MANDATORY MEDIATION IN RENT DISPUTES

MANDATORY MEDIATION IN RENT DISPUTES

Pursuant to Article 37 of Law No. 7445 Amending Certain Laws, published in the Official Gazette on April 5, 2023, mandatory mediation is required for disputes arising from rental relationships (except for eviction through summary proceedings without a court order), disputes concerning the dissolution of partnerships, disputes arising from condominium ownership, and disputes concerning neighbor rights. With this regulation, as of September 1, 2023, it is mandatory to apply to a mediator before filing a lawsuit concerning rental disputes.

Pursuant to this regulation, Article 18/B has been added to the Law on Mediation in Legal Disputes No. 6325: “18/B – (1) In the following disputes, applying to a mediator before filing a lawsuit is a prerequisite for the lawsuit: a) Disputes arising from the lease relationship, except for provisions regarding the eviction of leased immovable property through summary execution under Law No. 2004,

b) Disputes concerning the distribution of movable and immovable property and the dissolution of joint ownership, c) Disputes arising from the Condominium Law No. 634 dated 23/6/1965, d) Disputes arising from neighbor rights....” Thus, disputes arising from lease relationships are subject to mandatory mediation.

1. MEDIATION

Mediation, which refers to an alternative dispute resolution method involving a third party (mediator) with the aim of reaching a voluntary agreement between the parties to resolve the dispute, a process that aims to resolve disputes between the parties without a court decision, offering a faster, more economical, and more sustainable legal solution, is gaining increasing acceptance worldwide and in our country.

Mediation, a voluntary alternative dispute resolution method, has become a prerequisite for litigation in our country, primarily for disputes arising from labor law. Subsequently, mediation has also been made a prerequisite for litigation in commercial disputes and disputes arising from consumer law. Thus, it has become an institution that is resorted to in many disputes. Recent legislative changes have expanded the scope of mediation by introducing a mediation requirement for disputes arising from lease relationships and real estate transfers.

2. LEASE RELATIONSHIPS AND MANDATORY MEDIATION

A lease agreement is a contract whereby the lessor grants the lessee the right to use or benefit from a thing, and the lessee undertakes to pay the agreed rent in return (Turkish Code of Obligations, Article 299). Disputes arising from rental relationships generally concern eviction, determination of the rent amount, and adjustment of the rent amount. With the new regulation, these relationships are subject to mandatory mediation as a condition for filing a lawsuit, with certain exceptions. In addition, disputes concerning the distribution of movable and immovable property and the dissolution of joint ownership, as well as disputes arising from the Condominium Law and neighbor rights, are also subject to this condition under the relevant regulation.

a. DISPUTES ARISING FROM LEASE RELATIONSHIPS

Disputes arising from lease relationships can basically be categorized as eviction, determination of rent, and adjustment of rent. Disputes arising from these relationships are subject to mandatory mediation as a condition for filing a lawsuit under subparagraph (a) of the relevant article.

a.1. EVICTION OF THE TENANT

An eviction lawsuit is a lawsuit filed by the lessor to have the tenant vacate the leased property for reasons specified in the law. The law provides for two types of termination of lease agreements: termination by notice and termination by lawsuit.

In termination by notice, the lessor may terminate the lease agreement within the periods specified in the law. These periods and the form of termination are specified in Article 347 et seq. of the Turkish Code of Obligations (TBK).

In the other method of termination, termination through litigation, certain conditions arising from the tenant or the landlord must be met in order for the tenant to be evicted, which are detailed in Article 350 et seq. of the Turkish Code of Obligations. In the event of any dispute arising in the aforementioned cases, the new law requires that a mediator be consulted before applying to the competent court.

a.2. RENT DETERMINATION LAWSUIT

A rent determination lawsuit is a lawsuit to reassess and determine the rent for the leased immovable property within the time limits specified in the law. Rent determination lawsuits are also based on the Turkish Code of Obligations. Article 344/3 of the Turkish Code of Obligations states, "...in lease agreements with a term of more than five years or renewed after five years, and at the end of every five years thereafter, the rent to be applied in the new lease year shall be determined by the judge based on the rate of change in the twelve-month average of the consumer price index, the condition of the leased property, and comparable rents..." thereby establishing the basis for rent determination lawsuits.

With the new regulation, mediation has been made a prerequisite for rent determination lawsuits, and this lawsuit is also subject to the mandatory mediation condition.

a.3. RENT ADJUSTMENT LAWSUIT

This is a lawsuit filed to adapt to the circumstances and conditions that have changed after the date of conclusion of the lease agreement. The rent adjustment lawsuit finds its basis in Article 138 of the Turkish Code of Obligations.

