Foreign Company Buys a Building Subject to Multiple Leases in Turkey: Due Diligence Checklist (2026 Updated Guide)

Foreign company buying a leased building in Turkey? Review lease agreements, tenants, deposits, rent, eviction risks, title records, zoning, permits, tax exposure and seller warranties before closing.

A foreign company purchasing an office building, commercial property, apartment building or other income-producing real estate in Turkey should not assess the transaction solely by examining the title deed and purchase price. Where the building is already occupied under multiple leases, the buyer is effectively acquiring both real estate and an existing portfolio of landlord-tenant relationships. Under Turkish law, acquisition of leased property can result in the purchaser becoming a party to existing lease relationships. Consequently, undisclosed leases, unusually low rents, long contractual terms, tenant deposits, prepaid rent, side agreements, pending eviction proceedings and unresolved tenant claims can materially affect the value of the investment. A comprehensive legal due diligence should therefore be completed before signing or closing.

1. Verify the Title Deed

The starting point is the official title record. Confirm the registered owner, property type, independent sections and all registered rights or restrictions affecting the building.

The seller’s commercial description of the property should always be compared with the official records.

2. Search for Mortgages and Other Encumbrances

Determine whether the property is subject to mortgages, attachments, usufruct rights, easements, annotations, promises to sell or other restrictions.

A foreign investor should understand exactly which encumbrances will be discharged before closing and which will remain after acquisition.

3. Identify Every Occupant

Request a complete occupancy schedule covering every independent section.

The list should identify the tenant or occupant, unit number, area occupied, lease commencement date, expiry date, current rent and security deposit.

Physical inspection should then be used to determine whether the schedule matches reality.

4. Obtain Every Lease Agreement

Do not rely exclusively on a rent roll prepared by the seller.

Request the original lease agreement and every amendment, renewal, protocol, addendum and side letter for each tenant.

A building advertised as having short-term leases may contain contractual arrangements that substantially limit the buyer’s flexibility.

5. Investigate Oral Lease Arrangements

Not every occupancy dispute will necessarily be resolved simply because no written agreement appears in the seller’s files.

Ask whether any tenant occupies space under an oral arrangement, historical understanding or undocumented renewal.

6. Verify the Parties to Each Lease

Confirm whether the person occupying the property is actually the contractual tenant.

Corporate mergers, company-name changes, business transfers, subleases and informal transfers can result in a different party occupying the premises.

7. Review Lease Commencement and Duration

Record the commencement date and contractual duration of every lease.

Do not assume that purchasing the property automatically allows the new owner to terminate existing leases immediately.

8. Analyze Renewal Provisions

Commercial leases may contain detailed renewal mechanisms, notice requirements or options.

These provisions can materially affect the buyer’s ability to reposition, renovate or redevelop the building.

9. Determine the Current Rent

The contractual rent may differ significantly from the amount currently being paid.

Review invoices, bank statements, payment records and rent ledgers to determine the actual rent collected from each tenant.

10. Identify Below-Market Leases

A building may appear attractive based on projected market rent while existing tenants pay considerably less.

The investor should value the property using the legally and contractually achievable income rather than assuming immediate adjustment to market levels.

11. Review Rent Increase Provisions

Analyze how rent is adjusted and whether previous increases were implemented correctly.

Long-standing disputes concerning rent adjustments can materially affect projected investment returns.

12. Check for Rent Determination Proceedings

Ask whether the landlord or tenants have initiated proceedings concerning determination of rent.

Obtain pleadings, expert reports, judgments and appeal information for every pending case.

13. Identify Unpaid Rent

Prepare an arrears schedule showing outstanding rent, service charges and other tenant obligations.

The purchase agreement should clearly determine whether historical receivables remain with the seller or are transferred to the buyer.

14. Review Pending Rent Collection Proceedings

Check whether enforcement or court proceedings are pending against tenants.

The purchaser should understand their procedural status and the rights being acquired.

