Contract Review in Leases of Residences and Roofed Commercial Premises
Concluding a lease only on a ready-made form, without provisions on payment, increases, security, use and termination that suit the property and the parties, can give rise to serious disputes later. When a contract is prepared or reviewed, the following areas in particular are checked:
- The identity of the parties, representation and authority to sign
- Whether the landlord is the owner and the landlord’s authority to lease
- The accuracy of the title deed, address and independent unit details of the property
- Purpose of use, permits and operating conditions
- Lease term, handover date and renewal arrangements
- Rent, payment day, bank account and the standard for payment descriptions
- The rent increase provision and mandatory limits
- The validity of the deposit, suretyship and other security
- Allocation of dues, taxes, insurance, maintenance and repair costs
- Fixtures, existing defects and the handover record
- Alterations, decoration, permits, signage and the obligation to restore the property
- Sublease and transfer of the right of use or of the contract
- The validity of provisions on early eviction, contractual penalties and acceleration
- Notice addresses, notary, KEP and the arrangement for electronic communication
- Dispute resolution, jurisdiction and mediation provisions
In leases of residences and roofed commercial premises, contract clauses that conflict with mandatory provisions to the tenant’s detriment may not produce the expected legal result even if they are written in the text. The freedom of contract and the protective provisions of the law must therefore be assessed together.
Basic Rights and Obligations of the Landlord and the Tenant
The landlord is obliged to hand over the leased property on the agreed date in a condition suitable for the use intended in the contract, and to keep it in that condition throughout the lease. The tenant, in turn, must pay the rent and the ancillary costs for which the tenant is responsible on time, use the leased property with care and in accordance with the purpose of use in the contract, give the necessary notices, and at the end of the lease return the property in the condition in which it was received, apart from wear arising from ordinary use.
When a defect that affects the value of use appears in the leased property, the nature of the defect, whether it was reported to the landlord in time, whether urgent intervention is required and prevention of an increase in the loss are examined. Claims for remedying the defect, a reduction of the rent, compensation or termination may be subject to different conditions in the same event.
Renovations and alterations made by the tenant are assessed on the basis of the landlord’s written consent; works to be carried out by the landlord are assessed on whether the tenant can be expected to tolerate them. The increase in value, the rent and the obligation to restore the property are examined separately. The fact that one of the parties has had maintenance or repairs carried out does not mean that the cost can in every case be recovered from the other party.
Commercial Leases and Commercial Contracts
In commercial leases, what matters is not only the physical handover of the property but that it is legally and technically usable for the planned activity. Zoning use, the occupancy permit, the business opening and operating license, the management plan, and the characteristics and restrictions recorded in the land registry should be examined before the contract is signed.
In long-term commercial leases, the following matters are specifically regulated:
- A fixed rent, turnover rent or mixed rent model
- VAT, withholding tax, stamp duty and the invoicing arrangement
- Common areas, dues, and advertising and marketing costs
- Fit-out period, investment contribution and the start of rent
- License, operating permit, signage and conditions of use
- Maintenance, repair, insurance and allocation of risk
- Sublease, transfer of the business and transfer of the contract
- Early exit, re-letting and loss during the reasonable period
- Renewal option and the method of rent increase
- Security, suretyship, bank letter of guarantee and corporate guarantee
- Eviction, key handover and restoration of the property
The transfer of the lease relationship by a commercial tenant to a third party should be assessed separately, particularly in a transfer of the business and in corporate restructurings. The landlord’s written consent, a justified reason and the continuing liability of the transferring tenant are determined on the basis of the specific transaction.
Family Residence, Annotation and Transfer Transactions
Leases That Are Family Residences
Where the leased property is used as the family residence, special provisions apply to the termination of the lease and to the spouse’s being a party to the contract. Whether a tenant spouse can end the contract without the express consent of the other spouse, and the legal consequences of notices, are examined.
Annotation of the Lease Right in the Land Registry
Particularly in long-term commercial, land and investment leases, the contract provision on annotating the lease right in the land registry, and the registration procedures, are carried out. The effect of the annotation on rights that can be asserted against persons who later acquire the property is assessed.
Sublease, Transfer of the Right of Use and Transfer of the Contract
The consent and form requirements for allowing a third party to use the leased property, subleasing it, or transferring the lease relationship are examined with the differing provisions for leases of residences and commercial premises in mind.
Written consent and the cost of alterations
For the tenant’s renovations and alterations, the landlord’s written consent is important under Article 321 TBK. Claims for restoration and for increase in value are assessed, in addition to consent, through separate written arrangements. The conditions for changes to be made by the landlord fall under Article 320 TBK.
Late-payment penalty and acceleration
In leases of residences and roofed commercial premises, a penalty clause tied to late payment of rent and clauses providing that later rents fall due are invalid under Article 346 TBK. Writing them into the contract does not make the provision applicable by itself. The form and maximum amount of suretyship and, where necessary, the spouse’s consent are also reviewed separately.
How We Work on This Topic
We review the purpose of use of the property and the parties’ performance obligations together. We prepare the contract text to fit mandatory rules, operating conditions, consent, security and the handover arrangement; in a dispute, we build the claim and the defense on the same documents.