Turkey: Special Lien In Favour Of The Lessor

Introduction

The fact that a Lessor must make immovable properties available to the lessee if the rent is upaid required a special protective right in favour of the lessor, and the ability to secure the rent, and to securely obtain such receivable, is recognized.

A pledge means the real right established over a movable or immovable property in order to secure the obligation of the debtor. A Special Lien also sets an example for movable pledges. Within the scope of a special lien as set out under Article 950, and the following articles of the Turkish Civil Code, the creditor has the right to retain the movable properties and securities that have come into his or her possession with the debtor's consent, until his or her claim has been satisfied, providing such claim is due and is intrinsically connected with the retained objects. If the obligation is unfulfilled, or sufficient security is not provided, the creditor may request the liquidation of the properties retained by him or her by serving a prior written notice to the debtor.

Within the scope of the above-stated general special lien, a specific lien in favour of the lessor is set out under the lease agreement section of the Turkish Code of Obligations ("TCO") with respect to rents. Thus, a legal special lien that may be enforced against the seizable movable properties of the lessee in favour of the lessor is recognized as a security for the rent that is owed.

Notwithstanding the fact that disputes arise on a daily basis from immovable property leases, the practise of special liens is not encountered at the same frequency. How special liens are set out under the TCO, as special and different types of special liens under the Turkish Civil Code, is dealt with in Article 270, as well as in the following articles of the Enforcement and Bankruptcy Law ("EBL").

The Legal Regulations and the Implementation

Article 336 of the TCO sets out Special Liens in Favour of the Lessor as follows:

"In terms of immovable property leases, as security for rent for the past year and the current six-month period, lessor has a special lien on movable properties upon the leased immovable property and is either used as fixtures, or required for the use of the leased immovable property."

As well, Article 338 of the same code is as follows:

"Where the lessee wishes to vacate the immovable property, or intends to remove the objects located therein, the lessor may, upon the decision of the judge of the court of peace or the bailiff, retain such objects as are required to secure his claim.

If the items that are the subject of the retention decision are removed secretly or by force, such items may, with police assistance, be brought back onto the leased immovable property within ten days of their removal."

Article 270 of EBL on the "Preparation of Ledger for Special Lien" in relation to the provision under TCO is as follows:

"Lessor may request the assistance of the bailiff's office prior to the commencement of the enforcement proceeding for the temporary protection of the special lien.

If the delay constitutes danger, the assistance of the municipal police or sub-district governor may also be requested.

Bailiff's Office prepares the inventory of the items subject to special lien and grants an appropriate period to the lessor for the commencement of enforcement proceeding by way of foreclosure of collateral provided that such period does not exceed fifteen days."

Such legal regulations recognise a special lien (a pledge right in other words) to the lessor over the "seizable" properties owned by the lessee and located on the leased immovable property, in addition to the right to collect the rent, and to vacate the leased immovable property.

There are two phases of the special lien.

The first phase is the creation of the special liens, i.e. the collateralisation. The lessor may request a special lien to be placed on the movable properties that are on the leased immovable property as security for rent for the past year and the current six-month period.

For the creation of such right, the creditor shall first apply to the bailiff's office (or the civil court of peace) as per Art. 270/1 of the EBL. If the adequacy of such request is approved, the bailiff's office shall review the immovable property with the commissioned officer or the relevant expert, to determine the movable properties owned by the lessee, to ascertain the quantity and value of such properties, and an inventory with respect to the aforementioned shall be prepared and the special lien shall be prepared as per Art. 270/3 of the EBL.

The second phase of a special lien is the enforcement proceeding in relation to the receivable. At such point, the creditor lessor shall be obliged to commence the enforcement proceeding by way of foreclosure of collateral within the period granted to him (and which cannot be longer than 15 days) as per Art. 270/2 of the EBL. If such enforcement proceeding is not commenced, the special lien shall be deemed forfeited. In the course of the enforcement proceeding, Article 145 titled "Foreclosure of Pledge on Movable" of the EBL, and the following articles, shall apply.

Nevertheless, the fact that the former Code of Obligations also sets out that a special lien may be placed on the items that are useful for the design of the leased immovable property, the TCO in force does not include the aforementioned within its scope. The item to be subject to such special lien must be located on, and either used as fixtures, or be required for the use of the leased immovable property. As a matter of course, such items must be seizable. The special lien is applied over both the usufructary lease, and the receivables of the operators of accommodation facilities, parking spaces, or other comparable facilities. The special lien may also be applied to items that are owned by the sublessee. On the other hand, if any third party claims that he or she owns the movable properties that are subject to the special lien, such third party shall have to evidence that the relevant items are owned by him or her; however, such evidence shall not be wholly satisfactory. In order for the action for replevin to be accepted, the third party must claim (evidence) that the creditor lessor knows, or should have known, that the movable property that is subject to the special lien, is not owned by the lessee.

Protective provisions in relation to the items that are subject to the special lien also exist. As per the TCO, Art. 338/2, if the items subject to the retention decision are removed secretly or by force, such items may, with police assistance, be brought back onto the leased immovable property within ten days of their removal. As per Art. 271/1 of the EBL, any item subject to the special lien that is removed secretly, or by force, must be returned to the leased immovable property within ten days of its removal, as per the order of the bailiff's office and by the municipal police.

Conclusion

The special lien granted to the lessor aims to secure the rent owing from the lease agreement, and to ensure that the lessor obtains such receivable in a relatively secure manner. The special lien is a specific regulation in terms of the movable pledge, as set out under the Turkish Code of Obligations, and exercised within the scope of the provisions of the Enforcement and Bankruptcy Law. The lessor may request the creation of a special lien over the movable properties on the leased immovable property as security for rent for the past year and the current six-month period and, accordingly, the collection of such receivable by commencing an enforcement proceeding by way of foreclosure of collateral.

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.