15. Review Eviction Proceedings

Obtain complete files for every ongoing eviction case.

An investor should never price a building on the assumption that a tenant will soon leave without independently evaluating the legal basis and procedural status of the case.

16. Do Not Assume Purchase Automatically Terminates Leases

One of the most important acquisition risks is assuming that transfer of ownership itself eliminates existing tenants.

The buyer should analyze each lease and the applicable Turkish lease rules before preparing any vacancy or redevelopment strategy.

17. Review Security Deposits

Prepare a tenant-by-tenant schedule showing deposits received, their form, amount and current status.

The sale agreement should regulate transfer and accounting of deposits clearly.

18. Identify Bank Guarantees and Other Security

Commercial tenants may have provided bank guarantees, letters of guarantee, corporate guarantees or other security.

Confirm whether these instruments can effectively benefit the purchaser after closing and whether additional transfer formalities are necessary.

19. Check for Prepaid Rent

A seller may have collected rent covering periods after the expected closing date.

Without proper adjustment, the buyer could become landlord while the seller retains rent economically attributable to the post-closing period.

20. Review Rent-Free Periods and Incentives

Side agreements may provide rent-free months, fit-out contributions, discounts or other concessions.

These arrangements should be incorporated into the financial model.

21. Search for Side Letters

Request written confirmation from the seller that no undisclosed side letters, oral concessions or separate arrangements exist.

Material lease rights are sometimes found outside the principal lease document.

22. Examine Subleases

Determine whether tenants have sublet all or part of their premises.

Identify the subtenant and examine whether the arrangement was authorized and how it affects possession.

23. Review Assignment Rights

Some leases regulate assignment, transfer of business or corporate restructuring.

This can affect the identity and creditworthiness of the party ultimately occupying the building.

24. Evaluate Tenant Creditworthiness

A rent roll is only as valuable as the tenants’ ability to pay.

Review significant tenants for insolvency indicators, enforcement proceedings or other financial difficulties where legally and practically appropriate.

25. Measure Tenant Concentration Risk

A building may contain many leases while most rental income comes from one or two tenants.

Calculate the percentage of total rent represented by major tenants and the consequences if they leave or default.

26. Examine Lease Expiry Concentration

If several major leases expire during the same period, future cash flow may be substantially less predictable.

Prepare a lease-expiry schedule before valuation.

27. Verify Commercial Use

Confirm that the actual use of each unit is compatible with zoning, building status and other applicable regulatory requirements.

The existence of a paying tenant does not establish that the tenant’s use is legally permissible.

28. Review Zoning Status

Investigate applicable zoning conditions and restrictions.

This becomes particularly important if the investor intends to renovate, expand, convert or redevelop the building.

29. Check Construction and Occupancy Documentation

Review available construction, occupancy and building documentation.

Material inconsistencies between approved plans and the existing structure should be investigated before closing.

30. Identify Unauthorized Alterations

Tenants or previous owners may have combined units, enclosed areas, changed façades, installed mezzanines or made other alterations.

Determine whether necessary approvals were obtained and who bears responsibility for remediation.

31. Conduct a Physical Inspection

Legal documentation should be compared with the actual building.

Inspect common areas, occupied units where possible, technical installations and visible alterations.

32. Review Tenant Fit-Outs

Determine who owns improvements installed by tenants and what happens when the lease terminates.

Restoration obligations should also be reviewed.

33. Check Repair and Maintenance Obligations

Lease agreements may allocate maintenance obligations differently between landlord and tenant.

For a large building, roof, façade, elevators, heating and cooling systems and common infrastructure can generate substantial costs.

34. Review Common-Area Charges

Determine how operating expenses are allocated and whether tenants pay service charges separately from rent.

Examine historical collections and unpaid amounts.

35. Review Property Management Agreements

If a third-party manager operates the building, examine the management agreement, fees, termination rights and transfer provisions.

The purchaser may inherit operational dependencies that were not apparent from the lease documents.

