TERMINATION OF THE LEASE AGREEMENTS BY THE LESSOR UPON EXPIRY OF THE TEN-YEAR PROLONGATION PERIOD

The general rule is that unless terminated by the lessee, in residential and roofed workplace leases, the lessor does not have the right to terminate the lease solely on the basis of the expiration of the lease term.

However, under Article 347 of the Turkish Code of Obligations numbered 6098 (the “TCO”), the lessor is entitled to unilaterally terminate the lease under certain conditions. According to this provision, at the end of a ten-year prolongation period following the initial lease term, the lessor may terminate the lease without stating a reason, provided that termination notice is given at least three months prior to the end of each subsequent prolongation year.

To put it succinctly, by virtue of Article 347/1 of the TCO:

1. Fixed term lease agreements do not automatically terminate on the expiry date of the fixed term;
2. The lessee has the right to terminate a fixed term lease agreement by giving a notice of termination at least 15 (fifteen) days before the expiry date of the agreement;
3. If a notice of termination is not duly given by the lessee, the lessee is accepted as to have been extended with the same conditions for 1 (one) year term. However, the rent amount may be increased as per the applicable provisions of the TCO;
4. The lessor is entitled to terminate the fixed term lease agreement only at the end of 10 (ten) year period of prolongation by giving a notice of termination at least 3 (three) months before the expiry of each prolonged year following this ten-year period.

Besides, the General Assembly of the Court of Cassation with docket number E. 2027/6-458 and Decision number K.2021/614 (in Turkish, “Yargıtay Hukuk Genel Kurulu”) has ruled that where a lease agreement between the parties is renewed, the date of the most recent agreement must be taken as the basis, and the ten-year prolongation period must be calculated according to the most recent signed agreement, since each renewal agreement restarting the ten-year period.

The Court of Cassation reached this conclusion on the grounds that Article 347 of the TCO regulates the duration of the lease agreement itself rather than the overall duration of the lease relationship.

Accordingly, for the lessor to trigger Article 347 of the TCO:

• The term of the lease agreement concluded between the parties must first expire;
• The initial lease agreement must then be automatically renewed for one-year periods as envisaged by the aforementioned article of TCO without a new agreement being executed between the parties;
• Such automatic renewals must continue for a total of ten years;
• The lessor must serve a termination notice at least three months before the end of the last renewal year following this ten-year period; and
• A lawsuit claiming evacuation must be filed at the end of the renewal year.

If, after the initial lease agreement, the parties execute a new lease agreement/ protocol, the ten-year period must be calculated from the expiry date of this new agreement/ protocol. In other words, each renewal agreement/ protocol executed by the parties restarts the ten-year period.

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