Evaluation of Termination and Eviction Provisions Regarding the Rental of Covered Commercial Premises Under a Usufructuary Lease

ABSTRACT

Pursuant to Article 357 of the Turkish Code of Obligations[1] numbered 6098 (“TCO”), a usufructuary lease is a type of bilateral agreement under which the lessor grants the lessee both the right to use and the right of usufruct, with rent directly tied to the revenue generated. This study examines the concept of “product,” the rights and assets that may constitute the subject matter of such a lease, and the significance of transferring elements such as operating licenses, fixtures, and commercial reputation to the lessee. Additionally, pursuant to Articles 362 and following of the TCO, the study explores termination, renewal, and extraordinary termination in usufructuary leases, including special termination events such as the lessee’s bankruptcy or death. In light of legislation, doctrinal perspectives, and leading Court of Cassation rulings, this study seeks to clarify the boundaries of the usufructuary lease regime as applied to commercial premises.

Keywords:

Usufructuary Lease, Revenue Lease, Covered Commercial Premises, Lease, Lease Agreement, Termination, Eviction

1. INTRODUCTION

The TCO classifies lease agreements into three principal categories: ordinary leases, residential and covered commercial premises leases, and usufructuary leases. Articles 357–378 of the TCO, addressing usufructuary leases, have historically been applied in areas such as agricultural production mining operations, or fishery leases However, with the development commercial life, they have also become applicable to covered commercial premises with high turnover potential, such as restaurants, cafés, tourism businesses, and shopping mall stores.

Particularly, the leasing of covered commercial premises within the scope of a usufructuary lease entails not only the physical premises of the business but also elements such as the operating license, fixtures and the customer base, this results in a more complex legal structure compared to classical lease agreements.  In this context, the relationship between product leases and the protective provisions specific to residential and covered commercial premises leases, the balance of power between the parties, and the limits of termination possibilities gain significance.

2. LEGAL SCOPE OF USUFRUCTUARY LEASES AND THEIR APPLICATION WITH RESPECT TO COVERED COMMERCIAL PREMISES

Pursuant to Article 357 of the TCO, a usufructuary lease is an agreement whereby the lessor undertakes to grant the lessee the use of a thing or a right that yields products, together with the products obtained therefrom, in return for a fixed or determinable consideration. The definition set forth in this provision reveals two essential elements for understanding the legal scope of a usufructuary lease the transfer to the lessee not only of the right of use but also of the right of usufruct and the linking of the rent directly to the products obtained. Accordingly, it is possible to state that the usufructuary lease is a fully bilateral agreement.

The product which is the subject of a usufructuary lease may be defined, in an economic sense, as any yield obtained through the use of a thing in accordance with its purpose. The subject matter of a product lease may consist of rights and assets that yield legal products, as well as land and businesses that produce agricultural products.[2]

In the specific context of businesses classified as covered commercial premises, a usufructuary lease entails the transfer to the lessee not only of the premises themselves, but also of the fixtures and furnishings of the premises, the operating right, the customer portfolio, the elements constituting the commercial goodwill and, in particular, the operating license. The operating license constitutes an indispensable requirement, as it enables the lessee to conduct the business in their own name and on their own account, to benefit from the products independently, and to render the business fully operational.[3] In examining whether a business has been leased under a usufructuary lease, the Court of Cassation applies the criteria of (i) delivery of  the leased premises together with the fixtures and the operating license, (ii) agreement of the rent as a certain proportion of the monthly turnover.[4] The Court of Cassation’s consistent position is that determining the rent solely on the basis of turnover is not sufficient to establish the existence of a usufructuary lease relationship. An examination of the Court of Cassation’s precedents reveals that, in cases where the operating license has not been transferred, the agreement cannot be classified as a usufructuary lease even if the rent is indexed to turnover.

The requirement, in practice, that the transfer of the operating license be a prerequisite for applying the provisions on revenue leases to lease agreements has been subject to criticism in the legal doctrine, as under the TCC, the existence of an operating license is not an essential element to carry out business activities. In such a case, an element not provided for in the legislation is being introduced into the concept of a usufructuary lease agreement through case law. Within the scope of this study, we take the view that the Court of Cassation’s well-founded and consistent approach in taxi plate leasing cases [5], where the factual relationship constitutes a usufructuary lease, and the absence of license transfer alone does not render that relationship as something other than a usufructuary lease, should likewise be applied in the context of commercial premises leases.

3. TERMINATION OF USUFRUCTUARY LEASES

Termination of usufructuary lease agreements is regulated under Articles 362 and the following of the TCO, distinguishing between fixed-term and indefinite-term agreements. In both cases, if the lessee fails to pay rent or ancillary charges post-delivery, the lessor may, by giving the lessee a written grace period of at least sixty days, notify the lessee that the agreement will be terminated if the payment is not made within that period. Fixed-term leases expire automatically upon term completion, without need for notice. Unless the usufructuary lease agreement is expressly or tacitly renewed, it terminates automatically.[6] Article 367/2 of the TCO stipulates that renewal is deemed valid for one year rather than for an indefinite term, contrary to the general provisions. Accordingly, the lessor’s claims regarding the tacit renewal of the agreement may only be valid for a period of one year, and in this respect it may be said that the lessor’s ability to obtain eviction is considerably strong.