36. Review Insurance Coverage

Examine building and liability insurance arrangements and determine how tenant insurance obligations are structured.

Coverage should be reassessed for the post-closing ownership structure.

37. Investigate Existing Tenant Claims

Ask whether tenants have alleged defects, water intrusion, heating problems, access restrictions, construction disturbance or other landlord breaches.

An unresolved tenant claim can become the new owner’s problem after acquisition.

38. Examine Litigation and Enforcement Files

Request a schedule of all litigation, mediation, enforcement and administrative proceedings involving the property or its tenants.

Review the actual files rather than relying only on the seller’s summary.

39. Determine Whether Any Tenant Has Special Rights

A particular tenant may have renewal, expansion, exclusivity, signage, parking or other negotiated rights.

Such rights can restrict the purchaser’s future plans.

40. Review Parking Rights

For commercial buildings, parking can be economically important.

Determine whether parking spaces are included in leases, separately licensed or used informally.

41. Review Signage and Advertising Rights

Major tenants may possess façade, rooftop or common-area signage rights.

These rights can affect both appearance and future rental opportunities.

42. Check Utility Arrangements

Determine whether electricity, water, heating and other services are separately metered or allocated through the landlord.

Identify unpaid utility obligations and disputes.

43. Review Environmental Risks

For industrial or mixed-use properties, investigate whether existing or former tenants carried out activities capable of causing contamination.

Environmental remediation exposure can substantially exceed ordinary lease disputes.

44. Review Tax and Municipal Issues

Determine whether there are outstanding property-related taxes, municipal liabilities or other public charges relevant to the transaction.

The purchase agreement should allocate pre-closing and post-closing liabilities clearly.

45. Verify the Seller’s Rent Roll Against Bank Records

A rent roll prepared for a transaction should not be accepted without verification.

Compare reported rent with bank records, invoices and accounting information for a meaningful historical period.

46. Obtain Tenant Confirmations Where Appropriate

For material tenants, the transaction structure may justify obtaining confirmations concerning rent, deposit, arrears, lease term and side agreements.

This can identify inconsistencies between the seller’s records and the tenant’s position before closing.

47. Review Seller Representations and Warranties

The purchase agreement should contain appropriate representations concerning leases, tenants, deposits, prepaid rent, arrears, litigation, side agreements and notices.

The warranties should correspond to the risks identified during due diligence.

48. Include Protection Against Undisclosed Leases

The seller should address the risk of undisclosed occupancy arrangements.

A hidden lease discovered after closing can materially interfere with redevelopment or leasing plans.

49. Address Pre-Closing Lease Changes

The seller should generally be restricted, subject to the agreed transaction terms, from entering new leases or materially amending existing leases before closing without the buyer’s consent.

Otherwise, the economic characteristics of the property can change between signing and completion.

50. Regulate Rent Collection Before and After Closing

The agreement should establish how rent relating to the closing month is apportioned and how payments mistakenly made to the former owner after closing will be transferred.

51. Transfer Tenant Files at Closing

The purchaser should receive a complete tenant file for each unit, including contracts, amendments, notices, payment records, deposit information and litigation documents.

52. Notify Tenants of the Ownership Change

Following completion, tenant communications should be managed systematically.

Tenants should receive accurate information concerning the new landlord and future payment arrangements.

53. Protect Against Fraudulent Rent Instructions

Changes in landlord bank details can create payment-fraud risks.

Tenant notification procedures should therefore be controlled and verifiable.

54. Evaluate Redevelopment Plans Before Buying

If the foreign company intends to empty and redevelop the building, the lease portfolio must be examined before acquisition—not afterward.

The investor should determine realistically when possession of each unit may become available.

55. Model the Worst-Case Occupancy Scenario

Do not value the investment solely on the assumption that every unwanted tenant can quickly be removed.

Prepare a financial scenario in which difficult leases remain in force for substantially longer than expected.

56. Calculate True Net Rental Income

Gross rent does not equal investment return.

