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  • Writer's pictureAv. Lider Tanrıkulu

Rent Determination (Determination of Rent Price) and Assessment Lawsuit

Updated: Oct 14, 2023


Contents



1. WHAT IS A RENT DETERMINATION LAWSUIT?


The lease agreement is a typical and consensual contract that gives rise to an obligation specifically regulated in Article 299 of the Turkish Code of Obligations.

Article 299 of the Turkish Code of Obligations: “A lease agreement is a contract in which the lessor undertakes to leave the use of a thing or the use and utilization of it to the lessee, and the lessee undertakes to pay the agreed rental price in return.”


As can be understood from the definition, the parties have rights and obligations towards each other. The obligation of the lessee to pay the rent on time and in full in return for the use of the leased property is one of them.


Lease Fee


First thing to remember, the payment of the rent is one of the essential (in other words, indispensable) elements of the contract.


The rental price refers to the consideration provided to the lessor by leaving the use of the leased thing to the lessee[1]. In accordance with the Turkish Code of Obligations and the freedom of contract in our law, the parties may determine the rental price freely and in agreement. It is not possible to change it unilaterally. However, in lease agreements, the freedom of contract is limited in order to protect the weaker party of the contract in terms of determining the rental price.


Determination of the Rental Price through Litigation (Rent Determination Lawsuit)


The problem of determining the rental price, which did not have a basic legal basis before the Turkish Code of Obligations entered into force, has gained a legal basis with Article 344 of the Turkish Code of Obligations.


Article 344 of the Turkish Code of Obligations:


“The agreements of the parties regarding the rental price to be applied in the renewed lease periods are valid, provided that they do not exceed the rate of change in the consumer price index in the previous lease year according to the twelve-month averages. This rule also applies to lease agreements with a term longer than one year.


On the other hand, if the parties have not made an agreement on this matter, the rent shall be determined by the judge in equity, taking into account the condition of the leased property, provided that it does not exceed the rate of change according to the twelve-month averages in the consumer price index for the previous lease year.


Regardless of whether an agreement has been made by the parties on this matter or not, in lease agreements with a term longer than five years or renewed after five years and at the end of each subsequent five years, the rental price to be applied in the new lease year shall be determined by the judge in accordance with equity, taking into account the rate of change in the consumer price index according to the twelve-month averages, the condition of the leased property and the comparable rental prices. In each lease year after five years, the rent determined in this manner may be changed according to the principles in the previous paragraphs.


The rental price, as stipulated in the contract, cannot be modified for five years if it is agreed upon in a foreign currency. This condition is subject to the regulations set forth in the Law on the Protection of the Value of Turkish Currency dated 20/2/1930 and numbered 1567. However, the provision of Article 138 of this Law titled “Excessive difficulty of performance” is reserved. In determining the rental price after five years, the provision of the third paragraph shall apply, taking into account the changes in the value of the foreign currency.”


Accordingly, the rent determination lawsuit is applicable for residential and roofed workplace rents. Therefore, a rent determination lawsuit cannot be filed in the lawsuit of acquaintance rents. In addition, contrary to popular belief, the rent determination lawsuit can be filed by both the lessee and the lessor.


Furthermore, the parties to the contract may determine the rate of increase in the lease agreement, provided that it is not higher than the producer price index rate. In cases where it is not determined, the judge determines the rental price according to the precedent rental prices, the condition of the leased property and the principle of equity, provided that it is not higher than the consumer price index (TÜFE, abbreviation in Turkish) rate. In rent determination lawsuits, the judgment is related to the determination of the rent for a lease year. This determination made by the court must be clear, precise and complete.


As a result of the rent determination lawsuit, the judge determines the rent to be applied for a period of one year. Thus, the rental price in the lease agreement is changed by the judge’s decision and the lease agreement is reshaped by the court decision.[2]


Timeframe for initiating lawsuits related to rent determination.


The rent determination lawsuit can be filed at any time as long as the lease agreement continues.


