I. What is a Rent Determination Lawsuit?
A rent determination lawsuit can be defined as a legal action related to determining the rental fee for residential and roofed commercial leases. This type of lawsuit can be initiated when the rental fee is not specified at all in the lease agreement. Additionally, it can be filed for leases lasting more than five years or renewed after five years, and at the end of each subsequent five-year period.
The determination of the rental fee involves considering factors such as:
- The condition of the leased property,
- Consumer price index,
- Comparable rental fees in the market.
It’s important to note that this explanation pertains to rent determination lawsuits for leases lasting more than five years, those renewed after five years, or filed at the end of each subsequent five-year period.
II. Conditions for a Rent Determination Lawsuit
Is There a Written Lease Agreement?
One crucial aspect to consider in rent determination lawsuits is whether there is a written lease agreement.
It is important to note that having a written lease agreement is not a requirement for the formation of a lease relationship. Parties can enter into verbal lease agreements. For detailed information about lease agreements, you can refer to our article on “Lease Agreements.”
However, the presence or absence of a written lease agreement becomes a significant factor in rent determination lawsuits. In cases where there is no written lease agreement, determining the durations, especially for leases renewed after five years, can be challenging. For verbal lease agreements, establishing the commencement date of the lease relationship becomes essential. In cases where there is a written lease agreement, the rent determination lawsuit should be filed at least after the completion of a 5-year period from the specified lease commencement date.
III. Rent Determination Lawsuit 5-Year Requirement
The 5-year requirement stems from the provision stated in the third paragraph of Article 344 of the Turkish Civil Code. According to this provision: “Regardless of whether an agreement has been made by the parties on this matter, in lease agreements that are longer 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 is determined in accordance with the twelve-month averages of the consumer price index, taking into account the condition of the leased property and comparable rental prices, in a fair manner. The rent determined in this way for each year after the first five years can be changed according to the principles set forth in the preceding paragraphs.”
The law explicitly uses the term “lease agreements longer than five years or renewed after five years” to indicate when the consideration of comparable rental prices can be taken into account for rent determination.
III. When is a Rent Determination Lawsuit Filed?
If comparable rental prices are to be taken into account for rent determination, the rent determination lawsuit should be filed in the 5th year of the lease agreement.
If there is a written lease agreement between the parties, and if the lease agreement includes a provision stating that the rent will increase in the renewed periods, the rent determination lawsuit can be filed until the end of the new lease period. In this case, the beginning of the new period can be considered as the start of the lease, and a retroactive rent determination lawsuit can be filed. For example, let’s assume there is a lease agreement dated November 15, 2017, and the lease agreement includes a clause stating, “The tenant will pay the rent by increasing it by the CPI rate in the renewed lease periods.” In this case, the 5-year term of the lease relationship will expire on November 15, 2022. The landlord can file a rent determination lawsuit by November 15, 2023, and request the determination of the rent from November 15, 2022.
There might not be a written lease agreement between the parties, or even if there is, there might not be a provision in the written lease agreement for an increase in the renewed lease periods. In such cases, the landlord must send a notice at least 30 days before the beginning of the new lease period, stating that the rent will be increased. In this situation, the rent determination lawsuit filed within the new period will cover the entire new period.
If these conditions are not met, the rent determination lawsuit can be requested for the next period.
IV. Attorney Fees in Rent Determination Lawsuits
Article 9 of the Attorney Minimum Fee Schedule states: “In eviction lawsuits, the entire amount calculated according to the third part of this Schedule over the amount of one year’s rent, or the entire amount of the determined rent difference or alimony awarded in rent determination and alimony lawsuits, is awarded as attorney fees. These amounts cannot be less than the fee specified for the court where the case is heard in the second part of this Schedule.”
According to the Attorney Minimum Fee Schedule, the minimum attorney fee for a rent determination lawsuit should be at least 5,500 TL. However, according to the third part of the Schedule, the minimum tariff for attorney fees in rent determination lawsuits is determined based on the one-year difference between the new and old rent amounts.
