Our Turkish Code of Obligations No. 6098 entered into force on 01.07.2012. However, as of that date, some articles related to the lease agreements were postponed for whatever reason.
Essentially, revolutionary changes were made with the Code of Obligations, but a postponement was foreseen to avoid confusion, but let’s not go into details at this time, but when a series of legal complications occurred due to the postponement, the relevant provisions were postponed for 5 years and then 8 years. As a result, 53 of a law numbered 6353. “Provisional Article 2 has been published. According to this; Articles 323, 325, 331, 340, 342, 343, 344, 346 and 354 of the Turkish Code of Obligations will not be applicable to workplace rentals where the lessee is persons deemed to be merchants in the Turkish Commercial Code and private law and public law legal entities until 01.07.2020. has been enacted. It also stipulates that the old Code of Obligations No. 818 will be applied to the dispute if there is no provision in the contracts in the text of the article.
Overview of Turkish Code of Obligations Regulation on Rental Contracts
The Turkish Code of Obligations No. 6098 has protected the tenant against the lessor with its relative mandatory provisions regarding the lease agreement. The legislator has determined such a method in order to prevent the lessor from putting the lessee into financial obligations that he cannot afford by using the power stemming from his position. In this state, the rights and obligations of the tenant are determined by the Turkish Code of Obligations, and the tenant is prevented from being put under more severe obligations than those determined by the law.
However, these innovations brought by the law have brought along a problem in terms of leasing workplaces where merchants and legal persons are tenants. As we mentioned above, it is thought that the balance of power will deteriorate if the provisions brought by the legislator to protect the tenant are applied to merchants and legal entities who can currently protect themselves financially and who are in a position to negotiate the terms of the contract with the lessor. It was thought that traders and legal persons would not need this legal protection. For these reasons, the legislator has also evaluated the objections from the sector on the subject and postponed the effective date of 9 articles, which we will explain in more detail below, to 01.07.2020, limited only to commercial rental relations. But time flies fast. 8 years have passed and it is time for legal regulations to come into effect. Unless, of course, there is a new delay.
1- TURKISH LAW OF OBLIGATIONS ARTICLE 323 / TRANSFER OF RENTAL RELATIONSHIP
The leased one, 3. According to the relevant article regulating the transfer of the lease to persons, without the written consent of the lessor, the rental relationship may be terminated in 3rd. It cannot be transferred to individuals. However, in the continuation of the legislative article, a distinction was made in terms of commercial lease relations. According to the article, if the lessor cannot show a justifiable reason, the 3rd party of the rental relationship. He will not be able to avoid giving consent to his transfer to people. In this case, the just cause is the 3rd of the lease relationship. As a result of the transfer to the person, the party taking over the lease will replace the lessee. The transferor lessee will be relieved of all his debts to the lessor. However, in this case, the transferring tenant may be the third party who takes over against the lessor, up to the expiry date of the lease agreement or for a maximum of two years. The joint liability will continue with the person.
2- TURKISH LAW OF OBLIGATIONS ARTICLE 325 / EARLY DISCHARGE
If there is an article that falls like a bomb in the middle of commercial lease agreements, it is essentially the 325 mentioned here. It is matter.
Due to market conditions, commercial real estate leases are generally made for relatively long periods such as 5-10 years, and in practice, if the lease agreement is terminated before its time, the tenants had difficulties with very high penal clauses and compensation clauses.
With the new regulation, if the tenant evacuates the leased property before the end of the contract period or without complying with the termination period, the lessee’s debts arising from the lease contract continue for a reasonable period of time during which the leased property can be rented under similar conditions. However, in the continuation of the article, a way is given to the lessee to get rid of his debts arising from a contract. According to the article, if the tenant finds a new tenant who has the ability to pay and is ready to take over the rental relationship, the tenant’s debts arising from the lease agreement will expire. 325. It is also regulated in the article that the expenses that the lessor avoids due to the evacuation of the lessor and the benefits obtained from using the leased land in another way or that it deliberately avoids to obtain are deducted from the rental price.
