Transfer of Lease Agreement and the Status of the New Owner
Introduction
Lease agreements are among the contracts that grant tenants the right to use immovable property for a certain period in exchange for payment and impose significant obligations on the parties. Under Article 310 of the Turkish Code of Obligations (“TCO”), if the ownership of an immovable property changes, the new owner automatically becomes a party to the lease agreement. While this provision secures the tenant’s right to occupy the property during the contract term, legal debates arise concerning the new owner’s right to eviction and rent increase.
In recent years, lease law in Turkey has frequently come to the fore, mainly due to rising property prices, urban transformation projects, and economic fluctuations. While recent regulations have granted new rights to property owners, they have also given rise to various legal issues requiring the protection of tenants.
This article examines the transfer of lease agreements, the rights and obligations of the new owner, the means of protection available to tenants, and the eviction processes in light of current practices.
The Transfer of Lease Agreements and the Legal Status of the New Owner
The Legal Nature of Lease Transfers
Under Article 310 of the TCO, if the ownership of a leased immovable changes hands, the existing lease agreement is automatically transferred to the new owner. This rule applies in all cases of ownership transfer, including sale, inheritance, forced execution, or donation. Upon acquiring ownership, the new owner becomes a party to the lease agreement and must allow the tenant to continue using the property under the same terms.
However, no unilateral amendments to the lease terms can be made due to the ownership change. The new owner has no authority to increase the rent, shorten the lease term, or impose additional obligations. Article 343 of the TCO explicitly provides that no amendments to the tenant's detriment may be made in lease agreements. Therefore, the new owner may only evict the tenant upon fulfillment of statutory conditions and the expiration of legal periods.
Obligations of the New Owner Toward the Tenant
As the new party to the lease, the new owner must fulfill all responsibilities undertaken by the former owner during the lease period. Under Article 301 of the TCO, the new owner must ensure the tenant’s right to use the leased premises by the contract and maintain the property in a suitable condition for use.
If the leased premises are defective or need essential repair or maintenance, the tenant may, under Articles 304 and 305 of the TCO, request a rent reduction or terminate the lease. These rights remain valid even after the ownership transfer, and the new owner becomes the addressee of such claims.
Eviction Rights of the New Owner and Tenant Protections
New Owner’s Right to Evict
When a lease agreement is transferred, the new owner becomes a party to the lease when the property is acquired. However, this does not automatically grant an eviction right. While Article 310 of the TCO regulates the transfer of lease agreements with ownership, Article 351 stipulates the conditions under which the new owner may evict the tenant.
The new owner may only evict the tenant if there is a genuine need to use the property as a residence or workplace for themselves, their spouse, descendants, or ascendants. Specific legal procedures must be followed to exercise this eviction right. Failure to comply with these procedures renders the eviction request unlawful and subject to dismissal by the courts.
According to Article 351 of the TCO, the new owner must notify the tenant in writing within one month from the date of title transfer. The right to request eviction is forfeited if this notice is not served within one month.
Additionally, an eviction lawsuit may only be filed six months after the notice. The lawsuit cannot be filed immediately after the notice is served, and the tenant may not be pressured for eviction before the end of the six-month waiting period.
The new owner bears the burden of proving that the eviction request is genuine and made in good faith. According to Court of Cassation precedents, the eviction right becomes invalid if the new owner cannot prove genuine need or leases the property to another person after eviction. If the tenant suffers damages as a result, the new owner may be held liable to pay compensation.
Furthermore, the new owner must prove that the declared need is not fictitious or collusive. If it is determined that the property was acquired solely to evict the tenant and there is no real need, courts may reject the eviction claim.
Additionally, once the tenant is evicted, the new owner may not lease the property to another person for three years. If this rule is violated, the tenant may file a compensation claim under Article 355 of the TCO. This provision is intended to prevent bad faith eviction lawsuits and ensure the necessity is genuine.
