Flat-for-Land Construction Agreements in Turkey (Kat Karşılığı): Ratios and Key Clauses
- The law does not set the sharing ratio; it is negotiated according to location, zoning rights, construction cost and market conditions.
- Because it involves transferring land shares, a flat-for-land agreement should be executed before a notary; an ordinary written contract carries serious risk.
- Transferring the contractor's shares in stages linked to construction progress is the clause that protects landowners most.
- The specification schedule, delivery date, delay compensation and guarantee should all be annexed to the contract.
In a Turkish flat-for-land (kat karşılığı) construction agreement, the landowner contributes the land and the contractor contributes labour and capital; the independent units in the new building are then shared at an agreed ratio. Much of Istanbul's residential and urban transformation construction is delivered this way. Drawing on ÇET Yapı's experience in real estate development, here are the agreement's most critical points.
How is the sharing ratio set?
The law does not set the ratio; the parties agree freely. The main factors are:
- Location and sale value: in high-value areas the landowner's share increases.
- Zoning rights (floor-area ratio): the more buildable area on the same plot, the more the balance shifts.
- Construction cost: basements/parking, ground improvement and facade systems affect the contractor's share.
- Project size and duration: financing cost is factored in on long projects.
In practice ratios vary widely; a percentage only means something if offers are prepared on the same feasibility study. Comparing ratios is misleading if gross/net areas, flat sizes or specifications differ.
Form requirement: why notarisation matters
Because a flat-for-land agreement transfers land shares to the contractor, it should be executed in official form before a notary. Ordinary written contracts or "handshake" deals risk invalidity with respect to the property transfer. The specification schedule, preliminary design and flat allocation list should be annexed to the notarised agreement.
10 clauses every agreement needs
- Parties and parcel details (block, parcel, title records)
- Project definition: number of floors and units, gross/net areas
- Flat allocation list: which unit belongs to whom
- Specification schedule: with brands and grades
- Start and delivery dates: clear periods linked to the permit date
- Delay compensation / rent: an amount per month of delay
- Staged title transfer: contractor's shares transferred as construction progresses
- Guarantee: building completion insurance, bank letter of guarantee, etc.
- Cost allocation: permit, fees, building inspection, utility connections and taxes
- Termination and penalty: what happens if works stop
Three practices that protect landowners
- Do not transfer shares up front: staged transfer tied to foundations, shell and occupancy spreads the risk of abandonment.
- Tie delivery to the occupancy permit: define "delivery" as obtaining the occupancy permit and fixing defects.
- Inspect the contractor's track record on site: visit completed buildings and speak to former landowners.
A note for buyers
If you buy an off-plan unit from the contractor's share, in projects of 30 or more units the seller must provide building completion insurance or an alternative guarantee before selling; delivery may not exceed 48 months from the contract and you have a 14-day right of withdrawal.
ÇET Yapı experience
ÇET Yapı's İnsaya Residences in Merter were developed on a 2,332 m² plot as 40 homes and 2 shops, with 10,494 m² of total construction area completed in 25 months. Contact us to assess your land's potential together.
This article is for general information only; always obtain legal advice before signing.
Frequently Asked Questions
What percentage does the landowner get in a flat-for-land deal?
The law does not fix it. The parties agree freely based on location, zoning rights, construction cost, sale prices and project size. When comparing offers, consider net area, specification grade and delivery time together with the ratio.
Must a flat-for-land agreement be notarised in Turkey?
Yes — because it includes a promise to transfer land shares, it should be executed in official form before a notary. Agreements not in this form risk being invalid as regards the property transfer.
When should land shares be transferred to the contractor?
The safest approach is to transfer the contractor's shares in stages tied to construction milestones such as foundations, shell completion and occupancy permit. Transferring all shares up front leaves the landowner unprotected if works stop.
What happens if the contractor is late?
If the contract sets delay compensation or rent, the contractor pays it for each month of delay. A termination right after a certain delay should also be written into the contract.
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