3- TURKISH LAW OF OBLIGATIONS ARTICLE 331 / EXTRAORDINARY TERMINATION
Another article whose validity has been postponed is Article 331 of the TCO, which gives the relevant party the right to terminate the rental agreement if the rental agreement becomes unbearable for one of the parties.
According to the relevant provision, each of the parties may terminate the contract by complying with the legal termination notice periods if there is an important reason that makes the continuity of the rental relationship unbearable for him. The legislator has given the parties the right to an extraordinary termination in the presence of situations that occur in the conditions that form the basis of the contract after the establishment of the lease agreement and that make the rental relationship unbearable for the parties.
In the repealed Turkish Code of Obligations No. 818, the extraordinary termination was granted to the parties by article 264, but the most important difference between the two laws emerged in the determination of the compensation to be paid in case of termination. Accordingly, according to Law No. 818, the terminating party was liable to the other with full compensation, and if the rental period was more than one year, this compensation could not be less than six months’ rent. However, according to the new Turkish Code of Obligations No. 6098, the discretion is left to the judge in determining the financial consequences of the termination.
4- TURKISH LAW OF OBLIGATIONS ARTICLE 340 / PROHIBITION OF CONNECTED AGREEMENTS
This is an arrangement that will cause a lot of fanfare. This provision, which was introduced with the aim of protecting the tenant, regulates that the validity of the rental agreement cannot be based on a different agreement.
According to the verdict “If the establishment or maintenance of the contract in residential and roofed workplace leases is dependent on the tenant’s incurring a debt that is not directly related to the use of the leased property, the lease-related contract is invalid.” Briefly, Related contracts signed after 01.07.2020 will be deemed invalid in case of conflict.
What is a linked contract? To give an example, since the old Law No. 818 did not foresee a prohibition in this regard, it can be seen that in practice, especially in shopping mall rentals, the lessor imposes additional contracts and obligations on the lessee regarding the purchase of warehouses and other services. Again, while the insurance of the rented place is left to the lessee, the insurance for the entire shopping mall is made by the lessor, but the insurance premiums related to this are directly charged to the lessee under the name of common expense. However, since any damage to the entire shopping mall is a risk that belongs entirely to the lessor, reflecting the insurance premiums to the tenants can be given as an example to the related contracts.
Since there was no ban on related contracts in the previous law period, there are still uncertainties about the implementation that will emerge after 01.07.2020. In the coming period, these uncertainties in practice will become clear through the decisions given by the Supreme Court.
5- TURKISH LAW OF OBLIGATIONS ARTICLE 342 / ASSURANCE OF THE TENANT
With the entry into force of the relevant article, it is thought that some solution will be brought to the deposit problem in the current practice. Within the scope of the article, it has been made legal to request assurance from the lessee in order to ensure that the lessee fulfills its obligations arising from the contract and damages that may arise from the use of the leased property. Accordingly, the amount of assurance can be given in the form of money or valuable papers, provided that it does not exceed the maximum three-month rental fee. According to the article, if the security is money, it will be stored in the time savings account, and the valuable papers will be stored in the bank, not to be withdrawn without the consent of the lessor.
In the period prior to the entry into force of the relevant article, the determination of the amount of security was entirely left to the lessor, while the deposit was left directly with the lessor. In this case, the high deposit fees and the expiry of the rental relationship in some cases caused this amount not to be recovered. With the new regulation, it is aimed to prevent this situation.
6- TURKISH LAW OF OBLIGATIONS ARTICLE 343 / PROHIBITION OF CHANGE AGAINST
The relevant regulation stipulates that no changes can be made in the lease agreement against the tenant, except for the rent of the lessee. Thus, it was aimed to prevent the lessors from making unilateral practices within the freedom of contract.
