The "Usufruct Lease" is regulated under the Turkish
Code of Obligations ("TCO") No. 6098 between Articles 357
The usufruct lease is a contract whereby the lessor undertakes
to grant the lessee the right of use of a productive object and the
benefit of its fruits or proceeds in exchange for rent.
Unless there is a special provision, general provisions on lease contracts shall be applicable to the usufruct lease.
If a usufruct lease contract includes equipment, animals, the
objects transferred or the goods stocked, the parties are obliged
to assess the values of such items together, record them and
provide a copy of the signed inventory to the other party.
Articles 360 and 361 of the TCO regulate the obligations of the
lessor. Pursuant to these articles, the lessor is required to
deliver the leased object including the leased movable property, if
there is any, to the lessee in a condition fit for its designated
use and operation and to maintain it in that condition throughout
the period of the contract. Moreover, the lessor is obliged to
carry out major repairs as required on the object during the lease
term at his own expense and as soon as the lessee has informed him
of the need for such repairs.
As per Article 362 of the TCO, the tenant or lessee must pay the
rent and the accessory charges at the end of each month and at the
latest upon expiry of the lease, unless otherwise stipulated under
the contract or required by local custom. In the event of
non-payment of the rent that has become due upon delivery of the
leased or in the event of non-payment of the accessory charges, the
lessor may set a written time limit of at least 60 days for payment
and notify the lessee that in the event of nonpayment he will
terminate the lease upon expiry of that time limit.
Pursuant to Article 363 of the TCO, the lessee may request a
reduction of the rent in extraordinary circumstances. According to
the said article, the lessee may require the lessor to reduce the
rent proportionately where the usual proceeds of an agricultural
land decreases due to an extraordinary disaster or natural events.
Initial waiver of such right shall be valid only if the possibility
of occurrence of such circumstances have been taken into account in
determining the rental amount or if the damage arising is covered
Along with the obligation to pay the rent, the lessee has an
obligation to use, operate and maintain the leased object. The
lessee is obliged to use the leased object in accordance with its
intended use and operate it with due care and in particular must
ensure that its long-term productivity is sustained. The lessee
must not change the operational procedure of the leased object in a
manner that may be observed after the expiry of the lease period
without the consent of the lessor. Moreover, the lessee must carry
out the normal maintenance of the leased object. In accordance with
local custom, he must carry out minor repairs and replace
inexpensive equipment and tools which have become useless as a
result of age or wear and tear.
Article 366 of the TCO regulates the prohibition to sub-lease
and transfer the right of use. In accordance with this article, the
lessee may not sub-let all or part of the leased object or transfer
the right of use or operation without the lessor's consent.
However, the lessee may lease some parts of the leased object
provided that it does not require any change that may cause damage
to the lessor. The rules regulating sub-lease shall be applicable
by analogy to the lease contracts concluded between the lessee and
the third party.
The circumstances that could bring an end to the usufruct lease
contract are; the (i) expiry of time, (ii) notice of termination
and (iii) extraordinary termination.
In principle, the lease contract automatically comes to an end
upon expiry of the period where there is a usufruct lease contract
for a limited duration. However, if the lease is tacitly continued,
the lease contract shall be deemed renewed for an additional year
unless otherwise agreed. The renewed lease contract may be
terminated at the end of each lease year in compliance with the
legal notification period.
Notification is required for the termination of a usufruct lease
contract concluded for an indefinite period. The parties may
terminate the contract in compliance with the notice period of at
least six months, except where the notice period has been otherwise
agreed under the contract or determined by local customs. Unless
otherwise stipulated in a contract, a termination notice may be
served in spring and autumn for usufruct leases on agricultural
lands in accordance with the local customs. A termination
notice may be served at any time for other usufruct leases.
Extraordinary termination may be possible in the event of (i) a material cause, (ii) bankruptcy of the lessee or (iii) death of the lessee.
Where performance of the contract becomes unconscionable for a
party for good cause, such party may terminate the lease in
compliance with the legally prescribed termination notice period.
The judge shall determine the financial consequences of an
extraordinary termination notice, taking into account all of the
circumstances and conditions.
Where the lessee becomes bankrupt, the contract shall
automatically end on the commencement of bankruptcy proceedings.
However, the lessor is obliged to sustain the contract until
the end of the lease year provided that the lessee has furnished
the necessary security for processing the rent and for the goods
documented under the inventory.
In the event of the death of the lessee, his heirs or the lessor
may terminate the contract provided that they comply with the legal
termination notice period of six months.
At the end of the lease, the lessee must return the object along with all items listed in the record in the condition they are in currently.
The lessee is obliged to pay compensation due to a reduction in
value, which may have been prevented had the lessee better
maintained the leased object. However, the lessee may not claim
compensation for the increase in the value of the object resulting
from a normal degree of diligent maintenance.
Where items listed in the record were valued when the object was
originally handed over to the lessee, he must return a record of
items of the same type and estimated value or pay compensation for
any reduction in value. However, the lessee may be relieved from
return or payment of compensation by proving the fault of the
lessor or the presence of force majeure. The lessee may request
compensation for the expenses he incurred which resulted in an
increase in the value due to his efforts.
The lessee of an agricultural land may not assert any right over
the fruits not yet harvested upon the termination of the lease
contract. However, the lessee may request as compensation the
agriculture expenses he incurred for the growing of the product,
which will be determined by the judge, and this compensation shall
be reduced from the processed rents.
The lessee returning the leased object must leave enough stock
as required by a regular enterprise in the leased object. The
lessee may request compensation for the excess stock left, if he
leaves more than he originally obtained; if he leaves less than he
originally obtained, he is obliged to replace what is lacking or
compensate the reduction in value.
The Usufruct lease, which is regulated between Articles 357 and
378 of the TCO, is defined as a contract whereby the lessor
undertakes to grant the lessee the right of use of a productive
object and the benefit of its fruits or proceeds in exchange for
Unless there is a special provision, general provisions on lease
contracts shall be applicable to the usufruct lease.
The lessor is under the obligation to deliver the leased object in a condition fit for its designated purpose, appropriate for operation and make major repairs. Moreover, the lessee, along with the obligation to pay the rent and the accessory charges, is obliged to use, operate and maintain the leased object.
The conditions which may bring an end to the usufruct lease contract are the (i) expiry of time, (ii) notice of termination and (iii) extraordinary termination.
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.