Turkey: How Should Your Company Rent A Place In Turkey? The Ultimate Guide To Roofed Workplace Leases Under Turkish Landlord-Tenant Law

INTRODUCTION

At the stage of establishment, the legislation of the Republic of Turkey requires the company to specify a location. Further, leases for a workplace are extremely important to the success of all companies. These contracts can build a duration of one to ten years relationship between landlord and tenant, establish the recurring expenses of the company, and prepare a suitable location for the business operations. Even if these transactions appear to be simple to handle, errors can cause immense harm.

The legal structure governing roofed workplaces is predominantly outlined in the Turkish Code of Obligations No. 6098. The primary provisions pertaining to roofed workplace tenancies are delineated in Articles 339 to 356, whereas the general regulations governing rent contracts are established in Articles 299 to 338. Workplace tenancies are established by a rental agreement that necessitates particular care for particular attributes, consequently, Articles 299 through 338 of the Turkish Code of Obligations are similarly crucial with regard to workplace leases.

By way of explanation, this paper endeavors to furnish precise answers to inquiries that a foreign business might have concerning the leasing of a shop, office, or analogous workplace in Turkey.

1. WHAT YOU MUST DO BEFORE SIGNING THE CONTRACT: IMPORTANT PRECAUTIONS

1.1. Accurate participant identification: In the event that a natural person is a party to the rental agreement, the agreement must explicitly specify their name, surname, identification number (e.g., Turkish ID no), and address. Official evidence must be brought and examined. If a legal entity is a party to the agreement, it is vital to expressly document the registered name of the company, tax number, and name of the tax branch to which it is subject.

1.2. Accurate real estate identification: In order to mitigate any uncertainties, it is imperative to scrutinize the title deed information and observable conditions of the workplace that is the subject of the contract. First, it is necessary to ascertain whether the workplace in question is owned by just one owner or by multiple owners, as well as verify whether the prospective signatory of the agreement possesses the requisite authority to sign documents pertaining to the workplace in question. Secondly, the title deed can be utilized as a foundation to identify any restrictions or limitations that may impede the tenant's rights. Lastly, it is imperative to analyze the development plan, as governmental or municipal entities might have had legal grounds to alter the conditions or in the end even require the tenant to vacate the premises. This could potentially give rise to significant complications, particularly in the context of long-term leases.

2. WHAT YOU MUST TAKE INTO ACCOUNT WHILE SIGNING THE CONTRACT: CONSIDERATIONS VITAL TO THE CONTRACTING PROCESS

2.1. Appropriateness for Leasing Objective: An examination of the management plan, floor plan, and certificate of occupancy for the workplace is necessary to assess the real estate's compatibility with the prospective tenant's leasing objective. In the contract, any conclusions reached during the examination of these documents must be specified. Conditions, such as permissions, must be described in writing if they pertain to the tenant's intention to lease the chosen workplace.

2.2. Dimensions Of The Real Estate And Related Title Deed Data: It is imperative to quantify and delineate the dimensions and tangible state of the workplace. It is wise to incorporate those details into the contract. In addition, incorporating explicit title deed identification into the contract text may prove beneficial for mitigating uncertainties and potential disputes.

2.3. The Duration of The Contract/The Tenure: The Turkish Code of Obligations, in Article 300, designates two distinct types of leasing agreements: indefinite-term and fixed-term. A fixed-term lease agreement is established for a specific duration and is subject to termination without prior notice at the conclusion of that period. Unambiguously stating the start and ending dates is essential in the agreement. In practice, workplace leasing agreements are typically drafted with a one-year fixed term. However, the parties automatically and without notice renew the agreement annually. Different than this, indefinite-term workplace leasing agreements declare a starting date of the contract but do not determine an expiration date. Lease agreements of an indeterminate nature are considered to apply for an uncertain period. The determination of whether a workplace leasing agreement is fixed-term or indefinite-term is a very important factor in determining how its termination is governed by the Turkish Rental Law. Therefore, it will be wise to decide the type of leasing agreement in this manner.

2.4. The Rent: The rental fee must be specified in detail within the lease. The designation of the rental fee as "gross" or "net" is crucial. Twenty percent of the stoppage charge is deemed to be added in the "gross" rent. When the rental price is expressed as a "net" quantity, it is presumed that the additional 20 percent withholding (stoppage) tax will be paid as a distinct payment. For instance, in certain circumstances, the state may alter the withholding (stoppage) tax rates. When a withholding tax discount is applicable, a rental agreement that specifies the rental price as "net" will be advantageous for the tenant who wishes to acquire this discount.

