IMPORTANT SUPREME COURT RULING REGARDING LANDLORDS AND TENANTS
IMPORTANT SUPREME COURT RULING REGARDING LANDLORDS AND TENANTS
This week, I will attempt to explain to you, my valued readers, a landmark ruling by the Supreme Court that has become a precedent and is one of the most curious topics in tenancy law, along with examples.
A very important precedent-setting decision has emerged from the Supreme Court, concerning millions of tenants and landlords. The 3rd Civil Chamber of the Supreme Court of Appeals has signed off on an important decision concerning tenants and property owners. The 3rd Civil Chamber of the Supreme Court issued a very important ruling stating that "Contractual provisions stipulating that the rent shall be paid in full even if the leased property is not in a condition suitable for use are invalid."
According to the 3rd Civil Chamber of the Supreme Court's decision, the plaintiff claimed that they were a tenant in the property belonging to the defendant under a ten-year contract dated 2019; that it was agreed in the contract that the leased property would be used as a wedding hall and could not be used for any other purpose; that due to the increasing Covid-19 pandemic in our country, many mass organizations were cancelled, activities in public institutions were suspended except for urgent matters, and as a result of the suspension of wedding and engagement hall activities in all provinces as of March 16, 2020, they notified the defendant via a notice dated March 17, 2020, that they could not pay the rent until activities were allowed again; and that despite the permission to resume operations as of July 1, 2020, provided that the determined rules were followed, the measures taken would seriously reduce the number of participants in wedding events, the space that could be used in the leased property, and therefore the benefit expected from the property, thus disrupting the balance of obligations that existed at the beginning to their disadvantage, and requested a decision to adjust the monthly net rent of 62,573.50 Turkish Liras to 30,000 Turkish Liras net, effective from July 1, 2020.
The defendant argued that it was agreed in the lease agreement that no adjustment would be requested, and that even in the case of force majeure, the rent would be paid even if the leased property was not used, and therefore the tenant could not request an adjustment of the rent on the grounds that their customers decreased due to the Covid-19 pandemic, and requested the dismissal of the case.
COURT OF FIRST INSTANCE PARTIALLY ACCEPTED THE ADJUSTMENT REQUEST
The Court of First Instance decided to partially accept the case on the grounds that even though there was a negative adjustment clause in the lease agreement, the adaptation of the lease agreement according to changing conditions is accepted in Supreme Court jurisprudence; that the pandemic experienced worldwide since March 2020 has affected social balance; that this pandemic was not foreseeable; that the operation of wedding halls was interrupted by official decisions; and that the conditions stipulated for adjustment in Article 138 of the Turkish Code of Obligations No. 6098 were met.
The parties appealed the decision of the Court of First Instance.
REGIONAL COURT OF JUSTICE DISMISSED THE CASE
The Regional Court of Justice stated that Article (1.3.) of the lease agreement, dated 2019 with a term of ten years, subject to the lawsuit, stated that the tenant could not request any reduction or adjustment in the rent as long as the lease agreement continues for any reason; that the plaintiff, who bears the title of merchant according to Article 12 of the Turkish Commercial Code No. 6102, must act prudently; that in the face of the explicit provisions in the lease agreement, the plaintiff tenant could not request a reduction in the rent; and that it was not correct for the Court of First Instance to reduce the rent. Therefore, it decided to reject the plaintiff's appeal on the merits, accept the defendant's appeal, overturn the Court of First Instance's decision, and reject the case and the request for an interim injunction. The decision was appealed by the plaintiff's attorney.
3RD CIVIL CHAMBER OF THE SUPREME COURT FOUND IN FAVOR OF THE PLAINTIFF TENANT
The 3rd Civil Chamber of the Supreme Court, which handled the file, included the following statements in its reversal decree:
"When the contract provisions in question are evaluated together, the provisions regarding the lessor's obligation to keep the leased property in a condition suitable for use, even if the lessor does not, and the mandatory provision of Article 301 of Law No. 6098, have been changed to the detriment of the plaintiff tenant (and in favor of the defendant lessor). Therefore, these provisions of the contract are absolutely invalid pursuant to Article 27 of the same Law. On the other hand, the invalidity of these provisions does not affect the other provisions of the contract. Such being the case, the Regional Court of Justice should have conducted the appellate review by taking into account that the provisions in the lease agreement, which state that the tenant is obliged to pay the rent in full in any case even if the lessor does not keep the leased property in a condition suitable for the intended use agreed upon in the contract, are invalid, and that the plaintiff tenant is justified in filing a lawsuit for the reduction of the rent based on adjustment pursuant to Article 138 of Law No. 6098, limited to the period when the administrative bans and measures taken due to the Covid-19 pandemic were effective; however, it is not considered correct to overturn the Court of First Instance's ruling and decide to dismiss the case entirely based on an erroneous evaluation, which necessitates reversal."