The Regulation Amending the Regulation Implementing Law No. 6306 ("Regulation") was published in the Official Gazette dated 19 October 2019 and numbered 30923. The Regulation introduced novelties to various aspects of the urban transformation practice and delineated the amendments made to Law No. 6306 on the Transformation of Areas Under the Risk of Disasters ("Law") on 10 July 2019. Some of the important amendments are as follows:

1. Contractors with temporary group authorization numbers will now be able to take part in urban transformation practices.

2. Before the Regulation, all contractors undertaking construction work on parcels of land that involved risky buildings had to deposit a security payment of 10% of the approximate cost of the building to the administration before obtaining a construction permit. The Regulation now exempts public entities from this obligation.

3. With the amendments made to the Law on 10 July 2019, in cases where construction that falls within the scope of urban transformation fails to commence for 1 (one) year or discontinues at the fault of the contractor, land owners were conferred the right to terminate the contract executed with the contractor by filing an application to the administration.

The Regulation clarifies the following points with respect to the abovementioned process:

  • For land owners to terminate a contract executed with a contractor due to failure to start construction for 1 (one) year, the following conditions must be fulfilled:

i. If there are any contractual obligations that must to be performed before construction commences, such actions must have been performed;

ii. There must not be any court decisions, administrative decisions or practices, or similar valid grounds preventing commencement of the construction;

iii. Failure to start the construction must be due to factors caused by the contractor; and

iv. The landowners who hold at least two thirds of the land must decide to take action.

  • In order for the landowners to terminate the contract because of the discontinuation of the construction, they must prove with solid information and documentation that the construction stopped and did not resume for at least 6 (six) months although there is a team and equipment capable of completing the project.
  • If the administration examines the application and finds it to sufficiently prove discontinuation, the contractor will be given a period of 15 (fifteen) days to submit its defense.
  • Upon receipt of the defense, if the administration still finds the discontinuation wrongful, the contractor will be notified and given a period of 30 (thirty) days to either begin construction or to continue working with a team and equipment capable of completing the project. If they do not commence construction within the 30 (thirty) day period, the contract will be terminated.
  • At the end of the 30 (thirty) day period, the administration will conduct an on-site examination. If the administration determines that the contactor has not begun construction or continued working with the team and equipment capable of completing the project, the contract will be terminated ex officio.
  • The general terms of the relevant law will apply to work performed until the date of termination, transfer of the land shares, payments made, and other matters. The contractor cannot reclaim rental aid made to the beneficiaries as per the Law until the date of termination.