We said that every extraordinary period creates its own law and we named it the Law of CoranaVirus. In the continuation, we mentioned that we will touch on a different area in each of our articles. The subject of this article is one of the most curious subjects, the effects of the Corona Virus crisis on rental agreements, whether the tenant’s obligation to pay the rent will continue, and how the tenant-lessor relations will be affected by this situation.
Due to the known CoronaVirus epidemic, very serious measures were taken across the country in order to protect citizens and prevent the spread of the epidemic, the public was warned to stay at home in order to prevent the spread of the virus, citizens over the age of 65, who are in the high-risk group, those with chronic diseases and young people under the age of 20, curfew. Measures were taken, such as the closure of workplaces operating in many different business lines, from restaurants, hairdressers, gyms to bars and cafes. After that, the shopping malls were closed and the streets were empty.
Although what was done was right in terms of health, it was inevitable that there would be serious negative effects in terms of economy. All economic circles confirm that we are facing a serious crisis, while American economists say prepare for the greatest recession in history, IMF Resources refer to CoronaVirus as an unprecedented economic crisis in the world. Of course, it is unthinkable that all these developments will not hit our country…
The measures taken have naturally caused some sectors to slow down and others to stop altogether. Most of these businesses are not owners, they are tenants. After all, these businesses, whether open or closed, continue to pay rent because they continue to occupy their place. Lease agreements continue to operate regardless of the state of the business.
So, how will these rents of companies, workplaces, businesses, self-employed people who are directly or indirectly affected by this CoronaVirus crisis and even companies, workplaces, businesses, and self-employed people who have to close their businesses due to the circular of the Ministry of Internal Affairs be paid? The owners of workplaces and shops who have tied their income to this rent are right, but are the tenants who have stopped working and cannot do it wrong? Of course not, they’re right too.
So, is there a legal regulation regarding rental agreements?
Unfortunately, there is only one regulation on this subject, which is a candidate to become a serious problem between the parties. This legal regulation on the subject states the short but interesting provision in the LAW ON CHANGE IN SOME LAW NO. 7226 published in the 31080 Repeated Issue of the Official Gazette dated 26.03.2020; TEMPORARY ARTICLE 2 – (1) Failure to pay the rental fee of the workplace, which will operate from 1/3/2020 to 30/6/2020, shall not constitute a reason for termination of the lease agreement and eviction.
That’s it. Well, let’s see if we can say that the legislator has taken a step to protect the tenants; Essentially, this is a clause that only covers termination and evictions. In summary, it is said that if the rental fees processed between March 1 and June 30 are not paid in due time, this situation does not constitute a reason for termination and eviction. However, it seems that although the commercial life has almost stopped, the payment obligation continues. In other words, according to us, the legislator; “The rent may be delayed or not paid, if it is paid late, manage a little,” he says. He says, is there a provision for rental prices that can hardly be paid? No, it is not available. In this case, it can mean that it will be paid even if it is late. But what can be done if it has become unpaid at all? Are there any legal possibilities that tenants can apply? Let’s look at these details now.
What does the General Rule on Rental Agreements say?
In Turkish Law Rental agreements are subject to the Turkish Code of Obligations No. 6098. According to Article 313 of the Code of Obligations, the debt of paying the rent is the tenant’s debt no.1. Related article; “The tenant is obliged to pay the rent,” he says. Failure to pay the rent will cause the tenant to default with the fulfillment of other conditions sought in the law. In other words, the debt is delayed and the obligation to pay immediately arises.
In Article 315 of the Code of Obligations, there is a special regulation regarding the default of the lessee. According to this regulation; “If the lessee does not perform the debt due to pay the rent or ancillary expenses after the delivery of the leased property, the lessor may give the lessee a period in writing and notify that if he does not perform within this period, he will terminate the contract. The period to be given to the tenant is at least ten days, and at least thirty days for residential and roofed workplace rentals. This period begins to run from the day following the date of the written notification to the tenant. is called.
