Will Shopping Centers' Closing Decision Eliminate the Rent Payable Debt? 24 April 2020

While the effects of the Covid-19 epidemic on the commercial life continue, many stores operating in the retail sector also had to interrupt their activities with the measures taken by the Ministry of Internal Affairs, as well as unofficial closure decisions taken by the shopping malls and business centers. As it is known, with the circular sent to all governorates by the Ministry of Interior on March 15, 2020, the activities of businesses operating as Public Resting and Amusement Locations such as showrooms, concert halls, cinemas, cafes, playgrounds, and sports centers are temporarily suspended as of 16 March 2020.

On the other hand, a number of closure decisions were taken by the shopping center and workplace center administrations in terms of workplaces whose activities were not suspended within the scope of the measures taken by the Ministry of Internal Affairs. In this context, Association of Shopping Malls and Turkish Federation of Shopping Centers and Retailers published the recommendations for the closure of shopping malls during the epidemic and providing the necessary convenience to the tenants during this period Within the scope of the fight against the Covid-19 outbreak. In this context, many shopping malls and business centers decided to close within the scope of combating the epidemic, causing the mandatory closure of the shops and workplaces within the relevant places.

Is There A Legal Arrangement That Eliminates Rent Payment Debt?

With the Provisional Article 2 of the Law No. 7226, which came into force on March 26, 2020, it was regulated that the rental fees that were not paid between 1.3.2020-30.6.2020 will not constitute the reason for the termination and evacuation of the lease contracts. However, with the legal regulation in question, no regulation was introduced that eliminates the rent payment debt of tenants for the relevant period. Accordingly, although the rent payment debt of the tenants continues, the delays and evacuation mechanisms are prevented by considering the delays in the payment of the rent in the related period. In this case, a new regulation was not introduced to eliminate the rent payment debt of tenants within the framework of the measures taken under the new type of coronavirus.

Are Shopping Center Tenants Obliged to Pay Lease Payment Under Existing Regulations?

As explained above, in addition to the workplaces whose activities were stopped within the scope of the Circular, many workplaces had to suspend their activities due to the closing decisions taken by the shopping malls. Accordingly, it can be thought that the workplaces in question cannot properly use the leased property and cannot provide the benefits expected from the lease agreement. It is indisputable that the closure of shopping malls within the scope of combating the new type of coronavirus is of great importance in the spread of the epidemic, but it is also controversial whether the rent payment debt of tenants who are forced to close their workplaces even if there is no official decision.

Pursuant to Article 301 of the Turkish Code of Obligations, the lessor is obliged to deliver the leased place in a condition suitable for the intended use of the contract at the agreed date and keep it in this condition for the duration of the contract. In this context, it can be mentioned that all leasers, including shopping centers, have an obligation to keep the leased ready for use, unless there is an administrative decision.

However, in the context of the fight against the Covid-19 outbreak, although there is no official decision regarding the closure of shopping malls, the decision in question may be considered as a temporary impossibility for the lessor due to the outbreak and the nature of the shopping malls.

Since the tenant's lease payment liability is arranged as a provision of the leaseholder's lease, it can be mentioned that the tenant's lease payment liability is temporarily suspended if the lessor does not keep the leased property available. As a matter of fact, Article 324 of the Turkish Code of Obligations regulates that the tenant is obliged to pay the rental fee in cases where the tenant does not use or is limited to use for a reason arising from him.

On the other hand, it is also possible that the decision to close the shopping malls within the scope of combating the coronavirus epidemic is not considered as the inability of the lessor to keep the leased property available without the fault of the lessor. As a matter of fact, although there is no official decision in this direction, it can be evaluated that the closure of the shopping centers was taken in order to prevent the spread of the epidemic and therefore it was not caused by the management's defect. In this case, according to the nature of the lease agreement, in accordance with Article 138 of the Turkish Code of Obligations, the right to demand adaptation of the contract provisions may arise in terms of the tenant. Accordingly, the tenant may request that the contract to be temporarily suspended or the rental price adjusted accordingly.

As a result, the impact of the new type of coronavirus epidemic in commercial life and the impact of temporary closure decisions of the workplaces on rental agreements require a detailed review in terms of each rental agreement. Both the lessor and the lessee should evaluate their mutual rights and debts in accordance with the contract and the provisions of the relevant legislation and take action accordingly.