January 10, 2025

Legal Structure of Lease Agreements for Advertisement Areas

A. INTRODUCTION

Lease agreements are among the agreements frequently concluded between private and/or legal persons as an indispensable part of daily life. The lease agreements regulated under the Turkish Code of Obligations No. 6098 bring various rights and obligations for both the lessor and the lessee. It finds a wide range of applications from real estate leases to vehicle leases, from commercial leases to residential leases. Leasing of advertisement areas is a type of lease agreement that plays an important role in the promotion and marketing strategies of commercial enterprises. This article aims to address the legal status and basic elements of advertisement areas lease agreements and shed light on the current problems in this field.

B. LEASE AGREEMENTS

The definition of lease agreements is defined in Article 299 of the Turkish Code of Obligations No. 6098 (‘TCO’):

“A lease agreement is a contract in which the lessor undertakes to leave the use of a thing or the use and enjoyment of it to the lessee, and the lessee undertakes to pay the agreed rental fee in return.”

As can be inferred from the definition, lease agreements are accelerated contracts that impose a number of rights and obligations on the lessee and the lessor. As in every type of agreement, the most important element is that the parties reach an agreement with their free will. The rental fee and payment periods must be specified in detail in the lease agreements. In case of any dispute that may arise between the lessor and the lessee regarding the rental fee in the future, the matters agreed in the agreement are of vital importance. The agreement of the parties, which is one of the elements of the lease agreement, is especially concretised by their agreement on the rental fee. After this agreement, the lessor’s delivery of the movable or immovable property to the lessee for the period specified in the contract means that all elements of the lease agreement are completed.

The obligations of the parties are independent of the type of lease agreement and are generally explained under Articles 301 and 312 of the TCO, which are:

  • Lessor’s obligation to return the property,
  • Lessor’s obligation to participate in tax and similar obligations (unless otherwise specified in the agreement)
  • The obligation to participate in the ancillary expenses incurred by the lessor itself or a third party, depending on the use of the leased property,
  • The lessee’s obligation to pay the rent,
  • The lessee’s obligation to use the leased property with care,
  • The lessee’s obligation to pay cleaning and maintenance costs (costs arising from ordinary use).

A lease agreement is an agreement concluded between the parties, which provides for the return of the leased property to the lessee for use within the framework of certain conditions and rules. This agreement can be made in writing or orally; it is not subject to a certain form requirement by law. However, it is important that the lease agreement is drawn up in writing in order to facilitate the resolution of disputes that may arise between the lessor and the lessee.

C. LEASE AGREEMENTS OF ADVERTISEMENT AREAS’ LEGAL NATURE

Lease agreements are generally classified under three main headings. These are (i) residential and roofed workplace lease agreements, (ii) ordinary lease agreements and (iii) usufructuary lease agreements. Among these three types of agreements, agreements regarding the lease of advertisement areas are included in usufructuary lease agreements.

It is necessary to evaluate whether the agreements regarding the lease of advertisement areas are considered as ordinary lease agreements or usufructuary (revenue) lease agreements. The main and most important criterion in determining whether a lease agreement is an ordinary lease or a usufructuary lease is whether the lessee is authorised to benefit from the usufructuaries of the leased thing.

Regarding this matter, in the established case law of the Supreme Court, it has been ruled that the relevant billboards have the characteristics of movable property and should be considered as usufructuary rent.

“In our case: The lease agreement was dated 01/01/1999 and lasted for 1 year. The contract became indefinite as of 01/01/2000. The leased property is the advertisement board numbered 17. Since the leased property is movable, the lessor may terminate the contract by giving 3 days’ notice in accordance with Article 262/last article of the Code of Obligations. The defendant was served with a notice on 27/04/2000 and the lawsuit was filed on 05/12/2000. In this case, while it should be decided to evacuate the lease, it is not correct to decide to dismiss the lawsuit with the written justification.” (Supreme Court 6th Civil Chamber’s decision dated 22.05.2001 and numbered 2001/4054E. 2001/4261K.)

“Article 357 of the Turkish Code of Obligations on the same subject is as follows: “Usufructuary lease is a contract where the lessor undertakes to leave to the lessee the use of a thing or right that yields usufructuaries and the harvesting of the usufructuaries in return for a fee.

Rent with crop participation is a usufructuary lease where the rent is agreed as a certain proportion of the crop to be harvested. “If this ratio is not agreed by contract, it shall be determined according to local custom.”; Article 358 states that “Unless there is a special provision in this section regarding usufructuary lease, the general provisions regarding the lease contract shall apply.” regulations.

As can be seen, movable and immovable properties constitute the subject matter of the ordinary lease agreement. However, unlike the ordinary lease agreement, in terms of usufructuary lease, the law also includes the right that can bring usufructuary.

In this case, usufructuary (revenue rent) is a type of lease in which the lessor leaves to the lessee the use, enjoyment or operation of a property, enterprise or right that yields a usufructuary (revenue) in return for a certain price.

It should be noted immediately that both natural and legal usufructuaries may be subject to usufructuary lease. In this context, the profit obtained as a result of the operation of the enterprise can be characterised as a legal usufructuary.

The main and most important criterion in determining whether a lease agreement is an ordinary lease or a usufructuary lease is whether the lessee is authorised to benefit from the usufructuaries of the leased thing.

In the lease of workplaces such as restaurants, hotels, canteens, hospitals, hospitals, schools, shops, factories for the purpose of operation, in the lease of billboards, in taxi leases, it is revenue rent (Arkan Azra Serim, Rights and Obligations of the Parties in Revenue Rent, … 2010, p. 3).’ (Supreme Court General Assembly of Civil Chambers’ decision dated 03.05.2023 and numbered 2022/583E. 2023/419K.)

