The Fate Of The Lease Agreement In The Event Of The Transfer Of The Leased Place And Eviction Lawsuit Within The Scope Of Turkish Code Of Obligations

Introduction

As it is known, lease agreements are frequently executed in practice, where the lessor undertakes to leave the use of something or the benefit derived from its use to the lessee, and the lessee undertakes to pay the agreed rent in return. However, according to the principle of the relativity of contracts prevailing in Turkish law, lease agreements produce effects only between the parties to the contract and do not generally produce effects and consequences against third parties, with some exceptions. Nonetheless, the legislator, in order to protect the tenant who is in a weaker position, has regulated in Article 310 of the Turkish Code of Obligations No. 6098 (“TCO”) that if the leased property changes hands after the lease agreement is concluded, the new owner becomes a party to the lease agreement. Thus, it prevents the new owner, who acquires the leased property after the lease agreement is concluded, from demanding the return of the leased property based on the right of ownership. In this respect, the sale of a leased property brings along various legal regulations and rights for both the tenant and the new owner. This article examines the fate of the lease agreement in the event of a change of ownership of the leased property and the rights of the new owner and the tenant in this context, in the light of doctrine and judicial decisions.

A. The Fate of the Existing Lease Agreement in Case of a Change of Ownership of the Leased Property

Before the entry into force of Art. 310 of the TCO, the new owner, who acquired the leased property after the lease agreement was concluded, could demand the return of the leased property based on the right of ownership. As mentioned above, due to the principle of relativity of lease agreements, the tenant could not assert their rights arising from the lease agreement against the new owner. The only exception to this was if the lease agreement involved an immovable property and the right arising from this agreement was annotated in the land registry. Indeed, according to Art. 254 of the repealed Code of Obligations, if the leased property was transferred to a third party or taken from the tenant through compulsory execution or bankruptcy procedures after the lease agreement was concluded, the tenant could demand the continuation of the lease agreement from the third party who acquired the property “if they accepted” or the performance of the agreement or compensation of their loss from the lessor. Similarly, under the Law No. 6570 on The Statute about the Renting of Tenements, the new owner became a party to the lease agreement at the moment of acquiring the immovable property and could only terminate the agreement by filing an eviction lawsuit according to Art. 7 of the said law. According to Art. 310 of the TCO, which entered into force on July 1, 2012, in the event of a change of ownership of the leased immovable property, the new owner becomes the successor to the lease agreement. In this case, the existing lease agreement continues between the new owner and the tenant. From the moment the new owner acquires the ownership of the leased property, they acquire the rights and obligations arising from the lease agreement of the previous owner. In this case, the tenant may demand the fulfilment of their obligations from the new owner, particularly the obligation to keep the leased property suitable for use. Furthermore, the tenant is also obliged to perform their debt arising from the agreement under the same conditions as stipulated in the agreement with the previous lessor. An important point here is that if the tenant has learned that the new owner has become a party to the agreement or if this situation has been notified to the tenant, they are obliged to pay the rent to the new owner. Otherwise, the provisions regarding the tenant's default may be applied.

According to Art. 310 of the TCO, which entered into force on July 1, 2012; in the event of a change of ownership of the leased immovable property, the new owner becomes the successor to the lease agreement. In this case, the existing lease agreement continues between the new owner and the tenant. From the moment the new owner acquires the ownership of the leased property, they acquire the rights and obligations arising from the lease agreement of the previous owner. In this case, the tenant may demand the fulfilment of their obligations from the new owner, particularly the obligation to keep the leased property suitable for use. Furthermore, the tenant is also obliged to perform their debt arising from the agreement under the same conditions as stipulated in the agreement with the previous lessor. An important point here is that if the tenant has learned that the new owner has become a party to the agreement or if this situation has been notified to the tenant, they are obliged to pay the rent to the new owner. Otherwise, the provisions regarding the tenant's default may be applied.

Consequently, the regulation in Art. 310/1 of the TCO has been introduced to protect the tenant and arises as a result of the agreement between the former owner and the tenant. According to this rule, with the acquisition of the leased property, the lease relationship will continue between the tenant and the new owner. Since the provision in Art. 310/1 of the TCO, which stipulates that the lease relationship will continue between the transferor and the transferee in case of a change of ownership of the leased property after the conclusion of the lease agreement, has been introduced to protect the tenant, it is considered imperative, and any agreements to the contrary will be deemed invalid.

B. The Right of the New Owner to Terminate the Lease Agreement

There is a special regulation in the law that grants the new owner the possibility to terminate the lease agreement in residential and roofed workplace leases. If the new owner wishes to terminate the lease agreement, they must comply with the legal provisions and the conditions of the lease agreement. In addition, under Art. 351 of the TCO, they have the right to demand the eviction of the leased property due to necessity. The new owner's demand for eviction due to necessity must be made by filing a lawsuit, not by a declaration directed at the tenant or through a notice sent to the tenant. This eviction lawsuit due to the new owner's necessity involves the process in which the new owner of the leased property demands the eviction of the tenant due to personal needs.

