LEASE AGREEMENT AND IMPLEMENTATION PROBLEMS

Lease Agreements in the Turkish Code of Obligations: Basic Regulation

1. The Law of Lease Agreements and Historical Evolution
• With the enactment of the Turkish Code of Obligations No. 6098 (TBK) on July 1, 2012, the regulations concerning lease relationships previously governed by the Code of Obligations No. 818 and the Law on Real Estate Leases No. 6570 largely ceased to exist.
• The TBK introduced “mandatory/minimum protection” principles in terms of lease law: no regulations can be made against the tenant; provisions contrary to the law are invalid (especially in residential/covered business premises leases).
• Procedural provisions (termination, default, expiration of the contract, etc.) can also be applied to the status of existing lease agreements under the TBK.

2. Important Provisions in the Turkish Code of Obligations – Tenant Rights / Landlord Restrictions

Turkish Code of Obligations Article Subject Key Provision / Effect
Article 301 Delivery and Use of Leased Property The lessor has the obligation to deliver the leased property in accordance with the contract and to keep it in a usable condition for the duration of the contract.
Articles 304 / 305 / 316 Defects / Breach of Contract The tenant has the right to a rent reduction or termination of the contract due to defects. However, practical inconsistencies arise in practice, such as granting a "time to remedy the deficiency" and the obligation to notify.
Article 343 Prohibition of Changes Unilateral changes to the detriment of the tenant cannot be made in matters other than the determination of the rent.
344 Rent Increase / Determination Lawsuit In renewal periods, rent increases cannot exceed the 12-month average Consumer Price Index (CPI) rate. Rent determination can be requested from the court for leases longer than 5 years or renewals after 5 years.
Article 346 Prohibition of Penalty / Acceleration Clause The tenant's liability is limited only to rent and ancillary expenses (ancillary liabilities); Penalty clauses and provisions regarding the acceleration of non-rent debts are invalid (especially in residential leases).
Article 347 Rights to Termination Without Cause: The landlord may have the right to terminate the lease without cause under certain conditions (e.g., a 10-year lease).
Articles 350/351 Eviction Due to Need: The conditions under which the landlord may request eviction due to the needs of themselves, their spouse, children, or other close relatives are regulated.
Article 310 Change of Ownership of the Leased Property: If the ownership changes after the contract begins, the new owner becomes a party to the lease agreement.

Common Problems in Practice and Court Practice

1. Eviction Request Due to Expiration of Time Limit

Often, landlords operate on the principle that "if the contract term has expired, the tenant can vacate the premises as they wish." However, according to Article 347 of the Turkish Code of Obligations, a landlord cannot evict a tenant solely on the grounds of the expiration of the term.
In practice, judges often reject this request; the landlord's right to terminate the contract is only possible through the reasons and procedures stipulated in the law.

2. Problems with Compliance with Rent Increase Rates
• PPI → CPI transition: Article 344 of the Turkish Code of Obligations (TBK) sets the 12-month average of the Consumer Price Index (CPI) as the upper limit for rent increases.
• Some landlords offer increases exceeding this limit. In such a case, the tenant can accept the increase to a limited extent or file a rent determination lawsuit to demand a fair rent.
• In commercial/business lease agreements, the restrictions in the TBK came into effect on July 1, 2020.

3. Transfer of Ownership and the Rights of the New Owner
• According to Article 310 of the Turkish Code of Obligations, even if the leased property changes hands, the lease agreement continues unchanged, and the new owner cannot evict the tenant.
• If the new owner wishes to exercise these rights, they must provide written notice (for example, within one month of the transfer date) and must observe specific time limits for filing an eviction lawsuit.
• In practice, failure to provide notice or incorrect handling of procedures leads to serious loss of rights for the tenant.

4. Breach of Contract / Defects
• If the tenant encounters a defect that significantly hinders the use of the leased property, they can request its rectification within 30 days; if it is not corrected within this period, they can terminate the contract.
• A common problem in practice: the landlord does not recognize this period, does not provide sufficient notice, or refuses to make the correction. This becomes a point of contention in court.
• Furthermore, the definition of "breach of contract" and the extent to which it constitutes an impediment to use can be interpreted differently by the courts due to ambiguities.

5. Security Deposit (Security Deposit) Disputes
• According to Article 342 of the Turkish Code of Obligations, the security deposit cannot exceed three months' rent.
• In cases where the landlord withholds the deposit without justification, fails to return it, or allows it to become time-barred, the tenant often has to initiate legal proceedings.
• In case of a change of ownership, the new owner is also responsible for the return of the deposit.

6. Problems with Rent Adjustment (Adaptation) in Foreign Currency
• Article 344/4 of the Turkish Code of Obligations stipulates that in cases where the rent is agreed upon in foreign currency, no rent increase can be made within the first five years, after which an adjustment (redetermination) can be requested from the court.
• Problem in terms of application: the rent value may have changed significantly due to currency fluctuations; the tenant may resort to "excessive difficulty in performance" (Article 138 of the Turkish Code of Obligations).

Points to Consider
: 1. Careful Contract Preparation
: • The contract should clearly state the parties' identities, property description, rent, payment date, deposit, terms of use, and responsibilities for renovations/repairs.
• Verification of the landlord's authority and title deed status is essential.
• If necessary, regulatory provisions such as the right to "determine the rent" and eviction conditions based on need should be clearly included.
2. Rent Increase Arrangement
: • If a rent increase agreement is to be made between the parties, attention should be paid to the limits of Article 344 of the Turkish Code of Obligations.
• If the parties cannot agree, the right to file a rent determination lawsuit is always reserved.
3. Attention to Notification/Communication Periods
: • Legal notification periods should not be overlooked in matters such as change of ownership, eviction requests, and termination.
• The form and duration of written notification (e.g., one month, three months) should be carefully determined.
4. Compliance Audit/Regular Monitoring
: • Economic indicators (CPI, comparable rents) should be monitored; rent increase proposals should be compared with these indicators.
• Exchange rate differences should be considered in foreign currency rental agreements; the defense of "excessive difficulty in performance" should be evaluated when necessary.
5. Preparation for Dispute Resolution
• Adding clauses such as "mediation" or "appropriate court" to the end of the contract is feasible.
• Both the tenant and the landlord should be prepared for the court process; they should keep written documents, evidence of notification, and photographs.
6. Monitoring Case Law
• Supreme Court decisions, especially in matters of rent determination, eviction due to necessity, and transfer of ownership, provide concrete examples; current decisions should be followed.