Turkey: Leases Of Residential And Roofed Workplaces Within The Frame Of The New Turkish Code Of Obligations

Last Updated: 4 May 2011

The Turkish Code of Obligations numbered 6098 ("TCO") has been published in the official gazette dated 04.02.2011 and numbered 27836. By the TCO which will enter into force on 01.07.2012, important issues are amended with respect to lease agreements.

The TCO annuls the Code of Obligations ("CO") numbered 818 and the Code of the Lease of Immovables numbered 6570. In the new TCO, articles with respect to lease agreements are stipulated in the 2nd part, 4th section, with the title "Private Debt Obligations". Also, (i) definition of lease agreement, (ii) duration of the lease, (iii) obligation of the lessor, (iv) obligations of the lessee, (v) private conditions, (vi) termination of the agreement, (vii) returning of the leased property and (viii) lessor's right of lien are regulated under the "General Provisions", and leases of residential and roofed workplaces are regulated under article 339 and the following articles.

The TCO regulates leasing of all residential and roofed workplaces under article 339 without making any distinction with respect to the place of the leased property unlike article 1 of the Code numbered 6570. Also, movables left in the possession of the lessee will be subject to the same provisions. In addition, unlike Code numbered 6570, the lease of immovables for a term of 6 months or less are subject to temporary use due to their nature and are not within the scope of the TCO. On the other hand, the lease agreements made by governmental institutions and organizations will be subject to the same provisions despite their own principles and procedures, and thus article 14 of the Code numbered 6570 is accepted.

TCO article 340 addresses connected agreements aiming to protect the lessee which were not regulated in the previous code. It is stipulated that the formation or continuation of the lease agreement with respect to residential and roofed workplaces will not be connected to any obligation which is against the lessee and not in relation to the lease agreement, and thus such agreements connected with leases will be deemed void.

"The Cost of Usage" stipulated under article 341 regulates that the costs of usage such as heating, lighting, and water shall be borne by the lessee unless it is stated otherwise in the agreement or it is contrary to local practice. In addition, it is obligatory to submit a copy of the document proving such costs to the other party upon request.

Article 342 in the TCO has made a new arrangement in order to protect the lessee since the lessors in practice obtain deposits or other guarantees which are not within the scope of the rental. In this respect, requesting a guarantee is permissible, but the code restricts such requests. It is stated that the amount of a guarantee cannot exceed three months' rent. Additionally, if the guarantee is given in cash, it must be deposited into a bank account and cannot be withdrawn from the bank without the prior approval of the lessor. If the guarantee is a negotiable instrument, it must be deposited in a bank and the bank will not return such guarantees unless both parties approve the return or an execution proceeding or a court award becomes final and binding. The bank may return the guarantee upon the request of the lessee if the lessor informs the bank in writing within three months following the termination of the lease agreement that he or she has initiated a lawsuit or an execution proceeding regarding the lease agreement.

Article 343 of the TCO stipulates that amendments against the lessee, excluding rent amounts, cannot be arranged in the lease agreement after the lease agreement has been signed. Thus, by providing the opportunity to amend the rent upon renewal of the agreement or the extension of the term, an exception is made to the restriction of amendment against the lessee.

In article 344 of the TCO, rules for determining the rent are regulated, and thus a legal gap is filled in this respect. In the first sub-paragraph of the article, it is regulated that the validity of the agreement between the parties in relation to a rent increase rate depends on the increase's not exceeding the "producer price index". The 2nd sub-paragraph of the article states that in the absence of any agreement with respect to a rent increase, the judge will determine the rent for the new lease period taking into consideration the condition of the leased property complying with equity, and "the producer price index" will be accepted as the maximum increase allowed. On the other hand, the third sub-paragraph of the article states that the judge will determine the rent, whether there is an agreement between the parties or not, by taking into consideration the producer price index, the condition of the leased property, comparable rentals, and equity principles if the lease period is more than five years or the lease agreement is renewed after five years in every fifth year. However, the producer price index is not accepted as the maximum limit for a rent increase. Additionally, the rent determined for every five-year period in this manner may be amended pursuant to sub- paragraphs one and two in the following years.

