Non-Possessory Rights in Turkey

Lease relationships are governed under the provisions of the Turkish Code of Obligations. The Turkish Code of Obligations entered into force on 1 July 2012, replacing the Repealed Code and Lease Law. Almost all major principles under the Repealed Code and the Lease Law have been maintained under the Turkish Code of Obligations, with certain diferences to meet the requirements of the present day Nonetheless, entry into force of certain signiicant provisions of the Turkish Code of Obligations with respect to lease agreements for commercial spaces was postponed until 1 July 2020. In basic terms, those provisions relate to the transfer of the leases, return of the leased property before the expiry of the term, termination due
to material reasons, contract bundling, limitation on the security deposit provided by the tenants, restriction on amending the lease agreement to the detriment of the tenants, determination of rent, indexation and restriction on rent increases, restriction to impose further obligations to tenants other than payments of rent and operational charges, and limitation on the grounds for termination. For such matters, the parties may freely agree the terms under the lease agreement.

Where no such agreement exists, the provisions of the Repealed Code and Lease Law shall apply Parties are entitled to conclude lease agreements with a ixed term
or indeinite term at their own discretion. If a lease agreement is concluded for a ixed term, it shall automatically terminate following the expiry of the term. However, a ixed term agreement may turn into an indeinite term agreement if the tenant continues to use the leased property following the expiry of the term without having an explicit agreement by and between the tenant and the landlord.

Where a residence or workplace is leased, the lease agreement shall be automatically extended for consecutive 1-year periods unless the tenant notiies the landlord of its intention to terminate the lease agreement at the end of the term with at least 15 calendar days’ prior notice. The only exception to this general rule is the landlords’ right to terminate any ixed term lease agreement after 10 years of renewals by serving the tenant with a 3-month prior written notice before the expiry of each subsequent lease term after the tenth year.

There is no statutory form for lease agreements; however, it is a general practice to have written lease agreements.

The rent can be denominated in any foreign currency, if the tenant and/or landlord is a non-resident in Turkey or if the tenant is subject to the exemption stated under the Executive Order of the President amending the Decree No. 32 and its secondary legislation. However rent denominated in foreign currency cannot be increased for an initial term of 5 years . Where the rent is denominated in TRY, rent may be increased at a rate which must not exceed the producer price index for the preceding year as announced by the Turkish Statistical Institute. For any lease agreement having a term of more than 5 years, the parties may request that the rent corresponding to the sixth year of the lease is re-determined by the court, regardless of any agreement that may be concluded by and between the landlord and the tenant in this respect . In such a case, the court should take into consideration the producer price index, the condition of the leased property, the rent of similar properties and decide on such grounds.

The security deposit to be provided by tenants may not exceed the equivalent of 3 times the monthly rent for the leased property. Furthermore, if the parties agree that the security deposit will be paid in cash, then the money must be deposited into a special savings account with a bank. The parties may also agree that the security deposit will be provided in the form of securities. In such a case, the securities must be reserved in a bank. Banks may release the security only with the consent of both parties or based on a legally efective payment order obtained in execution proceedings, or a legally efective court judgment.

A lease agreement can be annotated with the records of relevant land registry directorate. Such annotation would grant the lessee a right to enforce the terms of the lease agreement against a future owner of the leased property.