In CCS Law Istanbul, we give all services comprising different types of lease arrangements operating in Turkey so that landlords and tenants are aware of the pros and cons of Turkish law. In this article, we focus on defining leasing in law in Turkey, various forms of leasing agreements, and basic civil codeon leasing contracts.
What is a Lease Agreement?
A lease agreement is an agreement whereby the lessor grants rights to the lessee to use and enjoy an actual estate in return for a certain rent. This agreement, while it creates personal rights, may also be registered in the land registry to be legally effective against third parties as well, under Article 312 of the TCO.
Lease agreements in Turkey are regulated under three main categories:
Ordinary Leases,
Leases for Residential and Roofed Workplace Properties, and
Product Leases.
In this article, we will primarily focus on Residential and Roofed Workplace Leases as outlined in Articles 339-356 of the Turkish Code of Obligations.
Types of Lease Agreements
While a lease agreement is not required to be in writing to be legally valid, any verbal lease that is in effect and can be proven shall be legally binding. If a fixed-term lease agreement continues beyond its initial term without termination, it becomes an indefinite-term lease. However, in the case of the lease for residential and workplaces with roofing, the failure of the tenant to issue a written notice 15 days in advance regarding termination, before the date the contract expires, automatically extends under the same conditions for another year within the validity of the lease.
In the ordinary lease, unless otherwise contractually agreed upon, it is possible for the tenant to sublease the property. In residential and roofed workplace leases, the tenant can sublease only with the landlord's consent in writing-TCO Article 322. Similarly, the tenant may transfer the lease agreement with the landlord's consent, and the landlord cannot refuse this consent without valid reasons. The original tenant remains jointly and severally liable with the new tenant in respect of the rent and other charges payable for up to a maximum period of two years following the assignment (TCO Article 323).
Legal Provisions Relating to Residential and Roofed Workplace Rentals
Relevant provisions with respect to the lease of residences and roofed workplaces are between Articles 339-356 of the Turkish Code of Obligations. These types of leases are specially regulated in order to protect tenants. The following are specially regulated:
Termination of the tenancy : The tenant can terminate the lease by serving a 15-day notice at the end of the contractual period while the landlord's right to terminate is highly limited. To illustrate, the landlord can only terminate based on certain causes such as his personal need for the property or in case of breach by the tenant.
Subletting and Transfer of Lease: As earlier noted, residential and covered workplace lettings are more restricted regarding subletting and transfer. For the tenant to sublet the property or to transfer the lease agreement with a third party, he or she has to obtain in writing, the landlord's advance consent.
Rent Increase: During the lease period, the law limits the landlord in increasing the rent; furthermore, an agreed rent increase for renewed periods is not allowed to exceed the average of the Consumer Price Index during the last 12 months prior to renewal.
Tenant's Security Deposit (Depozito)
Under Turkish law, he shall be obliged to pay a security deposit, called depozito, not in excess of three month's rent. The deposit shall either be in cash or in the form of a valuable document; in case of a cash deposit, it shall be deposited in an interest-bearing bank account. In this regard, the landlord is only able to claim the security deposit upon termination of the lease, and only if it has been terminated by mutual consent, by court order, or at the end of any enforcement proceedings initiated by him.
In case the landlord does not inform the bank, within a period of three months following the termination of the contract, about any legal action regarding the lease, he is bound to return the deposit money to the tenant.
Determination of Rent
Tenancies can show the rent as a fixed amount payable each month or it can be tied to other factors such as in commercial leases, where the rent is tied to the lessee's business turnover. Rent determined by a percentage of business turnover is called turnover rent.
The law does not allow any modification of the contractual lease agreement at the expense of the interest of the tenant except in cases of rent increase. Indeed, TCO Article 343 provides that the previous years' rents may be increased based on the CPI, prevailing market conditions, and equity if the court so requests if no agreement regarding the determination of new rents for the subsequent year was reached.
In case of a lease for more than five years, or one whose period had been renewed after five years, the court may readjust the rent, taking into account the variation in the Consumer Price Index plus the market rate of properties belonging to the same category as the leased property, in accordance with the rule provided for under TCO Article 344.
Early Termination and Compensation for Loss of Rent
In this case, if the tenant terminates the contract before the end of the validity period without a valid reason, the landlord can claim compensation for loss of rent in accordance with Article 325 of TCO. The amount would be in regard to how long it would take for the landlord to find another tenant under similar conditions.
The landlord should thereby make reasonable efforts to re-rent the property in order to limit the loss. The tenant is liable for the rent during such period the unit remains vacant but only during a time when the landlord should reasonably be expected to find a replacement tenant.
Legal Termination of Lease Contracts
There are two ways to terminate a lease agreement: by serving notice, or by court action. While tenants enjoy considerable latitude to terminate leases without cause, landlords' grounds for termination are limited to the following conditions:
Personal need if the landlord needs the property for their use, spouse, descendants, or other dependants,
Major Repairs or Reconstruction: The structure needs much renovation or reconstruction; it is not livable while repairs are being undertaken.
Transfer of Ownership: "The landlord may terminate the lease in writing after six months if the new owner intends to use the property themselves or for their family.
How to Navigate a Lease with Professional Legal Advice
Understanding how to navigate complex lease agreements in Turkey is actually about understanding the legal framework governing landlord-tenant relations in the country. Here at CCS Law Istanbul, we ensure that our legal services are tailor-made for landlords and tenants alike, with their interests fully protected under Turkish law.
CCS Law Istanbul's professional help should be sought on the drafting and review of the rental agreements, their termination, or in case of disputes on landlord or tenant rights. Contact us today.
Disclaimer: This article is intended for informational purposes only and does not constitute legal advice.
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