One of the headings that gives rise to the greatest number of disputes in lease relationships is the tenant vacating the immovable before the term of the agreement has expired. In practice tenants notify the lessor of their intention to leave the business premises on various grounds and hand the immovable back. That choice gives rise to a serious loss of income for the owner, since the immovable may remain empty for a period and, when it is let again, may equally be let for a sum below the previous rent. Taking that risk into account, the legislature has provided that the tenant’s obligations continue for a reasonable period sufficient for a new tenant to be found on similar terms. Put otherwise, the tenant has been held liable for the loss that the early departure causes the lessor.
That liability is not, however, absolute. A tenant who leaves the business premises early is released from the obligation once it finds a prospective tenant to take its place who is of such a character that the lessor may be expected to accept it and who has the financial means to pay. The lessor is under no obligation to conclude a contract with that candidate or to accept it; what is decisive is that the tenant has put forward a suitable candidate. Moreover, when the amount of the liability is calculated, the expenses the lessor is spared and the benefits it obtains or deliberately refrains from obtaining must be deducted from the rent.
Below we address first the ordinary grounds on which a lease agreement comes to an end, then the liability in damages arising from early eviction, the determination of the reasonable period, and the tenant’s opportunity to be released from that obligation.
When Does a Lease Agreement Come to an End?
Before early eviction can be spoken of, the term of the agreement and the moment at which it ordinarily comes to an end must have been established in advance. It is therefore appropriate to answer that question before turning to the main subject. Under Art. 300 of the Turkish Code of Obligations No. 6098, a lease agreement may be concluded for a fixed or an indefinite term. Where the parties have agreed a term in the agreement, the relationship is regarded as being of fixed term; where no term has been provided for, it is regarded as being of indefinite term.
Termination of Fixed-Term Agreements
Fixed-term lease agreements come to an end as a rule automatically upon expiry of the term agreed. Leases of dwellings and of roofed business premises depart from that rule, however: for the relationship to end at the close of the term, written notice to the other party is required. If the party wishing to bring the agreement to an end does not give that notice at least 15 days before the expiry of the term, the agreement is deemed to have been extended for a further year.
The consequence of failing to give written notice does not consist solely in a one-year extension; the agreement also becomes one of indefinite term. Indeed, Art. 327 of the Turkish Code of Obligations No. 6098 provides that, where the lease relationship is in fact continued without any express agreement, the agreement is converted into one of indefinite term.
Termination of Indefinite-Term Agreements
Indefinite-term lease agreements may be brought to an end by the tenant, provided the statutory termination period and the notice period are observed. These two concepts require explanation. In leases of business premises the period in question corresponds to the expiry of the six-month rental period; the tenant may end the relationship at the close of each six months. For the agreement to end at the close of that period, written notice must reach the lessor at least three months in advance. That three-month period is termed the notice period for termination.
Accordingly, in leases of business premises concluded as indefinite-term agreements from the outset, or which subsequently acquire that character, the tenant may exercise the right of termination provided it complies with certain conditions. A tenant seeking termination must first give written notice to the lessor and must ensure that the notice is given at least three months before the date of termination. Where the notice is given in accordance with the notice period, the agreement comes to an end at the close of the six-month termination period.
At this point the practice of the Court of Cassation should be noted. The higher court does not regard notice alone as sufficient for termination to be treated as having taken place, but also requires that the keys have been delivered to the lessor in due form. It falls to the tenant to prove that delivery has taken place. For that reason, handing over the keys by drawing up a written record affords the tenant a significant advantage in proof in any disputes that may later arise.
Compensation for the Lessor’s Loss Arising from Early Eviction
Tenants notifying their intention to leave the immovable before the term of the agreement has expired and vacating the business premises translates directly into a loss of income for the lessor. The immovable may remain empty for a period, or may only be let again for a lower sum. Taking that outcome into account, the legislature has held the tenant liable for the loss that the early eviction causes the lessor.
Under Art. 325 of the Turkish Code of Obligations No. 6098, where the business premises are vacated early, the tenant’s obligations continue for a reasonable period within which the immovable may be let again on similar terms. Relying on that provision, the lessor may bring an action for damages claiming loss of rent. Two points are separately assessed in such an action: what the reasonable period amounts to, and which items the tenant’s liability covers.
The Concept of a Reasonable Period
The statute confines itself to stating that liability continues for a reasonable period and does not regulate how that period is to be determined. In each case, therefore, the period within which the immovable may be let again on similar terms, running from the date of eviction, must be separately established.
