Due to skyrocketing real estate prices in Turkey, many local and
foreign investors prefer leasing as opposed to buying properties
nowadays. Whether for tourism, commercial or industrial purposes,
lease engagements have become more important for both foreign and
local investors. From a commercial view, investors wish to secure
the premises they are leasing for a long-term (e.g. five years)
considering the high investment amount they spend for decoration
and operation of the leased premises. However, due to the high
demand for real estate, landlords frequently end up selling their
real properties to third parties when approached with a reasonable
offer. In such cases, a third party becomes the owner of the
relevant real property and the tenants face the risk of eviction by
the new owner under certain circumstances defined by law, despite
having a valid lease agreement.
According to Article 310 of the Turkish Code of Obligations (the
"TCO"), if a real property that is
occupied by a tenant via a lease agreement is sold to a third
party, the new owner of the premises automatically becomes a party
to the lease agreement. Therefore, the new owner must comply with
the terms and conditions of the lease agreement that would enable
the tenant to occupy the premises for the term specified under the
However, under Article 351 of the TCO, the new owner has a right
to file a lawsuit for the eviction of the tenant after six months
following the acquisition of the real property, if it is able to
prove to the court that it needs to use the premises for its own
residential purposes or commercial activities.1 If the
court is convinced that the owner needs the premises, the new owner
will be able to evict the tenant from the premises before the
expiration of the lease term under the lease agreement. In order to
prevent this eviction risk, a lease agreement should be annotated
to the relevant land registry on the real property's title deed
records. Once a lease agreement is annotated, the new owner will be
deemed to have acquired the premises together with the lease, and
therefore will not be entitled to evict the tenant until the
expiration of the lease term.
A lease agreement must be in written form for annotation with
the land registry. In this regard, contrary to the popular
misconception, it is not a legal requirement to execute lease
agreements before a notary public in order to have the lease
agreements annotated before the land registry. However, in the
event a lease agreement is not executed in the statutory form
before a notary public or the land registry, both the owner and the
tenant must apply to the land registry to annotate the lease. If a
lease agreement is executed in statutory form either before a
notary public or the land registry, the tenant may unilaterally
apply for annotation and the presence of the owner is not required.
It is worth noting that the annotation will be subject to a land
registry fee corresponding to 0.683% of the total rent amount
payable for the entire lease term, in addition to the stamp duty
arising out of the execution of the lease agreement.
In light of the above, in order to fully secure their long-term
investments, potential investors should consider annotating their
lease agreements with the relevant land registries despite the
additional cost burden and formalities.
1 In order to file the eviction lawsuit, the new owner must
notify the tenant of its intention within one month following the
Back in Issue 05 of IQ, we examined the decision in Yam Seng PTE Ltd v International Trade Corporation Ltd and looked at whether a general obligation of good faith could be implied into contracts made in accordance with English law.
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