Deduct non-recoverable operating expenses, maintenance, management costs, vacancies, litigation exposure and capital expenditure when evaluating the building.

57. Foreign Buyer Restrictions Must Also Be Checked

The acquisition structure should be reviewed under the rules applicable to the particular foreign investor and property.

A foreign-owned Turkish company and a foreign legal entity acquiring directly should not automatically be assumed to have identical legal positions.

58. Corporate Approvals Should Be Prepared

Confirm that the foreign buyer has all required corporate resolutions, authority documents and powers necessary for the transaction.

Foreign corporate documents may also require appropriate authentication and translation procedures.

59. Coordinate Legal and Technical Due Diligence

Lease review alone is insufficient.

Title, zoning, construction, technical condition, tax, corporate and tenancy findings should be consolidated before the investment committee or purchaser makes the final decision.

60. Prepare a Red-Flag Report Before Closing

For a building with multiple tenants, the final due diligence report should identify at least:

• leases that cannot be terminated on the buyer’s expected timetable;
• rents materially below market;
• substantial arrears;
• disputed deposits;
• prepaid rent;
• pending eviction or rent litigation;
• unauthorized occupants or subtenants;
• undisclosed side agreements;
• significant tenant claims;
• major lease expiries;
• zoning or permit problems;
• unauthorized construction;
• mortgages, attachments and title restrictions;
• material repair obligations;
• and seller representations required before closing.

Frequently Asked Questions

Does buying a leased building automatically terminate the tenants’ leases?

No. A purchaser should not assume that transfer of ownership automatically terminates existing lease relationships.

Should the foreign buyer review every lease?

Yes. For a multi-tenant investment, every material lease, amendment and side agreement should be examined.

What happens to tenant deposits after the sale?

The treatment of deposits should be identified during due diligence and expressly addressed in the purchase and closing documentation.

What if the seller collected rent in advance?

Prepaid rent should be identified and economically allocated between seller and purchaser according to the transaction documents and applicable legal position.

Can the new owner immediately increase rents to market level?

Not automatically. Existing lease terms and applicable Turkish rent rules must be analyzed.

Can the buyer evict tenants because it purchased the building?

Acquisition alone should not be treated as giving an unrestricted right to immediate eviction. Any termination or eviction strategy must be evaluated under the applicable legal grounds and facts.

What if there is an undisclosed tenant?

The purchaser’s rights may depend on the occupancy arrangement, applicable lease rules and representations given by the seller. This is why physical occupancy verification and seller warranties are important.

Should pending eviction cases affect the purchase price?

Potentially. Their legal strength, likely duration, costs and consequences for possession should be incorporated into the transaction analysis.

Is the rent roll enough for due diligence?

No. The rent roll should be verified against lease documents, payment records and actual occupancy.

What is the biggest mistake a foreign investor can make?

Valuing the building as though it will be vacant or immediately capable of generating market rent without first analyzing the existing tenants’ legal rights. The lease portfolio is part of the asset being acquired and should be investigated with the same care as the title itself.

Client-Focused Legal Support for Foreign Companies Buying Leased Buildings in Turkey

Acquiring a multi-tenant building in Turkey can involve title risks, existing leases, rent disputes, deposits, eviction proceedings, zoning restrictions, construction irregularities, seller warranties and post-closing landlord obligations. Fırat Fesih Kaya Law Office assists foreign companies and international investors with legal due diligence before purchasing commercial and income-producing real estate in Turkey. Lawyer Fırat Fesih Kaya provides legal assistance in reviewing title records and lease portfolios, identifying tenant and litigation risks, structuring purchase agreements, preparing seller warranties and closing conditions, and handling post-acquisition lease, rent and eviction disputes.

Phone:
+90 312 434 22 22

Mobile:
+90 532 769 22 22

Email:
info@firatfesihkaya.av.tr

Address:
Mevlana Boulevard No:221, Yıldırım Tower, Office No:148, 06520 Balgat, Çankaya, Ankara, Turkey