7- TURKISH LAW OF OBLIGATIONS ARTICLE 344 / DETERMINATION OF THE RENTAL AMOUNT
The relevant regulation determines the maximum rent increase that can be applied by the lessor. According to this article, the determination of the price varies depending on whether the amount of increase is determined in the contract or not. Accordingly, if the parties determine the amount of increase by contract, the increase rate cannot be more than the annual average of the consumer price index of the previous rental period.
The text of the article is very clear and does not require further comment. The full text of the article is as follows;
The agreements of the parties regarding the rental price to be applied in the renewed rental periods are valid provided that they do not exceed the change rate in the consumer price index in the previous rental year according to the twelve-month averages. This rule also applies to lease agreements for more than one year.
If an agreement has not been made by the parties on this matter, the rental price is determined by the judge on a fair basis, taking into account the situation of the leased property, provided that it does not exceed the change rate according to the twelve-month averages in the consumer price index of the previous rental year.
Regardless of whether an agreement has been made by the parties on this matter, the rental price to be applied in the new rental year at the end of every five years and at the end of every five years, the rate of change according to the twelve-month averages in the consumer price index by the judge, the condition of the leased property. It is determined in a fair manner, taking into account the rental prices and precedent rental prices. The rental price determined in this way in the next five years may be changed according to the principles in the previous paragraphs.
If the rental amount is determined in foreign currency in the contract, no change can be made in the rental price until five years have passed, provided that the provisions of the Law on the Protection of the Value of Turkish Currency No. 1567 dated 20/2/1930 are reserved. However, the provision of Article 138 of this Law, titled “Excessive difficulty in performance”, is reserved. After five years have passed, the provision of the third paragraph is applied, taking into account the changes in the value of the foreign currency, in the determination of the rental price.
8- TURKISH LAW OF OBLIGATIONS ARTICLE 346 / PROHIBITION TO ISSUED AGAINST THE TENANT
With the relevant regulation, two basic limitations have been brought to the lease agreements. The first of these is that the lessee cannot be obliged to pay an additional price with the contract, except for the rental price and ancillary expenses. The article also regulates the penal clauses and liabilities that are frequently encountered especially in commercial leasing contracts.
Within the scope of the article, it has been stipulated that no penal clause can be determined by the rental agreement, and the provisions of the agreement will not be applied, stating that the remaining rent will be due due to the failure to pay the rent on time. With this change, as of 01.07.2020, no extra obligations will be imposed on the lessee by contract, except for the rental price and side expenses related to usage.
9- TURKISH LAW OF OBLIGATIONS ARTICLE 354 / LIMITATION OF CAUSES OF ACTION
The legislator limited the grounds for lawsuits with article 354 of the TCO. According to the Related Article, “ Provisions regarding the termination of the lease agreement through litigation cannot be changed against the tenant”. But 354. The entry into force of the article will not bring about a change in practice. This is because Temporary 2. In cases where there is no provision with the article, the law no. 6570 will be implemented. Since the reasons for eviction are listed in a restrictive manner in Article 7 of Law No. 6570, there is currently no regulation in the grounds of eviction against the tenant. For this reason, 354. Against the regulation of the Law No. 6570. With the entry into force of the article, there will be no change in practice.
CONCLUSION
Absolute and relative imperative provisions of the abolished Code of Obligations No. 818 and Law No. 6570 on Real Estate Rents are applied in priority, instead of the provisions whose validity is postponed until 1.7. However, as of 01.07.2020, many important changes will come into effect in terms of commercial leases.
Especially after this period, when many shopping malls stopped their activities for a long time due to COVID-19, which is the biggest agenda of our day, and tenants had a hard time due to rental agreements concluded with very high rental prices in big and important streets, with the entry into force of the articles that were postponed for 8 years. Obviously, things will turn around. We are of the opinion that many different alternatives and demands may arise, especially in terms of shopping malls and important street tenants.
Of course, the implementation of the postponed articles may bring up many discussions and different interpretations in the first place, but it will be shaped by Supreme Court decisions in the future.
Melih Ozturk
Lawyer / K&P LEGAL LAW OFFICE