In this context, it is beyond dispute that the provisions of the TCO pertaining to the usufructuary lease will be directly applicable in the event of the lease of advertising spaces or termination of the contract.

Usufructuary lease agreements are a type of agreement in which the lessor undertakes to transfer a thing or right that provides a usufructuary to the lessee for the purpose of using and benefiting from its fruits, or to leave the right to collect (harvest) the usufructuaries to the lessee, and the lessee undertakes to pay a certain or determinable rental fee in return for this transfer. The relevant type of contract is regulated under Articles 357 and following of the TCO.

 ‘An usufructuary lease is a contract in which the lessor undertakes to leave to the lessee the use of a thing or right that yields a usufructuary and the harvesting of the usufructuarys in return for a fee.

An usufructuary lease is a rent in which the rent is agreed as a certain proportion of the usufructuary to be harvested. If this ratio is not agreed by contract, it is determined according to local custom.’

Usufructuary lease is a type of agreement in which there are conflicting interests between the parties in terms of the obligations and rights. In this agreement, while the lessee is under the obligation to pay the rent, the lessor is under the obligation to leave the goods subject to the agreement for the use of the lessee in return for this price. This situation, in which both parties are under mutual obligation, makes the usufructuary lease a synallagmatic agreement, which is imposes obligations on both parties.

A usufructuary lease is a personal and perpetual agreement that provides the lessee with the right to use, benefit from and operate the goods subject to the agreement. The fact that the agreement is for a definite or indefinite term does not change its characteristic of being a agreement that creates a continuous debt. In this agreement, the main obligation of the lessee is to pay the rent. Since the rent is paid in return for the leased goods, the usufructuary lease is among the reciprocal agreements. It should be noted immediately that both natural and legal usufructuaries (movables) can be subject to this type of lease agreements. In this context, the profit obtained as a result of the operation of the enterprise can be characterised as a legal usufructuary. Within the scope of the TCO, a form requirement specific to this type of agreement is not stipulated and freedom of contract is adopted.

The termination of usufructuary lease agreements are included in the scope of the TCO, and it is stipulated under Article 358 that the general provisions applicable to general lease agreements will be applied unless there is a special provision. Although it is possible to terminate the lease relationship according to the general provisions of the lease agreement, the termination reasons specific to the usufructuary lease should not conflict with the general termination reasons. Usufructuary lease contains special provisions in line with its own characteristics and the objectives pursued by the parties. Therefore, there should be no incompatibility between the reasons for termination based on general provisions and the regulations specific to the usufructuary lease. Otherwise, the effectiveness of usufructuary lease-specific regulations and the protection of the rights of the parties may be at risk. The reasons for the termination of the lease agreement are regulated by general and usufructuary lease-specific provisions. General reasons include expiration of the term, notice of termination, important reasons, bankruptcy or death of the lessee, non-payment of the rent, defective leased property and breach of the duty of care. In usufructuary lease, the reasons for termination overlap with the general reasons to a great extent.

Although the termination of usufructuary lease agreements refer to the general provisions, another issue to be examined is whether the provisions of the residential and roofed workplace lease will be applied to the disputes arising from this agreement. The Supreme Courts’ General Assembly, by referring to the abrogated Law No. 6570 on Real Estate Leases, has stated that the provisions of housing and roofed workplace lease cannot be applied to usufructuary lease agreements:

‘There is no provision in Law No. 6570 that may lead to the conclusion that even revenue lease agreements are within the scope of this law; in fact, considering the fact of protecting the lessee, which is the main purpose and concern of the legislator, it is not possible for revenue lease agreements to be within the scope of this law. This is because, in addition to the use of the leased property, and more importantly, the fact of ‘collecting the usufructuary, benefiting from the fruit’ and the fact that the rent can be paid in cash as well as a share of the fruit or revenue, which are the main elements that distinguish the revenue lease agreements from ordinary lease agreements, make this type of contract a unique structure and unlike ordinary lease agreements, the lessee is not in a weaker position than the lessor in revenue lease agreements.(Decree of the General Assembly of the Court of Appeal dated 14.04.2004 and numbered 2004/11-222E. 2004/222K.)

Historically, in the periods when technology was limited, usufructuary lease was generally limited to agricultural immovables, but in parallel with technological and economic developments, the scope of goods and rights subject to usufructuary lease has gradually expanded.

D. CONCLUSION

Lease agreements have a wide usage area in the daily lives of individuals and commercial organisations. It aims to provide legal security by regulating the rights and obligations between the parties. Lease agreements, which are dealt with in detail in the TCO, are analysed under three main headings: ordinary lease, residential and roofed workplace leases and usufructuary lease agreements.

It is supported by both the doctrine and the case law of the Supreme Court that in agreements of commercial importance, such as the lease of advertisement areas, these areas should be evaluated within the scope of usufructuary lease agreements. In the lease of assets that provide usufructuaries such as billboards, the nature of the agreements and the conditions of use determined by the parties are decisive in determining whether the agreement is ordinary rent or usufructuary rent.

In this context, it is clear that the application of the provisions on usufructuary lease in the leasing of advertising spaces is an effective guide in resolving disputes that may arise between the parties. In parallel with the development of technology and economy, the variety of assets subject to usufructuary lease has increased, and this situation has created new legal dynamics in terms of the regulation and implementation of agreements. The correct legal basis of commercial elements such as advertisement areas within the framework of lease agreements is important both for the continuity of economic activities and for ensuring legal security.

Best Regards,

Kılınç Law and Consultancy

Authors

Nigar Guliyeva

Nigar Guliyeva

Senior Lawyer

Elif Akman

Elif Akman

Lawyer