ABSTRACT
Several methods for the termination of a lease contract in the event of non-payment of rent and/or additional expenses are regulated under Turkish legislation. Article 315 of the Turkish Code of Obligations No.6098 sets out an extraordinary termination method, while Article 322 regulates eviction action in accordance with a court decision. This article examines and analyzes the use of these two different methods in cases of non-payment.
I. INTRODUCTION
According to Article 315 of the Turkish Code of Obligations No. 60981 (“TCO”) “Where the lessee fails to pay the rent and/ or additional expenses after delivery of the leased property, the lessor may, by issuing a written notice, grant an extension of time before terminating the contract if the lessee fails to make the payment once again,. The extension of time given to the lessee shall be not less than ten days, and thirty days for residential properties and roofed workplaces. This time period shall start from the date that the written notice is issued.” This article enables the lessor to extraordinarily terminate the contract, which is synallagmatic and creates a perpetual debt relationship.
2 Within the context of this article, payment of rent is the main obligation of the lessee,3 whereas expenses, such as a maintenance fee, that are relevant to the usage of the leased property are deemed additional expenses and constitute a secondary obligation4. Under Article 315 of the TCO, even though rent and additional expenses are of a different nature, both lead to the same conclusion in the event of non-payment5.
II. CONDITIONS UNDER WHICH THE LESSOR CAN EXERCISE THE RIGHT OF TERMINATION
A. Delivery of the Leased Property
Even if payment of rent and additional expenses is due, if the leased property has not been delivered to the lessee, the right to terminate regulated under Article 315 of the TCO cannot be excercised, since the delivery of the leased property is specifically stipulated in the abovementioned TCO Article. This can be interpreted as the lessee’s ability to establish direct control over the leased property6. In other words, the leased property has to be made ready for the lessee to control freely7.
B. Non-payment of Rent and Additional Expenses
As a result of the requirement, the rent or additional expenses must be due and subject to non-payment by the lessee for the lessor to be able to exercise the right of termination. Article 314 of the TCO stipulates the period of payment as follows: “The lessee shall pay the rent and the additional expenses, if required, at the end of each month and at the end of the rent period at the latest, unless the contract or local customs require otherwise”. As is common in practice, if a specific time for payment is determined, the payment is due on this date. Accordingly, if rent is due and subject to non-payment by the lessee, Article 315 is applicable. However, in line with widely accepted practice, for Article 315 to be applicable, the lessee must have gone into default alongside with the delay in the payment after the debt is due8. If the due date has not been determined beforehand, in accordance with the general provision related to default under sub-article 117/1 of the TCO, the lessee has to notify the lessor in order for the lessee to be considered in default.
However, in accordance with Article 117/2 of the TCO, if a due date has been set by which the rent must be paid, the lessee is automatically in default once that date is passed without requiring any notification to be made. Accordingly, since a due date is determined in practice, the lessee goes into default when the rent due is not paid. If the reason of the non-payment does not arise from the lessee’s actions, such as the lessor providing wrong account information, Article 314 of the TCO is not applicable and the lessor may not excercise the right of termination9.
C. Notification
In order for the lessor to be able to exercise their right to terminate, once the lessee has failed to meet their financial obligations, the lessor must give notice to the lessee of a certain extension of time. However, the notification is not valid if the rent is not yet due. Nevertheless, if the parties agree that the rent will be paid at the end of the certain period of time (based on working days), any notification sent before the end of this day is not valid10.
It is a requirment that the notification of an extension date be made in writing11. Notifications that do not comply with this requirement will be deemed invalid.
A further requirement for the notification to be valid is that the notification of extension given to the lessee must explicitly state the date on which the payment is due.12 The extension of the payment shall be not less than ten days, and thirty days for residential properties and roofed workplaces (Article 315). It can be understood from the Article that this is a partially compulsory provision; in which case, a longer period in favor of the lessee can be specified. However, it must not be shorter than the periods as regulated under the law13. This period commences on the day after the notification is delivered to the lessee. If there is more than one lessee, these lessees must be notified separately, and the period will commence after they receive the notification14. If the lessee is given a period shorter than that stipulated in Article 315, in order to exercise the right of termination, the lessor must again notify the lessee and grant a further time extension in compliance with the law15.
If the lessor is not the owner of the leased property (e.g. if the lessor is sub-leasing), the owner may not issue a further notification under Article 315 of the TCO or terminate the lease contract16. In this case, the person who is capable of issuing notifications or appealing for extraordinary termination is simply the lessor17 or an authorized representative of the lessor18.