The eviction lawsuit due to the new owner's necessity is regulated in Art. 351 of the TCO. According to this article, if the new owner of the leased immovable property needs the property for themselves, their spouse, descendants, ascendants, or other persons they are legally obliged to support as a residence or workplace, they can terminate the lease agreement six months after the acquisition date by filing a lawsuit, provided they notify the tenant in writing within one month from the acquisition date. Additionally, if the person who acquired the leased property wishes, they can also exercise the right to terminate the lease agreement due to necessity within one month from the end of the lease term by filing a lawsuit. The conditions for filing the lawsuit are briefly regulated as follows;

1. New Ownership: The person who will file the lawsuit must have acquired the immovable property later. This acquisition can be through sale, donation, inheritance, etc. The right to file an eviction lawsuit based on residential necessity belongs to the person who rented the property. The person who rented the property can be the owner or third parties who are not the owner. Third parties who are not the owner but rented the property can also file an eviction lawsuit due to residential necessity. Similarly, even if the person is the owner but not the one who rented the property, they can also file an eviction lawsuit due to residential necessity. The lessor does not necessarily have to be the owner. The lessor who is not the owner can also file this lawsuit. The Court of Cassation, in one of its decisions, ruled that “if the notice containing the intention to terminate due to necessity sent by the lessor who is not the owner is accepted, the owner can file a lawsuit, and the merits of the case should be examined and decided accordingly.” [Decision of the 6th Civil Chamber of the Court of Cassation dated 16.11.1006, 2006/9443 C. and 2006/12237 D.]
2. Necessity: The new owner must need the immovable property for themselves, their spouse, descendants, ascendants, or other persons they are legally obliged to support. This necessity must be genuine, sincere, and obligatory, and the new owner must prove their necessity.

Specific circumstances are not enumerated as necessity reasons in the TCO, but in case law, the necessity must be genuine and obligatory, and this necessity must continue during the lawsuit. The Court of Cassation evaluates the issue of residential or workplace necessity according to the conditions of each case. For example, in one of its decisions, the Court of Cassation ruled that if the leased workplaces are more advantageous and profitable in terms of location compared to the workplaces where the owner and tenant are currently operating, the necessity claim is considered sincere. [Decision of the 6th Civil Chamber of the Court of Cassation dated 16.11.1006, 2011/1625 C. and 2011/6900 D.] Similarly, the Court of Cassation ruled that the desire of an adult child to live in a separate residence from the family [Decision of the 6th Civil Chamber of the Court of Cassation dated 05.11.2015, 2015/6245 C. and 2015/9532 D., Court of Cassation General Assembly of Civil Chambers dated 23.10.2015, 2014/6-224 C. and 2015/2354 D.], and the proximity of the property to the workplace of the owner or the person in need [Decision of the 6th Civil Chamber of the Court of Cassation dated 30.10.2013, 2013/12007 C. and 2013/14454 D., Decision of the 6th Civil Chamber of the Court of Cassation dated 11.03.2015, 2015/1031 C. and 2015/2447 D.], are considered genuine and obligatory necessity situations.

On the other hand, even if the lessor resides in their own property, they may need the leased property due to reasons such as wedding preparations, health issues, or the advantageous location of the leased property. If it is determined that these reasons genuinely create a necessity for the new owner, an eviction decision may be made.

 Another important point here is that if the owner, who terminates the lease relationship due to necessity, rents the property to someone other than the former tenant within three years without a justified reason, they are obliged to pay compensation not less than one year's rent paid in the last lease year to the former tenant according to Art. 355 of the TCO. The justified reason mentioned here is evaluated by the court considering the specific circumstances of the case.

C. Time Limits for Filling the Eviction Lawsuit

The filing periods for eviction lawsuits by the new owner are regulated in Art. 350/2 and 351 of the TCO. The legislator has stipulated the filing periods for eviction lawsuits based on residential necessity according to whether the lease agreement is for a fixed or indefinite period. In the decision of the Istanbul Regional Courts of Justice, 35th Civil Chamber, numbered 2017/1690 C., 2018/774 D., it was stated that “In the event of a change of ownership of the leased property after the lease agreement is concluded, the new owner has two options to file an eviction lawsuit due to necessity: they can file an eviction lawsuit within one month after the end of the lease term according to Article 350 of the Turkish Code of Obligations, or they can file a lawsuit six months after the acquisition date by notifying the tenant in writing within one month from the acquisition date according to Article 351 of the Turkish Code of Obligations. It was understood that the lawsuit was filed within the legal period.” Accordingly;

If the lease agreement is for a fixed period, a lawsuit can be filed within one month after the end of the period without the need for any notice or notification. However, for residential and roofed workplace leases, if the tenant does not notify the lessor at least fifteen days before the end of the lease term according to Art. 347 of the TCO, the agreement is considered renewed for one year under the same conditions. In this case, if there is a lease agreement that is renewed each year, a lawsuit can be filed within one month after the end of the renewed period without the need for any notice or notification.

In indefinite period lease agreements, the termination period and termination notice period according to general provisions are taken into consideration. According to Art. 329 of the TCO, each six-month period is a termination period in indefinite period lease agreements. In this case, the new owner can file a lawsuit for the termination of the lease agreement and the eviction of the tenant six months later by notifying the tenant in writing within one month from the acquisition date.

Conclusion

As a result, contrary to the previous law, the TCO No. 6098 stipulates that in the event of a change of ownership of the leased property, the lease agreement cannot be easily terminated, and the new owner becomes a party to the agreement and is obliged to fulfill the debt. In these regulations, which are favorable for the protection of the tenant, who is in a relatively weaker position compared to the lessor, the new owner is also granted the right to file an eviction lawsuit if they need the leased property for residential or business purposes, thus protecting the new owner's interests to some extent. At the same time, a balance has been established between the rights of the tenant and the needs of the new owner.

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.