If the parties have not specified a term when concluding a usufructuary lease agreement, the agreement is considered to be of indefinite duration. Pursuant to Article 368 of the TCO, unless a different termination notice period has been agreed in the agreement or established by local custom, either party to an indefinite-term usufructuary lease may terminate the agreement by giving at least six months’ prior notice. Such notice must be served at least six months before the end of the lease year. In addition, under the heading of extraordinary termination in usufructuary leases, the legislator has provided under Articles 369 and the following provisions of the TCO that extraordinary termination may take place in the presence of significant reasons.  It then addresses the cases of lessee’s bankruptcy and death as specific instances of extraordinary termination.[7]  Pursuant to Article 370 of the TCO, in the event of the lessee’s bankruptcy, the agreement terminates automatically upon the opening of bankruptcy proceedings, without the need for any termination notice from either the lessee or the lessor. However, if the lessee provides sufficient security for the current rent and for the property recorded in the inventory, they may continue the agreement until the end of the lease year. In the event of the lessee’s death, both the lessee’s heirs and the lessor may terminate the agreement by complying with the statutory six-month termination notice period.

4. OPINIONS ON THE APPLICABILITY OF THE TERMINATION AND EVICTION PROVISIONS GOVERNING THE LEASE OF RESIDENTIAL AND COVERED COMMERCIAL PREMISES TO USUFRUCTUARY LEASES

Pursuant to Article 347 of the TCO, in the lease of residential and covered commercial premises, unless the lessee gives notice at least fifteen days prior to the expiry of a fixed-term agreement, the agreement is deemed to have been renewed for one year under the same terms. As can be seen, in the lease of residential and covered commercial premises, the legislator, has provided for the extension of the agreement in a protective approach of the lessee, making such extension contingent upon the lessee’s failure to give notice, whereas in a usufructuary lease the agreement terminates automatically at the end of the term.

Pursuant to Article 352 of the TCO, in the lease of residential and covered commercial premises, , in the case of leases with a term of less than one year, the lessee, fails to pay the rent within the lease term, or, in the case of leases with a term of one year or longer, fails to pay the rent within a lease year or within a period exceeding a lease year, thereby causing the lessor to serve two justified written notices, the lessor may terminate the lease agreement through legal action within one month following the end of the lease term or, in the case of  agreements longer than one year , within one month after the end of the lease year in which the notices were served. In usufructuary leases, however, while the agreement may be terminated at the end of each lease year subject to compliance with the applicable notice periods, both parties retain the right to extraordinary termination at any time if the lease relationship becomes intolerable.

In addition, in the lease of residential and covered commercial premises, the partners of a deceased lessee, or the heirs of such partners who engage in the same profession or trade, as well as those who resided with the deceased lessee in the same dwelling, may continue the lease as parties to the agreement, provided that they comply with the terms of the agreement and the relevant legal provisions. However, as noted in this study, in usufructuary leases, upon the death of the lessee, both the lessor and the heirs may terminate the lease agreement by complying with the applicable notice periods.

Where covered commercial premises are leased under a usufructuary lease arrangement, the applicability of termination and eviction provisions requires a separate assessment. One view in the legal doctrine maintains that such agreements should be governed entirely by the provisions on usufructuary leases, and that the restrictive provisions set forth in Articles 346 and the following of the TCO for residential and covered commercial leases should not apply.[8] The opposing view argues that, due to the nature of covered commercial premises, certain lessee-protective provisions should be applied by analogy.[9]

Within the scope of this study, we agree with the view that where covered commercial premises are leased under a usufructuary lease arrangement, the agreement should be governed entirely by the provisions applicable to usufructuary leases. This is because the lessor undertakes additional commercial and organizational responsibilities, prepares the premises for operation in terms of fixtures and even transfers the operating license to the lessee, thereby assuming obligations that are significantly more burdensome than those in a standard covered commercial premises lease. The protective provisions for the lessee under the TCO in relation to residential and covered commercial leases are premised on the assumption that the lessee occupies a weaker position than the lessor and therefore requires protection. However, in the case of covered commercial premises leased under a usufructuary lease, it cannot be said that the lessee is in a weaker position vis-à-vis the lessor. The Court of Cassation likewise holds the view that, the lessee does not occupy a disadvantaged position in usufructuary leases.[10]

5. CONCLUSION

The leasing of covered commercial premises under a usufructuary lease arrangement creates a complex legal relationship, in which the lessor transfers not only the physical premises but also elements that directly affect the operation of the business, such as operating licenses, fixtures, and customer base, to the lessee. In terms of termination and eviction, different regimes apply depending on whether the agreement is fixed-term or indefinite term, and in special situations such as the lessee’s bankruptcy or death, the rules on extraordinary termination apply.

We are of the opinion that the lessee-protective provisions specific to residential and covered commercial leases should not be applied to usufructuary lease agreements, since the legal relationship between the parties is more balanced and the lessee cannot be regarded as the weaker party. In such cases, contractual freedom should be respected in the parties’ commercial dealings. Considering the additional obligations and commercial responsibilities assumed by the lessor, the legal framework of usufructuary leases allows the parties to determine the terms freely, thereby providing flexibility in commercial life.

REFERENCES

1. Gözdenur Güllü İmamoğlu, Ürün Kirası, 2025

2. Mustafa Koca, Türk Hukukunda Ürün Kirası, 2016

3. Şeyhmus Darcan, Ürün Kirası Sözleşmesi, 2020

4. Court of Cassation, 6th Civil Chamber, Decision No. 2014/12899, Case No. 2014/11996, dated November 24, 2014

5. Court of Cassation, General Assembly of Civil Chambers, Decision No. 2023/419, Case No. 2022/583, dated May 3, 2023

6. Court of Cassation, General Assembly of Civil Chambers, Decision No. 2004/222, Case No. 2004/11-222, dated April 14, 2004