NEWSLETTER-2019-metin

218 NEWSLETTER 2019 Acceleration and Penalty Clause – Article 346 of the TCO Article 346 of the TCO, fundamentally, brings with it two limita- tions to lease agreements; the first being that the lessee shall not be obligated to make any payments other than rent and side expenses. No expenses under different names may be included into the rent or side expenses, which are defined under Article 303 of the TCO. This is, indeed, a quite common practice in lease agreements, where the lessors intend to include the number of items into rental prices or side expenses, such as restoration expenses, installing an elevator, etc. The second restriction under Article 346 pertains to the drafting penalty or acceleration clause, in the event of non-payment and/or late payment. Such types of clauses are under the hotlist of lease agree- ments, where the lessee becomes obliged to pay the penalty payment or the accelerated rent for the entire year, in the event of non-fulfilment of the payment obligations. Through this, the lessors seek to discour- age the lessees from non-payment or late payment. Article 346 of the TCO prohibits such clauses and invalidates them, if still drafted. For Commercial Lease Relationships, a penalty or an acceleration clause may be validly drafted by the contracting parties, as of today. However, being effective from 1 July 2020, this will no longer be possible under the TCO, thereby putting an end to one of the most commonly used clauses under lease agreements. Conclusion The postponed nine articles of the TCO with regard to lease agreements are about to come into force, if not deferred once again, on 1 July 2020. To this end, many practices frequently applied within the context of the Commercial Lease Agreements, such as deposit, rent increase, or penalty clauses will come to an end, which will mark a new period for Turkish contract law within the aspect of lease relation- ships.