Under this article, in order for an adjustment lawsuit to be filed, an extraordinary situation that was not foreseen by the parties and could not be expected to occur must have occurred, the extraordinary situation that occurred must not have originated from the debtor, the change in circumstances must have rendered the demand for performance so disadvantageous to the debtor as to be contrary to the principle of good faith, and the debtor must either not have performed the debt yet or must have performed it while reserving their rights arising from the excessive difficulty of performance.

In order to file a lawsuit for rent adjustment, the rent balance must first be disrupted. If the performance of the debt has become impossible for one of the parties, it is possible to file a lawsuit and request an adjustment in the rent. With the new regulation, mediation has been made a prerequisite for rent adjustment lawsuits, and this lawsuit is also subject to mandatory mediation. For this reason, tenants or landlords who wish to adjust the rent according to current conditions must apply to a mediator before filing a lawsuit.

b. DISPUTES REGARDING THE DISTRIBUTION OF MOVABLE AND IMMOVABLE PROPERTY AND THE DISSOLUTION OF PARTNERSHIPS

A dispute resolution or dissolution of joint ownership lawsuit is a type of lawsuit that terminates the joint ownership between partners in movable or immovable property subject to joint or joint ownership and enables the transition to personal ownership. All co-owners may file this lawsuit if there is no obligation to continue joint ownership due to the joint property being permanently dedicated to a specific purpose (TMK 698). The provisions regarding how this distribution is to be made are specified in TMK 699 and subsequent articles.

With the new regulation, it is mandatory to apply for mediation before filing a lawsuit for the dissolution of joint ownership (Law No. 6325, Article 18/B). A lawsuit for the dissolution of joint ownership filed without applying for mediation, which is a condition for the lawsuit, will be dismissed on procedural grounds.

c. DISPUTES ARISING FROM THE CONDOMINIUM LAW

The Condominium Law regulates the nature of condominium ownership, its establishment, the relationships between condominium owners, and in particular, the relationship of shared ownership, the rights and obligations of condominium owners, and the management of shared immovable property.

Lawsuits arising from the Condominium Law may be filed to cover damages and needs arising from the debts or liabilities of all condominium owners in the building, as well as lawsuits may be filed against condominium owners for certain liabilities related to common expenses. Examples include disputes between condominium owners regarding the maintenance and protection of the main property and general expenses, as well as disputes arising during the payment of condominium owners' debts related to apartment fees and expenses.

Pursuant to Article 18/B(c) of the Mediation Law in Legal Disputes No. 6325, as of September 1, 2023, mediation has been made a prerequisite for lawsuits arising from the Condominium Law, and it is mandatory for condominium owners to apply to a mediator before disputes between them turn into lawsuits.

d. DISPUTES ARISING FROM NEIGHBORLY RIGHTS

Neighborhood rights are defined in Article 737 of the Civil Code. The article states: "Everyone is obliged to avoid nuisance that will adversely affect their neighbors when exercising their rights arising from immovable property ownership and, in particular, when carrying out business activities. In particular, it is prohibited to cause disturbance by emitting smoke, steam, soot, dust, or odors, or by making noise or vibrations that exceed the degree of tolerance acceptable between neighbors, depending on the condition and nature of the immovable property and local customs." This article outlines the basic limits of neighborly rights.

3. EXCEPTIONS

As an exception to the requirement for litigation, claims for eviction arising from summary proceedings under the Enforcement and Bankruptcy Law No. 2004 are exempt. The relevant legal provision is the first sentence of subparagraph (a) of the first paragraph of Article 18/B of the Law No. 6325 on Mediation in Legal Disputes, which states: "Except for provisions relating to the eviction of leased immovable property through enforcement without a court order pursuant to Law No. 2004..." This exception has been established.

The eviction of leased real estate without a court order can only be requested in two cases: non-payment of rent and expiration of the eviction commitment letter. Accordingly, if the tenant fails to pay the rent or the date specified in the eviction commitment letter arrives, there is no requirement to apply for mediation before initiating enforcement proceedings or filing a lawsuit based on the proceedings.

4. CONCLUSION

As a result, both the number of mediators and the number of cases subject to mediation are increasing day by day. After rental disputes also become subject to mediation, the scope of the mediation institution will expand significantly, and the burden on the courts will be reduced, albeit relatively. Of course, this places a great responsibility on the parties and their representatives. Unlike court proceedings, mediation offers the parties a faster, more economical, and cooperation-based solution, reducing the burden on the judicial system and contributing to the formation of more sustainable relationships between the parties. However, if the parties do not make an effort in this direction and act in bad faith, mediation will prolong the trial process rather than shorten it, thereby reducing people's trust in the legal system.