Turkey’s real estate market has become increasingly attractive to both locals and foreigners, thanks to its booming economy, stunning landscapes, and affordable living costs. However, navigating rental agreements can sometimes be tricky, especially when currency preferences come into play. A common issue arises when a rental agreement is drafted in Turkish Lira (TRY), but the property owner insists on receiving payment in US Dollars (USD). Is this problematic? Let’s break it down.
Understanding the Legal Framework
In Turkey, rental agreements are governed by the Turkish Code of Obligations. According to the law, rental contracts must clearly state the currency in which the rent will be paid. If the agreement specifies Turkish Lira, then the tenant is legally obligated to pay in TRY. Conversely, if the contract states USD, the tenant must pay in USD.
Key Point: The currency stated in the rental agreement is legally binding. Any deviation from this without mutual consent can lead to disputes.
Why Do Owners Prefer USD?
Given the volatility of the Turkish Lira in recent years, many property owners prefer to receive rent in USD to protect themselves from currency fluctuations. This is especially common in cities like Istanbul, Antalya, and Bodrum, where foreign investors and expats are prevalent.
However, if the rental agreement is already in Turkish Lira, the owner cannot unilaterally demand payment in USD. Doing so would violate the terms of the contract.
Potential Problems for Tenants
- Currency Conversion Issues: If the owner insists on USD payments despite the contract being in TRY, tenants may face challenges in converting currencies, especially if they earn income in Turkish Lira.
- Legal Disputes: Insisting on USD payments when the contract specifies TRY can lead to legal disputes. Tenants have the right to refuse such demands and can take legal action if pressured.
- Exchange Rate Risks: Even if both parties agree to switch to USD, tenants may face risks due to fluctuating exchange rates, potentially increasing their rental costs unexpectedly.
What Should Tenants Do?
- Review the Contract: Always carefully review the rental agreement before signing. Ensure that the currency clause aligns with your payment capabilities.
- Negotiate Before Signing: If the owner prefers USD but you are more comfortable with TRY, negotiate this before signing the contract. Once signed, changing the terms requires mutual agreement.
- Seek Legal Advice: If the owner insists on USD payments after the contract is signed, consult a legal expert to understand your rights and options.
What Should Property Owners Do?
- Be Clear from the Start: If you prefer USD, ensure the rental agreement clearly states this from the beginning. Transparency avoids future conflicts.
- Consider Market Conditions: While USD may seem safer, insisting on it in a TRY-dominated market could limit your pool of potential tenants.
- Amend the Contract Mutually: If both parties agree to change the currency after signing, draft an addendum to the contract to reflect this change legally.
Conclusion
A rental agreement in Turkish Lira while the owner demands USD can indeed be problematic if not handled correctly. Both tenants and property owners must ensure that the contract clearly states the agreed-upon currency to avoid legal disputes and financial complications. Transparency, communication, and legal compliance are key to a smooth rental experience in Turkey.
At Select Turkey, we’re here to help you navigate the complexities of Turkey’s real estate market. Whether you’re renting or buying, our experts are ready to guide you every step of the way. Contact us today for personalized advice and support!