It is possible to terminate the contract if the tenant does not fulfill his debt within this period, which is given in summary. Here is the temporary 2nd part of the Law No. 7226 mentioned above. 315 of the Code of Obligations, in case the tenants default due to non-payment of the due rent between March 1, 2020 and June 30, 2020. In other words, the lease agreement cannot be terminated and the tenant cannot be asked to evacuate, and the notices made regarding the unpaid rent within the period covering these periods cannot be accepted as a “justified notice”.
The regulation introduced by the Law No. 7226, as we mentioned, prevents the termination of the lease agreement, but does not eliminate the rent receivable. There is no regulation that completely prevents the tenant who does not fulfill his rent debt from defaulting. In the presence of other legally required conditions, it does not prevent the tenants from defaulting on the debtor. In short, there is no obstacle to demanding both the rental fee and the default, that is, default interest, in case the rental fees operating in this process are not paid.
Subject of Legal Defect in Rental Agreements:
Legally, lease agreements are generally among the contracts that create a loan to be used. While one of the parties undertakes to transfer the use of a property to the other party in contracts that create a usage debt, the other party undertakes to pay a price. There is a permanent debt relationship between the parties. As a matter of fact, according to article 301 of the Code of Obligations; “…The lessor is obliged to deliver the leased property on the agreed date, in a condition suitable for the intended use in the contract, and to keep it in this condition throughout the contract. This provision cannot be changed against the tenant in housing and roofed workplace rents; In other lease agreements, no arrangement contrary to this provision can be made against the tenant through general transaction conditions.
In this article, the lessor has the obligation to deliver the leased thing in accordance with the intended use in the contract and to keep the leased property in this condition for the duration of the contract. This means: If there is a legal prohibition and limitation that prevents the use of the leased property in accordance with the purpose determined in the contract, reduces or completely eliminates the possibility of benefiting, after the lessor has delivered the subject of the lease, the defect provisions come into play. In case such a situation arises, this situation creates the responsibility of the lessor from a legal point of view. In this case, it is called shame in law.
From a broad perspective, the fact that the leased property cannot be used for the purpose agreed in the contract due to legal regulations can also be considered as a shame. And indirectly, it is the responsibility of the lessor. As it is frequently mentioned in the doctrine and Supreme Court decisions, the lessor does not have to be at fault to be responsible for the defect. That is, the situation that prevents the use of the leased property in accordance with the contract does not necessarily arise from the lessor. As a matter of fact, due to the Corona Virus epidemic, the activities of some business lines were temporarily suspended with the Ministry of Interior Circular issued as a result of the measures taken. For this reason, we think it is possible for the tenants to apply to the defect provisions in the workplaces whose activities are prohibited, if the rental purpose is clearly determined in the rental agreement signed between the parties.
Indeed, the Supreme Court 3. The Civil Chamber says exactly as follows in a fairly recent decision numbered 2017/ 6665 E. and 2019/2371 K. “With the expression of article 301 of TCO numbered 6098, the lessor; is obliged to deliver the leased property in a condition suitable for the intended use in the contract and to keep it in this condition throughout the contract. The lessor does not fulfill this debt only by an actual delivery. For whatever purpose the lessee has kept the leased property, the lessor is obliged to deliver in a manner suitable for that purpose. The lessor is obliged to correct the defects and deficiencies that occur in the leased property during the contract, unless the tenant is at fault. If there is an impossibility or low level of use of the leased property due to the defective delivery of the leased property, then the tenant is expected to notify the lessor of the existing defect in an appropriate time by acting in accordance with Articles 123 and 125 of the TCO. Again, according to article 305 of the Turkish Code of Obligations No. 6098, the lessor may apply to the liability arising from the later becoming defective of the leased item. If the leased item becomes defective later, the lessee may ask the lessor to correct the defects or to make a reduction in the rental price proportional to the defect or to repair the damage. In case of significant defect, the tenant’s right to terminate the contract is reserved. According to Article 307, in case of the existence of defects affecting the use of the leased property, the lessee may request a proportional reduction from the rental price for the period until these defects are eliminated.
The decision is very clear and seems quite supportive of our argument.