An additional significant tax concern pertains to workplace rentals; in the case where the landlord is a business enterprise, payment of value-added tax (VAT) at the rate of 18% of the aggregate rent is mandatory. If the landlord is a business entity, the workplace rental agreement must contain a provision specifying whether VAT is included or excluded from the price. When no such statement is written, it is presumed that the price specified in the contract incorporates value-added tax (VAT).

In Turkey, the rental currency is subject to stringent regulation as well. As per the Communiqué Regarding Decision No. 32 On The Protection Of The Turkish Currency's Value (Communique No: 2008-32/34), Turkish residents are prohibited from determining rental prices and other payment obligations associated with real estate rental contracts in foreign currency or an index to foreign currency for properties situated within Turkey, including roofed workplaces. Yet, in the event that a minimum of 50% of the shares in a Turkish-based legal entity are owned by non-Turkish residents, the agreement can include a rent specified in or indexed to foreign currency. In this way, the Turkish Court of Cassation recognizes that the safeguards implemented to preserve the value of the Turkish currency in lease agreements are of a public order-oriented nature.

2.5. The Rent Increase Rate: The rent escalation rate for roofed workplaces is outlined in Article 344 of the Turkish Code of Obligations. The rent increase rate cannot surpass the 12-month moving average of the consumer price index (CPI). Nevertheless, in accordance with the freedom of contract, the landlord and tenant can agree upon a rent increase rate that is lower than the CPI.

2.6. Rent Payment Due Date: The parties to the agreement are required to determine the payment schedule, which may be monthly, every three months, or annually. Additionally, the date of the rent payment is critical, as payment delays can unquestionably jeopardize the agreement. When determining the validity of a claim for rent delay or nonpayment, the rent payment due date, e.g. the first labor day of the month, will be considered.

2.7. The Method of Rent Payment: Bank transfers are required for the payment of rent of roofed workplaces. Thus, the contract must specify the legitimate bank account information required to pay the rent.

2.8. Renovation of Workplace: Considerable improvements may be required on the leased premises for workplace rentals, contingent upon the characteristics of the business. Prospective tenants might express an interest in undertaking property renovations for leasing objectives or to enhance the functionality or visual appeal of the work environment. To avoid future controversies and ambiguity, the contract must specify every aspect of the intended renovation. Contract provisions must delineate the obligations and responsibilities of the involved parties as well as the parts or areas of the workplace that are to be renovated. The text of the agreement must also accurately reflect the approximate extent of the renovation.

2.9. Surety Agreement: In the context of roofed workplace leases, the guarantee method is frequently employed. In the event of a surety contract, the rent contract must specify the surety's obligations, the information on whether an ordinary surety or joint surety is accepted, and the amount and duration of the surety's liability. Incorporating written statement of the guarantor in the text of the agreement can also prevent future controversies and ambiguities.

2.10 Annotation of Lease Agreement: The tenant may wish to enhance the power and authority in the lease agreement and protect tenancy rights from third-party claims. The annotation of lease agreements are well-known procedure arising from Article 1009 of the Turkish Civil Code and Article 312 of the Turkish Code of Obligations. The tenant's application to the title deed is adequate if the lease agreement has been duly signed and confirmed by a notary and if the tenant has been granted unilateral annotation authority by the agreement. On the other hand, The landlord must apply if the tenant is not duly authorized to annotate by the contract and if the lease agreement lacks a notarial signature.

3. WHAT YOU MUST BE PREPARED AFTER SIGNING THE CONTRACT: VARIOUS SCENARIOS

3.1. Sublease Agreement: Article 322 of the Turkisch Code of Obligations regulate the conditions for sublease agreements. According to this, in roofed workplace leases, without the landlord's written consent, the tenant can't sublease the leased property or transmit the right to use it. If the landlord gives written consent to the tenant to sublease the workplace, the tenant is deemed to be liable to the landlord if the subtenant utilizes the leased property in a manner inconsistent with the consent granted to the tenant.

3.2. Evacuation Commitment Letter (Tahliye Taahhüdü): Article 352/1 of The Turkish Code of Obligations sets forth the commitment to evacuate. The landlord may require the tenant to sign an evacuation commitment, which is a legally binding declaration that the rental property will be vacated at the specified time. In the scenario that the landlord wishes to terminate the lease agreement for any reason, the evacuation commitment letter enables the landlord to circumvent the need for longitude court proceedings. The timely completion of the workplace evacuation is conditioned on the tenant providing a valid evacuation commitment, then the evacuation of the workplace can be achieved in one month.

