The Flat-for-Land Construction Agreement and the Contractor's Share

A flat-for-land (kat karşılığı) construction agreement is the contract under which landowners transfer part of their land to a contractor in exchange for the contractor building and delivering finished units. It is the most common financing method for urban transformation.

What does the sharing ratio depend on?

• The land's value: The more valuable the land share, the higher the owner's share.
• Zoning entitlement: A higher floor area ratio yields more units in the new building, which raises the owner's share.
• Construction cost: As costs rise, the contractor's share rises.
• Market conditions: In periods when sales slow down, contractors ask for a higher share.

In practice, the owner's share tends to be higher in high-value areas and the contractor's share higher in lower-value areas. When evaluating the ratio, look not only at the percentage but at the size and specification of the unit you will receive.

What the agreement should include

• Which independent units will belong to whom (with floor, frontage and square meters)
• The delivery period and a daily/monthly penalty for delay
• The contractor's guarantee (a bank letter of guarantee or a mortgage)
• Responsibility for the permit, occupancy permit and establishing condominium ownership
• A materials and workmanship specification
• Rent assistance or temporary accommodation support
• The parties' rights if the agreement is terminated
• How taxes and expenses are shared

Risk-reducing measures for owners

• Tie the title deed transfer to construction progress; do not transfer your entire land share up front.
• Have the agreement drawn up at a notary and annotated on the title deed.
• Look into the contractor's past projects and financial standing.
• Appoint a shared technical advisor or lawyer among the owners making the joint decision.