal process are essential to protect the contractor’s investment and ensure predictable project outcomes.
Recently Added Blogs