The evacuation commitment letter is required to include the following: information on the landlord, the rental property that is to be evacuated, the lease agreement date, and scheduled evacuation date, the date of the undertaking of evacuation commitment, and the tenant's identification and signature. The evacuation commitment must be in writing and comprise a declaration of the parties' will that is unambiguous and unintervened. The date of the evacuation commitment letter must always be after the delivery of the roofed workplace which is the subject of the lease agreement. In other words, the letter of evacuation commitment must be dated after the lease agreement on each occasion. The signed and agreed-upon evacuation commitment letter that was obtained during the lease agreement process and that has the same signature date as the lease agreement is deemed invalid.

3.3. The Landlord's Need: The requirements for terminating a lease agreement due to the landlord's need are outlined in Article 350 of the Turkish Code of Obligations. Following the conclusion of a legally binding lease agreement with the tenant, the landlord may be required to have the workplace for his or her own needs, or the landlord's spouse, closest relatives (e.g., the landlord's children or parents), or for individuals for whom the landlord has a legal obligation of care.

The workplace requirement in question must be real, certain, and permanent. For instance, if the landlord is a party to another lease agreement as a tenant and needs this workplace, the workplace in question must be of equivalent or higher quality than the landlord's current workplace which he occupies as a tenant. In an alternative situation, the landlord might face the risk of being evacuated from the workplace which he stands as a tenant in another lease agreement. This provision may also be extended to the landlord's immediate family members.

In the case that a fixed term is set in the lease agreement, the landlord can terminate the contract one month after the ending date specified in this lease agreement. According to Articles 328 and 329, in the case of an indefinite-term lease agreement, the rental periods are calculated by 6 months parts, and the landlord is obliged to send a notice 3 months before the ending of this 6-month rental periods. Upon fulfilling this notification obligation, the landlord can initiate legal proceedings within one month subsequent to the conclusion of the aforementioned six-month rental period. In situations where the landlord fails to send the tenant a timely notification, declared notification shall be deemed valid and enforceable for the subsequent rental period.

In the absence of a valid reason and three years have passed since the landlord drove the tenant's evacuation of the leased workplace on the grounds of the landlord's need, the landlord is not permitted to rent the property to another individual other than the former tenant. Noncompliance will lead to compensation equivalent to a minimum of one year's rent.

3.4. The New Owner's Need: Per Article 351 of the Turkish Code of Obligations, if the new owner requires the workplace for himself, his spouse, descendants, parents, or other individuals that he is under a legal obligation to care for, he can terminate the lease agreement by initiating a lawsuit after at least six months, provided that he has notified the tenant in writing one month after the acquisition of the property.

3.5. Failure to Pay The Rent: If the tenant fails to pay the rent, the landlord may issue a notice to the tenant specifying that payment is expected in thirty days after the notification's delivery. The landlord may grant an additional tolerance period of more than thirty days, but this period cannot be shortened. The landlord can initiate a legal proceeding to compel the tenant to vacate the property if the rent is not remitted within the determined time frame.

3.6. The Two Justified Notifications: Article 352/2 stipulates that the landlord is obligated to notify the tenant if the tenant fails to pay the rent or secondary costs that are due. The landlord may terminate the lease agreement if the tenant fails to pay the rent or secondary costs in question twice within the rent period for fixed-term lease agreements, or within one rental year for fixed-term lease agreements with a duration of more than one year. This provision remains in effect even if the tenant remits payment of the specific rent or secondary costs in question subsequent to the landlord's notification. A petition must be filed by the landlord intending to terminate the contract within one month after the rental year's end. When the annual payment of the rent is determined in the contract, or an indefinite-term lease agreement is in place, the landlord is not permitted to use this as a legal reason for termination.

3.7. Tenant's Duty of Care: The tenant is obliged to utilize the workplace in a manner consistent with the leasing objectives. For example, the tenant is not permitted to convert the leased workplace into a small manufacturer if he leases it for the purpose of operating a clothing store. Likewise, the tenant must respect the tranquility and safety of the neighbors and refrain from disturbing them. On top of that, the tenant is prohibited from intentionally damaging the rented workplace. When such situations arise, the landlord may issue a notice to the tenant requesting that the improper conduct be stopped or repaired within a minimum of thirty days. If this notice is unable to deter the violation, the landlord may terminate the agreement.

CONCLUSION

This article provided thorough responses to inquiries that a foreign company may have regarding the rental of a storefront, office, or similar location in Turkey. Notably, both the Turkish Civil Code and the Turkish Code of Obligations contain also other general provisions that apply to landlord-tenant relations. Evidently, the lease agreement constitutes a complex legal transaction that has the potential to give rise to innumerable complications. Furthermore, while it is possible to develop an all-encompassing guideline that covers the majority of situations, a specific situation may arise that requires an analysis based on its unique characteristics and circumstances.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.