Common Expense Payments in Shopping Centers and the Effect of Pandemic on Common Expenses

Due to the current coronavirus (Covid-19) pandemic, various measures have been taken all over the world and these measures continue to be implemented. In order to reduce/prevent the spread of the virus, the governments try to minimize the individuals’ contacts with each other. To this end, calls are made for persons to stay home and the governments either suspend or restrict the activities of the businesses in which persons collectively spend a long time. Besides, even in the absence of a presidential decree or an official order, individuals reduce many outdoor activities, particularly eating and drinking, shopping and entertainment, due to the state of concern in the society. Moreover, additional restrictions also apply: For instance, in our Country, persons are currently prohibited to receive services from restaurants and cafes, with the exception of their services in takeaway capacity and delivery services. All these facts cause remarkably high turnover losses in various sectors; and the businesses experience difficulties in paying the amounts required for their survival, particularly the rents and the common expense debts. In order for the businesses to overcome this difficulty, solutions are sought by the domestic rule of law. The matter “whether or not the businesses have to pay their common expense debts in the current period” constitutes one of the most debatable issues.

This newsletter evaluates the fate of the common expense payments pertaining to the businesses that had to suspend their activities or that experience turnover losses compared to the past, even if they do not suspend their activities.

What is common expense?

The article 11 of the Regulation on Shopping Centers i.e., the Regulation numbered 29636 defines common expense as “The expenses which are not related to the immovable (shopping center) in kind and are recurring in certain periods, such as cleaning, security, maintenance-repair of not restoration nature, heating, water, electricity expenses pertaining to areas in common use”. The same article prescribes that the possibility of requesting the retail businesses in the shopping centers to pay contribution shares due to the services for common interest such as marketing and management falling outside the above common expenses is conditional upon the specification of this matter in the agreement between the parties. 

The concept of common expense emerges in locations where many businesses co-exist and use common areas, such as in shopping centers, rather than individual workplaces.

Effect of the Covid-19 outbreak on common expenses

In order to reduce the spread of the outbreak in our Country, various businesses are closed or their activities are restricted by virtue of the notices published by the Ministry of Interior on 15.03.2020 and 20.11.2020.  

In this direction, the Council of Shopping Centers - Turkey has published an announcement on 15.03.2020, which contains a recommendation for the closure of shopping centers due to public health reasons, considering the requests of the society and the retailers. Upon this recommendation, some of the businesses have decided to close their workplaces for some time. Besides, the Turkish Federation of Shopping Centers and Retailers (TAMPF) have stated that, during the period the retailers and the shopping and living centers within the federation are closed, the federation will provide support to the closed businesses by not issuing rent invoices to these businesses and by not collecting rents from these businesses. 

In spite of the fact that some of the shopping center managements have stated that they will not collect the rents for some time in order to provide support to their lessees in this period, the following question comes to mind: How will the lessee businesses in the shopping centers participate in the common expenses? Some lessees issue return invoices, objecting to the invoices issued for common expenses, some lessees declare their reservations, however, the other lessees fulfill their common expense payment obligations. However, given all the aspects, there is no doubt that the shopping center lessees and lessors are affected by this period.  

Both in the legislation and in the general legal norms, there are various solutions for such circumstances which occur beyond the control of the parties, which cannot be foreseen and prevented by the parties. However, in the doctrine, there are interpretations different from each other, about the fate of the common expenses. Therefore, the judicial decisions to be rendered by the courts within this period will be a guiding spirit.

Conclusion and Evaluation

For the businesses, stores and workplaces in shopping centers; the provision of certain services, such as security, cleaning, technical support, must continue in order to keep them ready to be operated and in order to ensure their sustainability, security and cleanliness even in case they are closed temporarily or even in the periods that they are not included into the scope of serving in takeaway capacity or performing delivery services. A lease agreement is a type of contract containing mutual obligations. If the lessor has fulfilled the obligations imposed on him in respect of the common expense services and if the lessee has benefited from the fulfillment of these obligations, the lessor may request the lessee to pay for the common expenses. Accordingly, the lessees, who benefit from the fulfillment of the obligations and are under the obligation to cover the common expense amounts as required by the lease agreements, must pay for those common expense amounts. This is because, the domestic rule of law does not protect the abstention from performing an obligation, the fulfilment of which is benefited under the principles of “pacta sunt servanda” and the rules of “objective good faith” constituting the fundamentals of the law of contracts.   

In virtue of all these explanations, we are of the opinion that the lessees’ obligation to bear the common expenses shall survive, since the provision of the common expense services also continue in the periods that their businesses are closed or that the activities of their businesses are restricted even if they are not closed. However, we would like to state that the judicial decisions which will be rendered in this period must be monitored, since the fate of the common expenses causes various debates in the doctrine.