Things to Consider in a Lease Agreement

Important Considerations in a Lease Agreement | Ephesus Law Firm

What is a Lease Agreement?

A lease agreement is a contract in which the lessor agrees to allow the lessee to use or benefit from something, and the lessee, in return, undertakes to pay the agreed rent.

What should be considered when preparing a rental agreement?

1- The lease agreement should clearly state the title deed information and the characteristics of the property.

The lease agreement must include the property's title deed information, full address, and any other important details regarding the lease. This will facilitate proof in case of future disputes between the parties concerning these details.

Furthermore, if the lease agreement is to be processed under a mortgage, it would be beneficial to regulate this in the lease agreement and to specify in advance who will pay the resulting expenses.

2. The rent amount and payment schedule should be clear and unambiguous.

Clearly defining the bank account details for payments, including the payment schedule and timeframes, in the lease agreement will prevent future disputes on such matters.

3. The deposit amount should be determined and it should be specified how this amount will be held.

If a deposit is involved in the contract, details such as its amount and how it will be kept must be clearly stated.

4. A list of existing fixtures and fittings in the residence should be prepared.

A list of the fixtures and fittings included in the leased property and their condition must be provided. Otherwise, proving damages to these fixtures and fittings may be difficult during the claim process.

5. It should be decided who will cover the membership fees and other expenses.

In residential and commercial property leases, unless otherwise stipulated in the contract or unless there is a local custom to the contrary, the tenant is obliged to bear the costs of utility expenses such as heating, lighting, and water. The party bearing these expenses must provide the other party with copies of the documents proving these expenses upon request. (Article 341)

Under the law, mandatory earthquake insurance must be paid for by the homeowner. However, it would be beneficial to specify how and by whom other expenses such as maintenance fees, electricity, and water will be covered.

6- If a guarantor is required under the contract, the relevant formal requirements must be taken into consideration.

Our legal framework stipulates several formal requirements to prevent abuse of the guarantor process; it is mandatory for the guarantor to write this declaration in their own handwriting. If a guarantor is required under a lease agreement, it would be beneficial to confirm that the necessary formal requirements have been met.

7- Whether subleasing is allowed or not should be regulated.

…Kiracı, konut ve çatılı işyeri kiralarında, without the landlord's written consent, The subtenant may not sublet the leased property to another person, nor may they transfer the right of use. If the subtenant uses the leased property in a manner different from that granted to the tenant, the tenant shall be liable to the landlord. In this case, the landlord may exercise the rights they have against the tenant also against the subtenant or the person who has transferred the right of use.Article 322)

According to the provision I mentioned above, if a sublease is foreseen within the scope of the lease agreement, this must be clearly stated in the lease agreement.

8- If renovations are to be carried out by the tenant, their scope must be specified.

If any renovations are to be carried out on the property covered by the lease agreement, and especially if a discount on the rent is possible in return for these renovations, we recommend that this be specified in the lease agreement.

9- Rent Increase Rate Should Be Determined

Agreements between the parties regarding the rent to be applied in renewed lease periods are valid, provided that they do not exceed the twelve-month average rate of the consumer price index of the previous lease year. This rule also applies to lease agreements longer than one year. If the parties have not reached an agreement on this matter, the rent will be determined by the judge according to equity, taking into account the condition of the leased property, provided that it does not exceed the twelve-month average rate of the consumer price index of the previous lease year.

Türk Borçlar Kanunu Madde 344 – The parties' agreement regarding the rent to be applied in the renewed lease periods, twelve-month averages in the consumer price index during the previous rental year This applies provided that the exchange rate is not exceeded. This rule also applies to lease agreements longer than one year.

Some Growth Rate Determination Methods Used in Practice

• CPIRent increases are calculated based on the Consumer Price Index (CPI) change rate compared to the same month of the previous year.
• CPI (12-month average): Rent increases are calculated based on the 12-month average of the Domestic Producer Price Index (DPPI).
• CPI (Compared to the same month of the previous year): Rent increases are calculated based on the change in the Domestic Producer Price Index (DPPI) compared to the same month of the previous year.
• (CPI + PPI)/2 – 12 aylık ortalama: TÜFE+Yİ-ÜFE 12 aylık ortalaması toplanarak 2’ye bölünmesi ile bulunan oran temel alınarak kira artışı hesaplanır.
• (CPI + PPI)/2 – Gecen yılın aynı ayına göre: TÜFE+Yİ-ÜFE gecen yılın aynı ayına göre toplanarak 2’ye bölünmesi ile bulunan oran temel alınarak kira artışı hesaplanır.
• Special Rate: Rent increases are calculated based on a specific rate entered into the system, separate from inflation rates.

10- Duration of the Lease Agreement

A lease agreement can be made for a fixed or indefinite period. A lease agreement that terminates without notice upon the expiration of the agreed period is considered a fixed-term lease; other lease agreements are considered to be for an indefinite period.Article 300If neither party terminates the lease agreement upon its expiration, the lease agreement will be deemed automatically renewed.

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