Commercial Lease Agreements in Turkey: Key Legal Points

Introduction to Commercial Leases

Commercial leases for offices, shops, warehouses, and other business premises operate under different rules than residential rentals. While the Turkish Code of Obligations (TCO) No. 6098 governs both, commercial tenants—especially registered merchants—face different dynamics and obligations.

Understanding these distinctions is essential for both landlords and tenants entering into workplace rental agreements.

Key Differences from Residential Leases

Tenant Protection Level

Aspect	Residential	Commercial
Protection level	Higher	Lower (merchants expected to be prudent)
Consumer law application	Yes	Generally no (B2B transaction)
Eviction grounds	Same as TCO	Same as TCO
Tax treatment	No withholding	Withholding tax applies

Merchant Status

Commercial tenants operating as registered merchants (tacir) are held to higher standards:

• Expected to understand their contractual obligations
• Less likely to receive favorable interpretation in disputes
• Subject to commercial law principles alongside TCO

Withholding Tax (Stopaj)

One of the most important distinctions in commercial leases is the withholding tax obligation.

How It Works

When renting commercial property:

• The tenant must withhold 20% of the gross rent as income tax
• This tax is paid to the Revenue Administration by the tenant
• The landlord receives the net amount

Net Rent vs. Gross Rent Contracts

Net Rent (Net Kira):

• Contract specifies the amount landlord receives after tax
• Tenant pays this amount to landlord PLUS pays tax separately
• Example: 10,000 TL net = landlord gets 10,000 TL, tenant pays ~2,500 TL tax to state

Gross Rent (Brüt Kira):

• Contract specifies total amount including tax
• Tenant deducts 20% and pays to state, remainder to landlord
• Example: 12,500 TL gross = landlord gets 10,000 TL, tenant pays 2,500 TL tax

Important: Clarify this in the contract to avoid disputes.

Who Issues the Invoice?

Landlord Type	Document
Company (Şirket)	Landlord issues invoice (+VAT if applicable)
Individual (Gerçek Kişi)	Tenant issues Expense Note (Gider Pusulası) and withholds Stopaj

Subletting and Transfer Rights

General Rule

A commercial tenant cannot sublet or transfer the lease without the landlord’s written consent.

Difference from Residential

However, unlike residential leases where the landlord can refuse arbitrarily, a commercial landlord cannot withhold consent without just cause.

Just Causes for Refusal:

• Proposed new tenant has poor credit/reputation
• New use would violate the lease terms
• Structural changes needed

Key Money (Hava Parası)

This practice involves payment for the right to take over a commercial lease or business:

• Common in prime retail locations
• Not expressly regulated by law
• Should be documented carefully
• Tax implications for both parties

Renovation and Decoration

Commercial tenants often invest significantly in the premises:

Common Improvements

• Interior construction (walls, ceilings)
• Shop fixtures and displays
• Specialized installations (kitchen, clinical equipment)
• Branding and signage

Legal Considerations

Without Clear Contract Terms:

• Landlord may demand return to original condition
• Tenant’s investment may be lost
• Disputes over fixture ownership are common

Recommended Contract Clauses:

1. “Tenant may remove improvements at lease end”
2. “Landlord shall compensate for improvements left behind”
3. “Specified improvements become part of the premises”
4. Clear definition of what constitutes “original condition”

Amortization of Improvements

For long-term leases, consider:

• Spreading renovation costs over lease term
• Landlord contribution in exchange for extended term
• Separate agreement on improvement ownership

Term and Renewal

Fixed Term Leases

Commercial leases are typically for longer terms (3-5 years is common):

• Provides business stability
• Amortizes setup costs
• May include renewal options

Automatic Extension

After the initial term:

• Lease extends automatically year by year
• Tenant has security of tenure
• Landlord needs just cause to terminate

Termination Rights

Same grounds as residential:

• Personal need (but must be genuine)
• Two valid warnings for late payment
• Eviction undertaking (if valid)
• 10-year extension period

Common Clauses in Commercial Leases

Exclusive Use

Landlord agrees not to rent other units to competing businesses:

• Important in shopping centers
• Should define competitive activity precisely
• Remedies if violated

Operating Hours

Lease may specify:

• Minimum hours of operation
• Coordination with other tenants
• Closure restrictions

Common Area Maintenance (CAM)

In multi-tenant buildings:

• Tenant contributes to shared expenses
• Should specify calculation method
• Annual reconciliation procedures

Assignment and Change of Control

If the tenant is a company:

• Clause addressing sale of company shares
• Change-of-control provisions
• Landlord notification requirements

Insurance Requirements

Commercial leases typically require:

• Property Insurance: May be landlord’s obligation
• Liability Insurance: Tenant’s obligation
• Business Interruption: Recommended for tenant
• Named Insured: Both parties may require coverage

Dispute Resolution

Commercial lease disputes can be resolved through:

Mediation (Mandatory as of 2023)

• Required before filing lawsuit
• Faster and cheaper than litigation
• Agreement has force of judgment

Arbitration

• If contract includes arbitration clause
• Often used in large commercial transactions
• Private and potentially faster

Court Litigation

• Civil courts for lease disputes
• Commercial courts if both parties are merchants

Practical Tips

For Tenants

1. Review before signing: Have a Attorney examine the contract
2. Negotiate terms: Commercial leases are negotiable
3. Document improvements: Keep records of all investments
4. Understand tax obligations: Withholding tax compliance is mandatory
5. Key money: Get written receipt and declare properly

For Landlords

1. Due diligence: Verify tenant’s business creditworthiness
2. Detailed contract: Address all common scenarios
3. Regular inspection: Document property condition
4. Tax compliance: Ensure tenant properly withholds and declares
5. Insurance verification: Confirm tenant coverage annually

Legal Assistance: We draft and review commercial lease agreements, handle tenant-landlord negotiations, and represent clients in commercial tenancy disputes. Contact us for expert guidance.

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