In addition, there may be cases where there is more than one lessor. In such a case, all lessors are required to make a notification together19. Thus, as the Court of Appeals once held, “Under Article 315 of the TCO, as a rule, an eviction case filed due to default in contract, shall be filed by the lessor. If there is more than one lessor, as there is a required joinder of parties, it is required for them to send a warning and file the case together20." If the lessee or the lessor has passed away, notification is to be made by his/her inheritors21.
It is possible for the owner of the leased property to change in the duration of the lease contract. In such a case, the new owner becomes the party of the lease contract (Article 310 of the TCO) and provided that he/she notifies the lessee beforehand that the rent for the following period is to be paid to him/ her, the new owner has the right to notify the lessee of unpaid rent for the period after the new owner has taken ownership22.
In addition to these conditions, it must be clearly and comprehensibly stated in the notification for which period the payment of rent is being demanded and that the contract will be terminated if the rent is not paid within the specified period23.
If, following receipt of notification, the lessee pays the rent in due course and within the specified period, termination of the lease contract will have been avoided. It is acceptable in some cases that partial payment of the rent will prevent termination of the contract24. If the lessee fails to pay a very insignificant amount of the rent, the lessor shall not be able to terminate the contract, and if the lessor tries to terminate the contract in such a case, it is accepted that the lessor has misused their right of termination25. Rent is a debt to be paid by delivery26. Therefore, provided that it is not stated otherwise in the contract, for the rent to be paid in due form it needs to be paid to the lessor in person or it needs to be sent through the PTT to the lessor’s residence. Also, rent paid through any method that has become a customary practice is accepted as duly paid27. For example, payment through the lessor’s bank account may be considered as duly paid. In order for a payment that is deposited into the lessor’s bank account to prevent termination of contract, the payment has to be made to the lessor’s bank account within the specified period for rent payment.
III. CONSEQUENCES OF A LESSEE’S DEFAULT
A. Termination of the Contract
Article 315 of the TCO, contrary to Article 260 of the previous Turkish Code of Obligations that regulate the rule of exceptional termination, is contradictory as it stipulates that in order to terminate the lease contract, notification is required alongside the lessee’s default. As said above, if the lessee fails to pay the rent within the stipulated period, the lessor has the right to exceptional termination of the contract. However, the right for exceptional termination cannot be exercized by the lessor before the ten-day or thirty-day period stipulated in the legislation or any other longer period regulated in the contract on behalf of the lessee expires.28 If the lessor sends a termination notice within these periods, it is considered invalid.
There is a formal requirement in the legislation for a termination notice regarding lease contracts related to residential properties and roofed workplaces. In accordance with Article 348 of the TCO, any termination notice for lease contracts of residential and roofed workplaces is required to be in writing. Although there is no requirement for conditions except these states, it is more prudent that notifications in writing of ease of proof.
Article 18/3 of the Turkish Commercial Code No. 6201 (“TCC”) regulates that between merchants, notices for declaring default, termination of a contract and retraction must done through a notary, registered mail, telegraph, or registered electronic mail with a secure e-signature. Accordingly, in the event that a lease contract is drawn up between merchants, the termination notice must be done through either of the methods above as stipulated in the TCC.
There are two different methods for carrying out notice of termination29. One method is to notify the lessee of the date by which payments must be made, and if the rent is not paid within that specified period, the lease contract will be terminated. In this notification, if the lessee fails to pay the rent within the specified period, the contract is considered terminated. The other method is to send the lessee a termination notice following the expiration of the specified period if the lessee fails to make the payment on time30. In this case termination is considered valid when the notification reaches the lessee and the contract is terminated anticipatorily.
The lessor may not exercise their right of termination if the lessee pays the rent within the period granted. However, for residential and roofed workplace lease contracts, the lessor does have a possible method to use against a lessee who is in default and who prevents termination of the contract by making the payment within the period granted to the lessee. Article 352/2 of the TCC, which is applicable for residential and roofed workplace lease contracts, states that: “If the lessee has been sent two justified written notices for not paying the rent within the lease period for lease contracts shorter than one year, and within one lease year or a period exceeding one lease year for lease contracts that have a period of one year or longer, the lessor may terminate the lease contract with remedies within one month following the end of the lease period or for contracts longer than one year, following the end of the lease year in which the notices have been sent.”
