THE IMPLEMENTATION OF THE POSTPONED ARTICLES OF THE TURKISH CODE OF OBLIGATIONS RELATED TO WORKPLACES-II(AUGUST 2020)

The postponed articles of the Turkish Code of Obligations No. 6098 (the “TCO“) have entered into force in terms of workplace rentals, whose lessees are merchants and public or private legal entities as of July 1, 2020. The application of these provisions is important in terms of workplace lease agreements circulated contrary to the relevant provisions during postponement period and particularly after July 1, 2020.

In the light above explanation the effects of such articles are as follows:

  • Article 323 of the TCO regulates the assignment of the lease contract to third parties. Though there is contradiction re. application of this article, it is obvious that a lease contract does not terminate upon the transfer of the contract and continues to be effective, with the transferee lessee. Therefore, the relevant article entered into force immediately as of July 1, 2020. Thus, in terms of the contracts concluded during the postponement period, the lessor will not be able to refrain from provide of consent to the transfer of the workplace rental unless there is a justified reason.
  • Article 325 of the TCO foresees that; in case of early termination the lessee will continue to perform its obligations under the lease contract for a reasonable period when the contract can be leased under similar circumstances. Since the relevant provision regulates the termination of the contract, it should be subject to the principle of immediate effect. In other words, this provision will apply immediately to workplace tenants as of July 1, 2020. The same conclusion will be reached for Article 331 of the TCO, which is another state of termination and regulates important reasons for extraordinary termination.
  • Article 340 of the TCO foresees that the lessor cannot ask the lessee to undertake any obligation which is not related to use of the premises and against the lessee’s benefit. Such contracts which are contrary to this provision shall be deemed invalid.  As of July 1, 2020, for instance, the lessor cannot request the insurance premiums for the insurance of the whole shopping mall in the lease agreements or car park allocation fee from the lessees who do not have a motor vehicle. In our opinion, the contracts concluded during the suspension period shall remain valid after 1 July 2020.
  • Article 342 of the TCO regulates the situation where the tenant is under the obligation to provide assurance with a lease contract and the limits of the debt. In our opinion the relevant provision will not have any effective in the past. Deposit agreements executed during the postponement period will be valid after 1 July 2020, unless they are contrary to law.
  • Article 344 of the TCO foresees that the parties' agreements regarding the rental price to be applied in renewed rental periods. Therefore, the provisions of Article 344 of the TCO should be immediately applied to the lease contracts concluded during the postponed period as of July 1, 2020. Thus, unless otherwise agreed in the contract, the rent increase rate will not exceed Consumer Price Index as of July 1, 2020, and no increase will be applied to foreign currency leases.
  • In practice, Article 346 of the TCO will be the most discussed article among the suspended articles. This article regulates that the lessor cannot impose any payment obligation on the tenant other than the rent and utilities. Acceleration clauses -which regulate that if the tenant fails to pay the rental fee on due time, all remaining payments will be due- will be deemed invalid. However, the discussion evolves around other penalty clauses (such as the obligation to keep stores open for certain hours in shopping malls, to declare the turnover inaccurately, etc.). This subject will be more clarify in future in the light of Supreme Court decisions.
  • Article 343 of the TCO states that no change can be made after t signature of the lease contract against the lessee except the rental fee. Since there was a similar clause in annulled law, there will be no change in practice by enforcement of this provision

As explained above, it is important to evaluate the applicability of such suspended provisions in terms of existing lease contracts and it is highly recommended to circulate new lease contracts in line with enforcement of such suspended provisions.