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Key Considerations in Rental Agreements

Key Considerations in Rental Agreements

The most commonly encountered type of contract in everyday life is rental agreements. When you wish to rent a residential property or a commercial space for your company’s activities, the property owner typically wants to sign a rental agreement first. By signing the rental agreement, you will legally enter into certain obligations and commitments. Therefore, it is crucial to know what issues to pay attention to when entering into a rental agreement to prevent potential problems that may arise in the future.

  • Rental agreements prepared under the provisions of the Turkish Code of Obligations (“TCO”) primarily regulate the tenant’s rental of a property and the corresponding payment of a fee. The primary obligation of the property owner arising from the contract is to deliver the residential or commercial space to the tenant. Therefore, it is essential to detail the conditions and manner of delivery meticulously in the agreement. Furthermore, any fixtures within the property should be explicitly listed, and the conditions of their delivery should be established. This ensures that the tenant is obligated to return the rented property in the condition it was received. By stipulating the condition of the property and the accompanying fixtures in the rental agreement, it will facilitate proof in the event of any disputes arising in the future.
  • Another important aspect to consider in rental agreements is the necessity of clearly specifying the rental start date. While it is not essential to define the duration of the rental, it can either be for a specified period or for an indefinite term. What is critical here is that if a lawsuit for eviction is to be filed, the start date of the rental will be considered in determining whether the lawsuit was filed in a timely manner; hence, it is vital to clearly state the date in the rental agreement. Failure to specify the rental start date may complicate proving when the rental relationship commenced in any future eviction lawsuits, potentially leading to a loss of rights.
  • Another crucial consideration is that the rental fee should be expressed clearly and unequivocally in the rental agreement. In particular, for commercial rental agreements, it should be explicitly determined whether the rental fee is net or gross in terms of tax obligations. Additionally, it must not be overlooked that under the Presidential Decree dated 2018, it is not permissible to set the rental fee in foreign currency. Alongside the rental fee, determining the rental increase rate is also critical for potential disputes regarding the rental fee in the future. The rental increase rate is defined in the TCO as the “twelve-month average of the consumer price index” as an upper limit, and the parties may specify a rate below this.
  • After the rental relationship concludes, it is important for the landlord to receive the property back in complete condition along with its fixtures in good order. Otherwise, a deposit is typically collected from the tenant for compensation in practice. It is essential to include this provision in the rental agreement for evidentiary purposes. The deposit amount, referred to as “security deposit” in the TCO, can be set at a maximum of three months’ rent. The rental agreement should explicitly state what the security deposit will cover, how and when it will be refunded, and under what conditions it will not be refunded. To avoid future confusion, if the deposit is sent from a bank, it should be specified that the payment is made concerning the deposit. Additionally, whether the deposit will be returned with interest or as the principal amount should also be clarified in the agreement to prevent potential disputes during the eviction process.
  • According to the TCO, the tenant may only sublease the rented residential or covered commercial property with the written consent of the landlord. If the tenant intends to do this while renting, it is crucial to include this in the rental agreement to obtain the written consent of the landlord, and it should be clearly stated. Otherwise, subleasing the property without the landlord’s consent will constitute grounds for eviction.
  • Generally, when leasing a commercial property, it may be necessary to make certain modifications and changes based on the needs of the business. In such cases, it is vital to detail the modifications to be made, the costs to be incurred for these modifications, who will bear these costs, and whether the landlord will bear them as a reduction in rent or as a cash payment in the rental agreement to prevent any disputes in the future.
  • Particularly for high-value commercial rentals, there may be significant tax liabilities and obligations involved. In such situations, the rental agreement must specify who will bear the stamp tax and other fees. If not specified, this responsibility will fall on the landlord according to the relevant provision of the TCO.

In conclusion, the significance of rental agreements, which we frequently encounter in our daily lives, becomes apparent when evaluating these points together. The rental agreement serves as the basis for resolving potential disputes that may arise later. Therefore, rental agreements prepared with the consultation of a lawyer, rather than standard rental agreements used by real estate agents, will provide more comprehensive and protective terms for both parties.

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