This provision grants the lessor the right of termination with remedies for residential and roofed workplace lease contracts of a period longer than one year, provided that two justified written notices are sent to the lessee who comes into default for the payment of the rent within one lease year. Any case should be opened within one month following the end of the lease year in which the notices are sent. For contracts shorter than a year, a case must be filed after the end of the duration of the contract.
Accordingly, in lease contracts, there is no requirement to wait for the expiration of the lease period of a period longer than one year.
With this provision, lessors are protected against lessees who constantly default on payment of rent and prevent termination of the contract before the expiration of the lease period31.
The two justified warnings stipulated in this provision must be made in relation to the rent of two separate months, not within the same month, and the payments made after the notification of the warnings do not constitute an obstacle to the two justified warnings.
B. The Return of a Leased Property
Under Article 334 of the TCO, with expiration of a contract, the lessee is liable for the return of the leased property and the lessor has the right to request to take the leased property back. In terms of vacating the leased property and to fulfill the lessee’s duty of restitution, (the Court of Appeals) does not consider the fact that a lessee had actually vacated the leased property sufficient and has ruled that the key ought be delivered to the lessor32. otherwise the lessee will still be recognized as using the property33. The lessor can file an action to vacate the property if the lease contract related to the residence or roofed workplace has come to an end34.
C. The Lessor’s Claim for Compensation
Under Article 126 of the TCO, in the case of contracts in progress, the lessor is able to claim compensation for any loss incurred due to expiration of the contract. In the case of the lease contract being terminated in accordance with Article 315 of the TCO, it is quite likely that damages will be incurred by the expiration of a contract before its full term. For example, where a one-year contract ends in the sixth month, any profit damages arising from seeking a new lessee correspond to such a loss under Article 126 of the TCO35. In such a situation, affirmative loss can be claimed according to Article 126 of the TCO. It is also possible to demand default interest due to the late payment of rent. The lessor is able to make this claim with receivable as well as to make it afterwards36. Unless otherwise indicated in the contract, default interest shall begin on the day the lessee defaulted on the liability and is subject to a period of limitation of five years (Article 147 of the TCO)37.
Any default interest arising from non-payment of rent can be different under certain stipulations. Any rate of interest stipulated in the lease contract is valid38. In the event of a rate not being stipulated, different rates of default interest are applied in commercial and non-commercial lease contracts39. In order to identify whether or not a lease contract is a commercial contract, Article 3 of the TCC is applied. In accordance with this provision, all procedures and actions relating to a business concern and the issues regulated in the TCC are commercial transactions. Therefore, hiring equipment for use in a business concern, renting real estate to maintain the operations of the concern, renting housing for the business concern’s employees, etc. are considered commercial40. The default interest in such business transactions and lease contracts, which are deemed commercial, must not exceed 100% of the advance interest in accordance with Law no. 3095 on the Statutory Interest and Default Interest, as stipulated in Article 120/2 of the TCO. An advance rate of interest is regulated as 19.5% per year in 2008. As of 2019, the default interest rate on commercial lease contracts must not exceed 39%. The default interest shall not exceed 18% for non-commercial lease contracts.
Occasionally, loss can exceed the default interest rate. According to Article 122 of the TCO, if there is any loss such as this, “The debtor is obliged to recover this loss unless the debtor proves that he/she has no defects. If an amount exceeding the default interest is regulated in the pending action, the judge shall decide on the amount of the loss as the judge is able to decide on principle upon the request of the plaintiff.”
IV. CONCLUSION
According to Article 315 of the TCO, in the event that a lessee fails to pay rent or additional expenses, the lessor has the right to extraordinarily terminate the contract. The exercise of this right is subject to the condition that the lessee has defaulted on payment. In this situation, the lessee’s default status is considered under Article 117 of the TCO. In the case of a dated lease contract, the lessee goes into default once he/she has failed to pay the rent on the due date. However, if there is not a dated lease contract, the lessor must send notification to the lessee of default. Notice of termination can only be sent to the lessee after a default warning. Notice of termination is subject to the formal requirement of being in writing and the lessor or the legal representative of the lessor must send this notification to the lessee. In this notification, the period of the lease related to the rent and additional expenses must be stated. The period for which the lessee is liable for rent must be in accordance with the lease contract or the thirty-day and tenday periods regulated in the TCO. If the lessee is given a notice of termination without being in default or if the contract is terminated without being time dependent, such transactions shall be disabled. There are two different procedures for the notice of termination. The first procedure is to clearly state that the contract will be annuled if the payments are not paid within the period given in the notice of the termination sent to the lessee. The second procedure is to send a separate notice of termination after the period given to the lessee to make a payment. After the contract is terminated, the lessee is responsible for returning the leased property to the lessor and the lessor has the right to request the return of the leased property. The lessor can demand any loss as per Article 126 of the TCO, default interest as per Article 120 and exceeding loss as per Article 122 in compensation.
