Before the enactment of the new Turkish Code of Obligations (TCO) No 6098, leases were renewed indefinitely for one-year periods, unless the tenant notified the landlord in writing of its intention to leave at least 15 days prior to the expiration of the lease term.
This previously well-established rule has been repealed by the Law on the Enforceability and Application of the Turkish Code of Obligations Law No 6101 (Application Law). This tenant friendly regime is now restricted to a maximum period of 11 years as per Article 347/1 of TCO.
Impact of the new provisions on lease renewals
Under the new provisions, landlords will be entitled to unilaterally terminate leases without cause by giving tenants three months’ notice, at the end of each renewal year following the tenth renewal year. Provisional Article 2 of the Application Law provides that the new unilateral termination right will apply to certain leases from 1 July 2014, whilst for others, the relevant date is 1 July 2017.
Which leases may be terminated in 2014 and which must wait until 2017?
During the transition period from the previous legislation to the new legislation, termination dates of leases are subject to two principles, based on their existing renewal periods as at 1 July 2012. Thus, landlords are entitled to terminate leases without cause:
- on 1 July 2017, where the ten-year automatic renewal period did not expire before 1 July 2012 but there are fewer than five years outstanding on the lease; and
- on 1 July 2014, where the ten-year automatic renewal period expired before 1 July 2012.
The table below indicates the dates on which landlords may exercise their right to terminate various leases having different effective dates and lease terms.
Click here to view table.
Historically, Turkish law has adopted a protective approach towards tenants, unless those tenants failed to comply with their material obligations such as payment of rent and/ or contributing to common expenses. However, the provisions discussed in this article mean that tenants must now take account of the ten- year renewal period when assessing their position in particular lease agreements.
These newly introduced, landlord friendly rules on lease termination will be of paramount importance in particular for leases which can be terminated without cause by landlords on 1 July 2014. Such provisions are bound to have serious implications for existing tenants and the likelihood of them being evicted.