Assigning a Lease and Tenant Rights When a Business Changes Hands in Turkey

When an investor buys a restaurant, hotel, shop or workshop in Antalya, much of what they are paying for is tied to where the business sits: the clientele, the location and the brand all belong to that address. Yet when the business changes hands, the lease over the premises does not automatically pass to the new owner. Transferring the tenancy is governed by Article 323 of the Turkish Code of Obligations (TCO, Law No. 6098), and for commercial leases this provision contains a special rule that protects the business tenant. This article looks at how a lease is assigned, and in particular at how the tenancy moves across when a business is sold, from a practical standpoint.

The Legal Basis for Lease Assignment: Article 323 of the TCO

Article 323/1 of the TCO lays down a clear rule: a tenant may not transfer the tenancy to a third party without first obtaining the landlord's written consent. Assigning a lease is not the same as subletting. In a sublease the original tenant remains a party to the contract and continues to bear responsibility; in an assignment the new tenant steps directly into the outgoing tenant's shoes.

Written consent is a condition of validity. Oral approval or mere tolerance in practice will not protect the tenant if a dispute later arises. An assignment made without consent amounts to a breach of contract from the landlord's perspective and raises the risk of eviction. For this reason, once negotiations over a business sale are underway, securing the landlord's consent in writing should be treated as one of the fundamental conditions of the deal.

A Privilege Specific to Commercial Leases: No Refusal Without Just Cause

The strongest protection the law offers a commercial tenant lies in the second sentence of Article 323/1: in commercial leases the landlord may not withhold consent unless there is just cause. This marks a fundamental departure from residential leases. Whereas a residential landlord may reject an assignment request without giving any reason, in a commercial lease a refusal must rest on a justified ground.

What counts as just cause is assessed on the facts of each case. Uncertainty over the transferee's ability to pay, evidence that the premises will be used for a purpose other than the one set out in the contract, or a change to the nature of the business that runs contrary to the landlord's reasonable expectations may all qualify as just cause. By contrast, a mere wish to renegotiate the rent or to raise the rental figure is not just cause. If the landlord refuses consent without showing a justified ground, the tenant may ask the court to grant that consent. In practice this privilege removes the single greatest obstacle facing a tenant who is selling the business, and it is a feature that makes Turkish commercial lease law predictable for foreign investors.

The Effects of Assignment: Substitution and the Outgoing Tenant's Liability

Once the assignment takes effect with the landlord's written consent, under Article 323/2 of the TCO the person to whom the tenancy is assigned steps into the tenant's place in the contract, and as a rule the outgoing tenant is released from its obligations towards the landlord. The new tenant takes over the remaining term, the rent and all the contractual provisions exactly as they stand.

For commercial leases, however, the law introduces an important exception. Under Article 323/3 of the TCO the outgoing tenant remains jointly and severally liable alongside the transferee until the lease ends, and for no more than two years. In other words, even after the sale is complete, the former operator continues to serve as a form of security for the rental obligations throughout this period. If less than two years remain until the contract expires, the liability ends with the lease; if more than two years remain, it ends when the two-year period runs out. This rule is a risk for the outgoing tenant and a safeguard for the landlord; the parties should separately regulate the internal recourse terms for this period in the transfer protocol.

Passing the Lease Across a Business Sale: Steps in Practice

Transferring a business (the going concern) is usually a mixed transaction covering fixtures, stock, permits, staff and the lease all at once. To keep the tenancy transition sound, the following steps are recommended:

• Approach early: make contact with the landlord before the transfer negotiations are finalised and put the request for consent in writing.
• A three-party assignment protocol: a document signed jointly by the outgoing tenant, the transferee and the landlord records both the substitution and the consent in a single text and removes any later problem of proof.
• Check the contract for an assignment ban: if the lease contains a clause prohibiting assignment, the landlord must separately lift that prohibition.
• Regulate the two-year liability: the terms for security, recourse and transfer of the deposit between the outgoing tenant and the transferee should be set out clearly in the protocol.

A Practical Guide for Foreign Business Buyers

A foreign investor buying a Turkish business that operates from leased premises must always assess the lease during pre-sale due diligence. The critical points are: whether the contract is for a fixed or indefinite term, how much term remains, the current rent and its escalation mechanism, whether an undertaking to vacate exists, whether there is an assignment-ban clause, and whether the landlord's consent has been obtained. Because the value of the lease is an inseparable part of the value of the business, the transfer price should not be paid until consent is secured. Identifying these elements in advance protects the buyer against both an invalid assignment and an unexpected eviction.

Frequently Asked Questions

Can the landlord refuse to allow the assignment of a commercial lease?

In commercial leases the landlord may refuse the assignment only where there is just cause. If consent is refused without a reason, the tenant can obtain permission to assign through the courts. In residential leases, by contrast, the landlord may refuse without giving any reason.

I have transferred my business; am I fully released from the rental obligations?

For commercial leases, no. Under Article 323/3 of the TCO the outgoing tenant remains jointly and severally liable alongside the transferee until the contract ends, and for no more than two years. Once that period expires, the liability comes to an end.

Does the lease pass automatically to the new business owner?

No. Even if the business changes hands, the lease does not transfer of its own accord; the landlord's written consent and an assignment are required. For this reason the assignment of the lease should be planned together with the business transfer agreement.

Is the landlord's oral approval sufficient?

No. Article 323 of the TCO requires written consent for an assignment. Oral approval or acquiescence will not protect the tenant in the event of a dispute; consent must therefore always be documented in writing, and preferably through a three-party protocol.

How Mona Hukuk Can Help

Our team in Antalya regularly advises both buyers and sellers on the transfer of businesses operating from leased commercial premises. We review lease agreements, prepare assignment protocols, manage the process of obtaining the landlord's written consent and, where necessary, represent clients in litigation concerning permission to assign.

For legal advice in Antalya, you can write to contact@monahukuk.com or call +90 (242) 606 14 32.