Article 305 of the Code of Obligations mentioned in the decision- “If the leased one becomes defective afterwards, the lessee may request the lessor to eliminate the defects or to make a proportional reduction from the rental price or to compensate the damage. However, the request for compensation does not prevent the use of other optional rights. is in the form.
Another article mentioned in the decision is the Law of Obligations, titled reduction of the rental price, article 307- “…The lessee may request a reduction in the rental price proportional to the defect, for the period between the discovery of these defects by the lessor by the lessor and the elimination of the defect, in case of the existence of defects affecting the use of the leased property…” says.
Let’s add article 306 of the Code of Obligations here; “…. In the event that the defect eliminates or significantly hinders the suitability of the leased property and is not remedied within the given time, the lessee may terminate the contract.
The subject is deep and detailed, so a detailed explanation is required.. Well, after all this explanation, now the crucial question is: Can it be based on Shameful Provisions Due to the CoronaVirus Crisis?
When all these legal provisions are evaluated together, we see that the lawyers are seriously divided into two. Some argue that it is not possible to apply the aforementioned defect provisions in the face of this crisis, which occurred due to force majeure and without the influence of the lessor.
However, due to the principle of balance between actions, it is correct to put all the burden on workplaces whose activities are temporarily suspended by a public decision. In this period, when workplaces cannot work, it is quite possible for us to request a reduction in the rental price pursuant to article 307 of the Code of Obligations.
Although there is a right to annulment pursuant to Article 306 above, since there are two parties in a contract and a balance must be struck between the acts, we think that requesting a reduction in the rental price, rather than the possibility of termination, is more beneficial both for the sake of the situation and for the rule of good faith. seems appropriate.
Hardship due to the CoronaVirus crisis and the Civil Code 2. Can the Integrity Rule in the article be sustained?
Although the subject of the debt is not impossible, its performance may become difficult due to an extraordinary situation that cannot be attributed to the debtor. In other words, although the performance of the debt is still possible, the performance of the said debt as agreed in the contract may have very difficult consequences for the debtor.
Although the principle of commitment to the contract is one of the principles that dominate the law of obligations, the implementation of the contract in this way, in its first agreed form, may bring along some injustices. The first legal institution that comes to mind to eliminate this injustice is the adaptation of contract conditions to changing conditions. It should be noted that the debtor does not have the right to adapt the contract or terminate the contract in accordance with article 138 of the Turkish Code of Obligations in every case of excessive difficulty in performance. In order to benefit from these legal opportunities, that is, the adaptation of the contract to the changing conditions or the use of the right to return depends on the fulfillment of the following four conditions;
- An extraordinary situation must have arisen at the time of the conclusion of the contract, which was not foreseen by the parties and was not expected to be foreseen.
- This situation should not have arisen from the debtor.
- This situation must have changed the existing facts at the time of the conclusion of the contract to the detriment of the debtor to such an extent that the request for performance would be contrary to the rules of good faith.
- The debtor must have not fulfilled his debt yet, or he must have performed it without prejudice to his rights arising from the excessive difficulty of performance.
According to the article, if all the conditions of the adaptation have been fulfilled, the debtor can ask the judge to adapt the contract to the new conditions. If this is not possible, the debtor may withdraw from the contract; As a rule, in perpetual contracts, he uses his right of termination. Therefore, in the event of such an application, the judge should carefully evaluate whether the conditions in question exist and reach a conclusion. However, when viewed objectively, the situation that has arisen due to the Corona Virus crisis is exactly as described in the law.
On the other hand, this solution, that is, the adaptation of the contract conditions due to excessive difficulty in performance, is also the famous 2nd article of the Turkish Civil Code. It also complies with the honesty rule in the article. In the doctrine, in the justification of the provision of article 138 of the Turkish Code of Obligations, it is also stated that the principle of honesty included in this article is the basis of the request for adaptation based on excessive difficulty in performance. Parallel to this justification, it is a fact that the Supreme Court tries to reach a conclusion based on the principle of honesty in its decisions.