If the rent is fixed in a foreign currency by the parties, article 344/4 of the TCO regulates that there is a limitation on any increase in rent. Accordingly, no amendment may be made as to the rent before five years. The rent will be determined pursuant to sub-paragraph 3 of the article taking into consideration the monetary value of the foreign currency after five years have passed.

In article 345 of the TCO, the limitation period and the impact of any award via a lawsuit initiated for determining the rent are regulated. It is accepted that the lawsuit for determining the rent may be initiated at any time. However, the new rent determined by the court will bind the lessee beginning from the new lease period provided that the lawsuit is initiated at least 30 days before the new lease period, or if the lessor has given notice with regard to an increase in rent in writing to the lessee within such period, it may be initiated until the end of the new lease period. If there is an article in the lease agreement stipulating a rent increase for the new lease period, the rent determined by the court in a lawsuit initiated before the end of the new lease period will also be valid beginning with the new lease period.

In article 346 of the TCO, a new provision is stipulated under the title "restriction of provisions against the lessee". Accordingly, there is no payment obligation upon the lessee other than rent and ancillary costs, and agreements arranging penalty or acceleration clauses in case of a failure to pay the rent on time, which are very common in practice, are void.

The termination of an agreement for residential and roofed workplace is regulated under article 347 and following. It is stipulated under article 347 that if the lessee has not given notice at least fifteen days prior to the end of an agreement with a definite term, then the agreement is deemed to be renewed for a period of one year with the same conditions. Also, the lessor may not terminate the agreement based on the fact that the term of the agreement has expired. However, the lessor may terminate an agreement for any reason upon the end of ten years of renewals provided that the lessor has given notice at least three months prior to the end of the renewal year. Agreements with indefinite terms may be terminated by the lessee at any time and by the lessor, upon expiry of ten years, pursuant to the termination notice given in accordance with the general terms.

Pursuant to article 348 of the TCO, the termination notice for the lease of residential and roofed workplace may only be valid if it is made in writing.

The validity conditions of the termination of lease agreements related to family residences are regulated under article 349. Accordingly, the lessee is not entitled to terminate the lease agreement if the immovable is leased as a family residence without the consent of the spouse. However, if it is not possible to obtain such consent or the spouse refrains from giving such consent without a just reason, then the lessee may demand from the court a decision on the issue. If the spouse, who is not the lessee, informs the lessor and becomes a party to the lease agreement, then the lessor must inform the lessee and the spouse respectively of any termination notice and payment terms with respect to a termination notice.

The reasons for termination of lease agreements with respect to residential and roofed workplaces by taking a legal action are determined separately for the lessor and the lessee. The reasons originating from a lessor are regulated under article 350 of the TCO which is titled "requirement, re-construction and development" and under article 351 which is titled "requirement of the new owner". On the other hand, the reasons originating from a lessee are regulated under article 352 of the TCO. Pursuant to this article, provided that some other conditions are also met, (i) an evacuation commitment, (ii) two justified notices and (iii) lessee or his or her spouse having another residence within the same municipal borders suitable for habiattion are accepted as reasons originating from a lessee.

Article 352 of the TCO stipulates that the time period for filing a legal action will be extended until the end of the lease period provided that at the latest within the time period envisaged for filing a legal action the lessor sends to the lessee a notice of action in writing.

In article 354, it is stated that the conditions with respect to termination of a lease agreement by taking legal action cannot be amended against the lessee.

Article 355 envisages the "prohibition for leasing to another person" as it is also stipulated in the Code numbered 6570. It is stated that in case of breaching this prohibition, an amount not less than the one-year's rent paid within the previous lease period will be paid to the lessee. The criminal sanction stipulated in Code numbered 6570 is not envisaged in the TCO.

In article 356, the continuance of a lease agreement in case of the death of the lessee is regulated.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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