It should be noted at the outset that the parties may reach agreement on this matter. Where a reasonable period has been agreed in the lease agreement, or where the parties reach agreement on the point after the eviction, the period determined is applied. Where no agreement can be reached, the period is established by the court. The court may make that determination by way of an on-site examination and a report by a court-appointed expert. The assessment takes into account the location of the business premises, the characteristics of the immovable, demand for premises of similar character and other data particular to the specific case.
Although the circumstances of the case may call for a longer period, the Court of Cassation accepts the reasonable period as being on average three months.
Court of Cassation, 3rd Civil Chamber, decision of 16.10.2019, Case No. 2018/3415, Decision No. 2019/8030
“Having regard to the fact that, according to the settled practice of the Court of Cassation, the reasonable period within which the leased immovable may be let again is on average three months, holding the respondent liable for the rent for a reasonable period of 8 months and 15 days on the basis of an erroneous assessment and an inadequate expert report has not been found correct and has necessitated reversal.”
The Scope of the Tenant’s Liability
Once the reasonable period has been determined, the second matter to be established is the scope of the liability. Although the provision states that the tenant’s obligations continue throughout the reasonable period, not every obligation arising out of the lease relationship can be assessed within that scope. The tenant’s liability is confined to the obligation to pay the rent and the service charges. Since the immovable has in fact been vacated, obligations such as using it with care, showing respect to neighbours or notifying the lessor of defects must be taken not to continue.
The amount of the damages is arrived at by multiplying the sum of the rent and service charges that would have been payable had there been no early eviction by the reasonable period. An example may usefully make the matter concrete: if the reasonable period has been determined as 3 months and the sum of the rent and service charges is TRY 10,000 per month, the amount for which the tenant will be held liable is TRY 30,000.
That the calculation may be made by this method does not mean that the figure so obtained will be awarded directly; certain deductions must be applied. Art. 325(2) of the Turkish Code of Obligations No. 6098 provides for the deduction from the rent of the expenses the lessor has saved and of the benefits it has deliberately refrained from obtaining or has in fact secured. For example, if the lessor was meeting the utility bills for the immovable and has been relieved of those payments by reason of the eviction, the sum in question must be deducted from the calculation.
The lessor may not have been able to let the immovable to another person; if, on the other hand, it has generated income by using the business premises itself, that income too is subject to deduction. The lessor is furthermore expected to make efforts to let the immovable again on similar terms. A lessor who does not display the care and effort to be expected of it cannot claim from the tenant the loss arising out of that omission.
A more detailed assessment of the tenant’s obligations appears in our study entitled “Service Charges (Dwellings, Housing Estates and Business Premises)”.
Courts with Subject-Matter and Territorial Jurisdiction
In an action for damages claiming loss of rent brought by the lessor, subject-matter jurisdiction lies with the Civil Court of Peace. As to territorial jurisdiction, a choice may be made between the court of the place where the agreement was performed and the court of the tenant’s domicile.
Release of the Tenant from Liability
Although the rule is that liability continues throughout the reasonable period, there are cases in which the tenant can be released from that burden. Where a tenant who vacates the business premises early finds, to take its place, a new tenant who is of such a character that the lessor may be expected to accept it and who has the financial means to pay, its liability comes to an end.
Nor is the outcome altered where the candidate put forward possesses the qualities the statute requires but the lessor declines to conclude a contract with that person; the tenant is released from liability all the same. For the tenant has done what fell to it in order to be released from the obligation, while the lessor has refused to accept the candidate put forward.
Independent Legal Assessment
In early-eviction disputes the argument is for the most part concentrated not on the existence of liability but on its scope and duration. On the lessor’s side, the element determining the strength of the file is whether the efforts made to let the immovable again can be demonstrated through advertisements, correspondence with estate agents and records of viewings. On the tenant’s side, whether the date of handover of the keys has been fixed by a written record and whether the financial means of the prospective new tenant put forward have been documented become decisive.
The following headings should be attended to if the process is to be conducted soundly:
- Recording the date of eviction and of handover of the keys by written record
- Giving the notice of termination in writing and observing the three-month notice period
- Supporting the reasonable period with concrete data on the location of the immovable and market conditions
- Confining the claim to the rent and service charges alone and filtering out items falling outside that scope
- Reflecting the deductions under Art. 325(2) of the Turkish Code of Obligations No. 6098 in the calculation from the outset
- Notifying the lessor in writing of the prospective new tenant and documenting that candidate’s qualities
Independent Legal provides advisory services and litigation support in disputes arising out of leases of business premises, from the conclusion of the agreement through to the conduct of actions for damages founded on early eviction.