As a matter of fact, in a decision of the Supreme Court of Appeals General Assembly, “…here, in cases such as extraordinary states of war, economic crises that shook the country, extraordinary rises in the inflation graph, shock devaluation, significant decrease in the value of money, adherence to the contract and contract justice. a conflict arises between the principles of the law and now strictly adhering to the contract creates a situation contrary to the principles of justice, fairness and objective goodwill (Article 2/2 of the MK). the basis on which it is based is to find a solution in accordance with the rule of honesty…”.
In another decision of the Supreme Court of Appeals General Assembly, the following statements were made; “…If the conditions that affect the will of the parties and cause them to enter into contracts, have changed significantly later on, with the realization of striking and unfair events, the parties are no longer bound by that contract. In the face of these changing conditions, 2nd Civil Code. It is possible to re-arrange the contract by making use of the article. State of emergency that disrupts the balance between the acts of the contract, war, economic crises that shook the country, extreme increases in the inflation graph, shock devaluation, significant decrease in the value of money; situations where commitment to the contract cannot be expected can be given as an example. If the balance between the performances in mutual agreements is upset due to extraordinary changes and strengthens the performance of the debt, “COLLAPSE OF THE BASIS OF THE TRANSACTION” comes to the fore. In this context, the judge, according to the data of the concrete case, may decide to increase the debtor’s performance for the benefit of the creditor or to get rid of the debtor’s obligation completely or partially for the benefit of the debtor, and intervenes and adapts the contract to the changing conditions.
I think that there is no need to make any further additions after these book-like, clear and clear decisions of the General Assembly of the Supreme Court of Appeals.
In addition to this situation, which is valid for rental fees, can the Tenant also Avoid Participating in Dues and General Expenses?
In our opinion, it does not seem possible to use the contract conditions or the opportunity brought for the rental price to not participate in the fees and general expenses. As a matter of fact, in accordance with the provision of Article 20/c under the heading of participation in the general expenses of the main real estate in the Property Ownership Law No. 634; “…The flat owners cannot avoid paying this expense and advance share by giving up their right to use the common place or facilities or claiming that there is no need or need to benefit from them due to the situation of their own independent section…”
Despite this, there are also opinions claiming that with the collapse of the transaction basis and the intervention of the judge in the contract, the contract can be adapted to changing conditions and a fair reduction in the payment amount can be requested. Due to the relatively low number of dues, we think that it is necessary to look and evaluate whether there is a numerical application value in this direction.
Due to the Ministry of Internal Affairs Circular issued as a result of the measures taken due to the Corona Virus epidemic, the activities of some business lines were temporarily suspended and many businesses were closed based on this. In our opinion, it is very possible to request a discount on the price. In addition, they may request the judge to adapt the contract to new conditions, to change the terms of the contract or to make a reduction in the rental contract price, pursuant to article 138 of the Turkish Code of Obligations, on the grounds that due to the state of emergency that severely disrupts the balance between the acts, they have difficulty in performance.
For businesses and companies that have to close their businesses by public decision, the first solution is due to the impossibility of performance, and the second solution is considered for businesses that close their businesses on their own initiative because the number of customers entering shopping malls has decreased, for example, the number of customers entering shopping malls, and there is no people on the streets, because it will not cover the operating costs. but it would be much more logical to rely on both provisions separately when applying to the court.
The intervention of the judge to the contract and its adaptation to the new situation will require some means of proof. The effects of CoronaVirus on daily life, the curfew of those under the age of 20 and over 65 and those with chronic diseases, the decrease in the number of customers from all walks of life, the dramatic decrease in the number of customers who can go out and enter the shopping mall, high operating costs, and those who do not want to come to work due to risk. Employees, unmet personnel expenses, difficulties in supplying goods, restrictions in logistics, prohibition of entry and exit to the city, decrease in purchasing opportunities, citizens turning to more virtual shopping, not having the opportunity to accept customers in the business, and some jobs turning into just pick-up or home delivery. There is no doubt that issues such as losses and, in short, serious loss of sales and turnover in total are easily demonstrable for businesses.
These two provisions in our laws will be a lifeline for businesses that are in a difficult situation due to the Corona Virus crisis.
Lawyer / K&P Legal Law Firm