If the new owner fails to comply with legal procedures during the eviction process, they may not only harm the tenant but also face legal sanctions. If a court finds abuse of eviction rights, it may order the new owner to compensate the tenant’s losses.
Tenant Rights and Legal Safeguards
After the lease transfer, tenants have various legal protections against the new owner. Article 310 of the TCO stipulates that lease agreements automatically transfer to the new owner upon the conveyance of ownership. This prevents arbitrary evictions or unilateral rent increases. The tenant has the right to use the leased property under the terms of the existing lease for its duration, and the new owner may not infringe upon this right. The tenant may only be evicted under the specific conditions outlined in the TCO.
The new owner may only evict the tenant if they or their first-degree relatives genuinely intend to use the property. In such cases, the new owner must serve a written notice within one month of acquisition and file an eviction lawsuit no earlier than six months after this notice. The Court of Cassation ruled that acquiring a property solely to evict a tenant is not a valid reason. The court may reject the eviction claim if the tenant proves that the ownership change occurred without genuine need.
One of the most important tenant rights is the protection of rent amounts. Article 343 of the TCO prohibits any amendment to lease terms to the tenant's detriment. Therefore, the new owner cannot change the rent unilaterally. Rent increases may only be implemented by Article 344 of the TCO and a new lease term.
Another critical issue for tenants is the deposit (security amount). Under Article 342 of the TCO, the deposit must not exceed three months’ rent and be held in a bank account. When the property is transferred, the new owner becomes the party responsible for returning the deposit at the end of the lease. Even if the new owner did not receive the deposit personally, they are still liable to return it to the tenant and may subsequently seek reimbursement from the previous owner.
Obligations of the Former Landlord and the Legal Relationship with the New Owner
The transfer of ownership of a leased immovable affects the rights of the tenant and the new owner and the legal and financial responsibilities of the former and new owners. Issues such as whether the former landlord’s obligations are transferred to the new owner, to whom the tenant must pay rent, and how the deposit will be refunded arise upon transfer.
According to Article 310 of the TCO, while the lease agreement automatically transfers to the new owner, the former owner’s obligations arising during the lease period are not automatically assumed by the new owner. Under fundamental principles of the law of obligations, each obligation belongs to the party under whose term it arose. The change of ownership does not transfer prior debts to the new owner.
However, the new owner becomes a party to the lease agreement as of the date of ownership and must continue the lease relationship. From now on, the new owner is responsible for the leased property’s maintenance and for ensuring it remains fit for use. Nevertheless, the new owner is not liable for past-due rents or deficiencies during the former owner’s term. If the property’s maintenance or repairs were due during the former owner’s period, the new owner is not obligated to fulfill those responsibilities.
The new owner is only liable for the deposit if it was transferred to them or secured in a bank account. If the former landlord fails to fulfill duties such as proper handover or providing a defect-free property, they retain liability.
Upon transfer of ownership, the tenant’s rent payment obligation is redirected to the new owner. However, if the tenant, unaware of the ownership change, continues paying rent to the former landlord in good faith, such payments are deemed valid under Article 162 of the TCO, and the new owner cannot demand double payment.
The existing lease binds the new owner and cannot demand rent for periods before the transfer. If the former landlord collected excessive rent, the tenant must seek restitution from them, not from the new owner.
Conclusion
The transfer of lease agreements and the legal position of the new owner is a complex process that often leads to legal disputes in both theory and practice.
Recent developments such as urban transformation projects, rising property prices, and the emphasis on tenant rights have increased the significance of lease law.
Tenants must know the contract’s terms, exercise their legal rights in the face of eviction demands, and seek legal remedies when necessary. New owners must understand that acquiring a leased property means continuing the lease relationship.
In conclusion, the transfer of lease agreements is not limited to the change of ownership; it also involves issues such as eviction procedures, deposit refunds, and rent increases. Tenants and new owners must act with knowledge of their rights and carefully examine the terms of the lease agreement.
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