Consequences Of Non-Payment Of Rent
In the lease agreement, the payment of the rent is the primary obligation of the lessee. General provisions apply in terms of time and place of performance. The parties may freely determine these matters.
In case of non-payment of the rent, four possibilities arise for the lessor.
The lessor may demand the unpaid rent with interest
The lessor may terminate the contract (TCO Art. 315)
Can file an eviction case due to two justified notices
Execution proceedings may be carried out in accordance with Article 269 of the Enforcement and Bankruptcy Law.
CLAIMING THE UNPAID RENT WITH INTEREST
Failure to fulfil the rent at the time agreed by the parties is sufficient for the lessee to be in default. There is no need for further notice. If the time of performance has not been agreed, the rent becomes due at the end of the month. However, it is accepted that due date is not sufficient for default and the lessor must give a notice.
OVER WHICH RATE DEFAULT INTEREST WILL BE CHARGED?
The default interest rate may be agreed upon by contract.Ø In non-commercial transactions (where both parties are not merchants), the interest rateØ cannot be freely determined. According to Article 120 of the TCO, the default interest rate cannot exceed one hundred per cent of the legal interest. Otherwise, the exceeding part shall be partially null and void. Since the legal interest rate for ordinary works is 9%, the default interest rate cannot exceed 18%. If the debtor is a merchant, the default interest rate is freely determined. The Court of Cassation examines whether the debtor is a merchant in the application of the limitation under Article 120 of the TCO. If the interest rate is not determined, defaultØ interest may be requested at the legal interest rate (9%). If the debtor is a merchant, commercial interest (advance interest) may be requested.
TERMINATION OF THE LEASE AGREEMENT TCO Art. 315-
“If the lessee fails to fulfil the obligation to pay the rent or ancillary expenses due after the delivery of the leased property, the lessor may give the lessee a written notice of termination of the contract in case of non-performance within this period. The period to be given to the lessee is at least ten days, and at least thirty days for residential and roofed workplace leases. This period starts to run from the day following the date of written notification to the lessee.” The periods are of relative mandatory nature.
It is possible to extend the periods. However, it is not possible to shorten them. Article 315 of the TCO is also valid for the termination of residential and roofed workplace leases. If the lessee pays the rent after the expiration of the 30-day period, this does not prevent the lessor’s right of termination, and the lessee’s failure to pay the rent debt does not prevent the right of termination from arising. If the tenant has the right of exchange, he/she must assert this within the 30-day period and thus prevent the right of termination from arising.
When the decisions of the Court of Cassation are examined, it is ruled that the lease agreement cannot be terminated due to non-payment of expenses (insurance, tax) that are not counted in the rental fee. (Payment orders to be made in accordance with Article 269 of the Enforcement and Bankruptcy Law and containing the eviction request also fulfil the requirement of being in writing. In the notice: It must clearly state that the contract will be terminated within the given period. The lease agreement cannot be terminated based on a notice that does not contain the intention to terminate. Court of Cassation 6th HD, E. 2016/5242, K. 2016/5299, 20.9.2016)
EVACUATION TO BE MADE PURSUANT TO ARTICLE 269 OF THE EXECUTION AND BANKRUPTCY LAW
Payment orders to be made pursuant to Article 269 of the Execution and Bankruptcy Law, which include the eviction request, also fulfil the requirement of being in writing. In the notice: It must be clearly stated that the contract will be terminated within the given period. The lease agreement cannot be terminated based on a notice that does not contain the will to terminate. It is not sufficient to state that only legal remedies will be applied in the notice. In the notice, the unpaid rent must be certain and shown correctly. If the rent is underestimated and the tenant pays the amount written in the notice, the lessor cannot terminate the contract. However, if the rent receivable is overstated, this does not invalidate the notice.
In a decision of the Court of Cassation, “After the payment order was notified to the defendant debtor on 18.09.2014, the defendant requested the evacuation of the lease with the lawsuit filed on 20/10/2014 without waiting for the legal thirty-day payment period. In this case, while the lawsuit should be filed after waiting for the expiry of the 30-day period written in Article 315/2 of the TCO, which should be applied with the reference of Article 269/1 of the EBL, the eviction lawsuit filed before the expiry of the legal payment period should be rejected.” (Court of Cassation 6th HD, E. 2015/9039, K. 2016/681, T. 08.02.2016)
HOW SHOULD THE NOTICE OF TERMINATION BE GIVEN?
Failure to pay the rent within the specified period does not automatically terminate the contract. The lessor is not obliged to terminate the lease agreement at the end of the term. For the termination of the lease agreement, the lessor must make a termination declaration at the end of the term. The lessor may notify that the contract will be terminated if the rent is not paid in the notice. It is also possible to declare termination together with the notice. As a rule, the termination declaration does not depend on the form.
However, in residential and roofed workplace leases, the termination declaration must be made in writing (TCO Art. 348). The lessor must make the termination declaration. If there is more than one lessor, the decision must be taken unanimously in the case of joint ownership (Article 640 of the TCC); in the case of shared ownership, the decision must be taken by the majority of shares and shareholders (Article 691 of the TCC). The termination declaration is directed against the tenant. If there is more than one tenant, the declaration must be directed to all tenants.
.
In the case of a family dwelling, pursuant to Article 348 of the TCO, if the non-tenant spouse becomes a party to the lease agreement by giving notice, the termination statement must be addressed to both spouses. The lessor may waive the right of termination. If the lessor does not use the right of termination for a long time and continues to receive the rental fees, this may constitute a waiver. The decisions of the Court of Cassation are also in this direction. For example, while the Court of Cassation considered the termination of the contract after 1.5 years in a dispute against the rule of good faith, it did not consider the termination after 8 months in a dispute against the rule of good faith.
CONSEQUENCES OF TERMINATION
With the termination declaration, the lease agreement shall be terminated with effect from the moment the termination declaration is received by the lessee. If the notice states that the lease agreement will be terminated within the given period, the lease agreement ends with the expiry of the period. The annotation of the lease agreement has no function in this case.
The annotation does not protect the lessee against breach of obligation. Upon the termination of the lease agreement, the lessee is obliged to return the leased property. If the lessee does not return or evacuate the leased property, the lessor may file a lawsuit for the return or evacuation of the leased property. If the lessee continues to use the leased property despite the termination of the lease agreement, the lessor may request compensation. Article 325 of the TCO should be applied in determining the compensation, and the reasonable period of time that the leased property can be rented should be taken into consideration.
STATUTE OF LIMITATIONS
Rent receivable is subject to 5-year statute of limitations pursuant to Article 147 of the TCO. If it is agreed to pay the rent at once, the statute of limitations is 10 years pursuant to Article 146 of the TCO. The period starts from the due date of the rent receivable.
You can access our other article examples and petition examples by clicking here.