What should foreign investors in Turkey do when their real estate projects are not delivered on time? In one of our previous articles, our topic was the rights of foreign real estate investors in Turkey vis-à-vis real estate contractors, in case the contractors did not deliver real estate projects as they had promised. Yet another option - unfortunately that is no longer a rare case these days - is not to deliver the project at all!
Recently, we have become an increasing number of customers who give us such cases. This is mostly due to the fact that while a number of Turkish real estate developers (including some well-known giants) have been overly expanding, launching a large number of projects that were well above their capital stock capabilities, they faced the recent severe economic crisis The rapid decline in market demand.
Below I will provide some general legal answers to the following questions: How can investors secure their rights if real estate projects are not delivered on time? What happens to premiums already paid up to thousands of dollars?
First of all, to avoid any problem as such, it is of course important to work with a trusted broker or real estate agency. If it is difficult to find a trusted person, it is highly recommended to work with a lawyer from the outset.
On the other hand, investors or their brokers must conduct a preliminary search in the market for the real estate developer whose investment will be undertaken. This research should revolve around questions such as whether they are currently in a debt crisis or whether they have failed to hand over their projects in previous cases.
Once an investor has made the decision to invest in a project with a company, he or she must be very careful about the terms of the contract. In particular, penal provisions should be fairly protective for the investor.
If the project is not delivered on time, the investor should not hesitate to take immediate action against the developer. Apart from some cases in which companies have reasonable excuses for delays, many companies are usually unable - or unwilling to complete their projects on time - once they start to request delays.
Therefore, these companies should be given a feeling that investors are fully aware of their rights and that they are prepared to appear in court if necessary. Some deceptive words from real estate companies should not confuse investors about claiming their rights.
Going to court and filing a lawsuit is usually a complicated and costly way for investors, so they may be tempted to hesitate to claim their rights, preferring to wait as much as possible.
But are these fears completely wrong? honestly no. It may take a long time to get results from the courts (mainly because the disputing party usually appeals upwards and then the Supreme Court), and during the litigation there are some expenditures such as legal counsel fees or court fees.
Enforcing court decisions is also sometimes difficult. However, is there a better option for investors than to claim their rights in court? Mostly, no.
Therefore, it is better that investors do not waste time taking legal action. This is particularly because if there is more than one case (which means more than one plaintiff) against a company, whoever wins them in his first case will have a chance to execute the court's decisions first.
In other words, creditors who win their cases against a company line up to collect their compensation. In addition, even if it takes time to reach a successful outcome, the amount of penalty fees and default interest also increases as the litigation period increases.
Therefore, investors' losses will not only be compensated, but additional fines will be paid for unnecessary delays. In conclusion, recourse to the court seems to be a troublesome way for the investor, but it is usually the only opportunity to effectively secure rights.