BIBLIOGRAPHY
ALPASLAN AKARTEPE, Türk Borçlar Kanunu’nun 315. Maddesi Çerçevesinde Kiracının Kira Bedelini Ödemede Temerrüdü ve Hukuki Sonuçları, p.25, http://dergipark.gov.tr/ download/article-file/333472, (Erişim Tarihi: 21.02.2019)
CEVDET YAVUZ, Türk Borçlar Hukuku Özel Hükümler, Istanbul 2014
FIKRET EREN, Borçlar Hukuku Özel Hükümler, Ankara 2014
M. ALPER GÜMÜŞ, 6098 Sayılı Borçlar Kanununa Göre Kira Sözleşmesi, Istanbul 2012
MURAT INCEOĞLU, Kira Hukuku, Istanbul 2014
NIHAL URAL ÇINAR, Türk Borçlar Kanunu’nda Düzenlenen Kira Sözleşmelerinde Kira Bedelinin Ödenmemesi ve Hukuki Sonuçları, Istanbul 2014
NIHAT YAVUZ, Yeni TBK, HMK, İİK ve İstinafa Göre Kira Hukuku, Ankara 2018
FOOTNOTE
1 Official Gazette (OG), dated February 4th, 2011, numbered 27836.
2 Alpaslan Akartepe, Türk Borçlar Kanunu’nun 315. Maddesi Çerçevesinde Kiracının Kira Bedelini Ödemede Temerrüdü ve Hukuki Sonuçları, p.25, http://dergipark.gov. tr/download/article-file/333472, (Last Access: 21.02.2019)
3 Cevdet Yavuz, Türk Borçlar Hukuku Özel Hükümler, 10. Ed., Istanbul 2014, p. 373.
4 Article 303 of Turkish Code of Obligation No6098 : “The Lessor shall be obligated that side expenses incurred related to use the lease property by himself/herself or by third.
5 M. Alper Gümüş, 6098 Sayılı Borçlar Kanununa Göre Kira Sözleşmesi, Istanbul 2011, p.86.
6 Inceoğlu, V. 1, p. 267.
7 Gümüş, p.277.
8 Ibid, p.272.
9 Ibid, p.272.
10 Supreme Court, 6. CC, D. 9.4.2013, 4267/6467.
11 Akartepe, p.15.
12 Ibid, p.15.
13 Supreme Court 6. CC., D. 6.11.2014, 10030/12090.
14 Nihal Ural Çınar, Türk Borçlar Kanunu’nda Düzenlenen Kira Sözleşmelerinde Kira Bedelinin Ödenmemesi ve Hukuki Sonuçları, Istanbul 2014, p.290.
15 Inceoğlu, V. 1, p. 274.
16 Ibid, p.286.
17 Ibid, p.286.
18 Akartepe, p.15,
19 Supreme Court 6. CC., D. 24.04.1995, 4151/4272.
20 Supreme Court 6. CC., D. 26.09.2013, 11183/13167.
21 Akartepe, p.14.
22 Ibid, p.14.
23 Supreme Court 6. CC. T. 20.06.2004, 5263/5373.
24 Fikret Eren, Borçlar Hukuku Özel Hükümler, Ankara 2014, p. 377.
25 Eren, p. 377.
26 Nihat Yavuz, Yeni TBK, HMK, İİK ve İstinafa Göre Kira Hukuku, 6. Ed., Ankara 2018, p.241.
27 Supreme Court 6. CC., D. 8.2.2016, 5082/667.
28 Supreme Court 6. CC., D. 9.4.2013, 4267/6472.
29 Akartepe, p.20.
30 Ibid, p.22.
31 N.Yavuz, p.824.
32 Supreme Court 8. CC., D. 13.9.2017, 3665/10603.
33 Supreme Court 6. CC., D. 5.3.2012, 15289/3446.
34 Akartepe, p.23.
35 İnceoğlu, V.1, p. 301.
36 N. Yavuz, p.242.
37 Ibid, p.242.
38 Ibid, p.242.
39 Ibid, p.241.
40 Ibid, p.242.