For example, if the current rent paid by the tenant is 3,000 TL, and after the rent determination lawsuit, the amount the tenant will pay is 7,000 TL, the one-year old rent amount is 36,000 TL. Th one-year new rent amount is 84,000 TL. The difference between them is 48,000 TL. The attorney fee should be at least 16% of this amount. In this case, a minimum of 7,680 TL should be paid as attorney fees.
V. Expert Report in Rent Determination Lawsuits
To determine the new rent amount, an expert conducts an inspection of the rented property in a rent determination lawsuit. The expert visits the property, conducts a comparative analysis, and examines lease agreements submitted by the parties. Additionally, the expert calculates the rate of rent increase. At the end of this examination, the expert submits a report to the court containing their opinions on the new rent amount. If this report is prepared in accordance with the law, it is generally considered as a basis for the court’s decision. However, the tenant may have been living in the property for many years. In such cases, the judge usually applies a fairness reduction to the rent determined by the expert. The most crucial element in a rent determination lawsuit is the expert report.
VI. How Long Does a Rent Determination Lawsuit Take?
The duration of a rent determination lawsuit depends on factors such as the time between hearings, the workload of the court, the need for property inspection, and the time required for the submission of the expert report. Due to these variables, it is not possible to provide an exact timeframe. However, on average, a rent determination lawsuit may take between 1 to 2 years. This estimation includes the processes of appeal and cassation as well.
VII. Can a Retroactive Rent Determination Lawsuit Be Filed?
A rent determination lawsuit can only be filed for the current lease year or, if specified in the lease agreement, for the subsequent lease years. It cannot be initiated retroactively for previous periods.
For a rent determination lawsuit to be initiated for the current lease year and subsequent years, there must be a clause in the lease agreement indicating that the rent will increase annually. In cases where such a clause is not present, the tenant should be served a notice at least one month before the expiration of the fifth year of the lease, informing them about the intention to file a rent determination lawsuit. In this scenario, the rent amount determined in the lawsuit filed within that lease year will be applicable from the beginning of that lease year.
VIII. Differences Between Rent Adjustment Lawsuit and Rent Determination Lawsuit
Rent adjustment lawsuit and rent determination lawsuit are regulated in different articles of the Turkish Civil Code and refer to distinct legal actions. The rent determination lawsuit is governed by Article 344 of the Turkish Civil Code.
On the other hand, the rent adjustment lawsuit is covered in Article 138 of the Turkish Civil Code, which states: “If an extraordinary situation arises, not foreseen by the parties at the time of contracting and not expected to be foreseen, due to a reason not stemming from the debtor, and if this situation changes the facts existing at the time of contracting to an extent contrary to the rules of honesty, and if the debtor has already performed the obligation while reserving the rights arising from the excessive difficulty of performance, the debtor has the right to request the adaptation of the contract to the new conditions from the judge. If this is not possible, the debtor also has the right to rescind the contract. In continuous performance contracts, the debtor generally uses the right of termination instead of the right of rescission. This provision also applies to foreign currency debts.“
The rent adjustment lawsuit is initiated when unforeseeable circumstances, not present at the time of the lease agreement, make it significantly difficult or impossible for the tenant to fulfill the rent payment. Th court will examine whether there is a genuine difficulty in performance and whether an unforeseeable extraordinary situation has occurred. The objective existence of an extraordinary situation is required.
The COVID-19 pandemic serves as an example of such an unforeseeable situation, leading many individuals to be unable to pay their rent and subsequently file rent adjustment lawsuits. In an adjustment lawsuit, unlike a determination lawsuit, the judge is not bound by the TÜFE (Consumer Price Index) rate. Moreover, this type of lawsuit can be filed after the occurrence of an unforeseeable situation without being subject to any specific time frame.
It’s noteworthy that the rent determination lawsuit can only be filed for residential and covered commercial properties, while the rent adjustment lawsuit can be initiated for any type of real estate lease.
Ece Deniz Vardar
Lawyer / Attorney in Turkey
Landlord Tenants Attorneys in Turkey
Call Us : +90 212 909 86 34
Sen Mail : info@ballawyer.com