Regardless of whether the parties have made an agreement on the rental price or not, the law stipulates a period of five years as the time period in which the rent will be determined. Accordingly, even if the parties have not determined a rent increase rate, at the end of five years, the parties will be able to request the determination of the rental price.


In contracts with a term shorter than five years, the judge is bound by the consumer price index rate when determining the rent.


Notice Requirement


The parties may file a lawsuit at the latest thirty days before the beginning of the new lease period and may increase the rent for the new lease period. Or the lessor can use the right to file a lawsuit until the end of the following new lease period by making a written notification to the lessee that the rent will increase within thirty days before the start of the new lease period at the latest.


As an example, let’s assume that there is a lease agreement covering the period between 15.09.2021 – 15.09.2022. If the lessor has sent a notice until 16.08.2022, a lawsuit can be filed until the end of the new lease period – that is, until 15.09.2023. The rent increase rate to be determined under the current conditions will be valid from the start date of the lease period.


Amendment


The actions for the determination of the rental price is a unique action and is close to the decisions rendered at the end of constitutive lawsuits. In accordance with this nature of the case, the request for the determination of the rental price cannot be divided and the rental price must be requested by the plaintiff clearly at one time. In other words, in lawsuits for the determination of the rental price, the rights regarding the surplus cannot be reserved and no request for amendment can be made regarding this reserved right.[3]


Before filing a lawsuit for the determination of the rental price, the above-mentioned decision of the Court of Cassation, which is valid in practice, should be taken into consideration. The incorrect or incomplete rental price cannot be changed later.


Legal Interest in Filing a Rent Determination Lawsuit


Although Article 345/f.1 of the Turkish Code of Obligations states that the action for the determination of the rental price can be filed at any time, there must be a legal interest in filing the mentioned action. The purpose of the action for determination is to eliminate legal uncertainty, in other words, to make legal relations certain for the parties and to ensure peace in this way.


Authorized Court


The court in charge of rent determination lawsuits is the Civil Courts of Peace. The competent court is the court of the defendant’s place of residence or the court of the place of performance of the contract.



2. WHAT IS A RENT ASSESSMENT LAWSUIT – IMPREVISION


The assessment lawsuit, which is adopted by the Court of Cassation and constitutes an exception to the principle of contractual adherence, is regulated in Article 138 of the Turkish Code of Obligations No. 6098 – under the title of excessive difficulty of performance.


Article 345 of the Turkish Code of Obligations:


“A lawsuit regarding the determination of the rental price may be filed at any time.


However, if this lawsuit is filed at the latest thirty days before the beginning of the new lease period or until the end of the following new lease period, provided that the lessor has notified the lessee in writing that the rent will be increased within this period, the rent to be determined by the court shall bind the lessee from the beginning of this new lease period.


If there is a provision in the contract that the rent will be increased in the new lease period, the rent to be determined by the court in the lawsuit to be filed until the end of the new lease period shall also be valid as of the beginning of this new period.”


It is a lawsuit filed when the conditions existing at the time of the contract change over time and become unbearable for one of the parties. With the changing conditions, it may become difficult to pay the rent debt or the rent may be considerably below its value. As can be understood from this situation, the adaptation lawsuit can be filed by the lessee and the lessor.


In the event that the balance existing at the establishment of the contract is excessively deteriorated and the contract becomes unbearable for the parties, the “assessment lawsuit” can be filed at any time.


Conditions of the Assessment lawsuit


Instances of exceptional events that upset the equilibrium of a contract during its inception include circumstances like war, economic turmoil that destabilizes the country, drastic surges in inflation, sudden currency devaluation or significant reduction in the value of currency, and others. The COVID-19 pandemic and the consequential worldwide economic crisis, along with notable spikes in currency exchange rates, serve as clear instances of such circumstances.


Of course, as can be understood from the definition made by the Court of Cassation, the party requesting adaptation (the plaintiff) should not cause the occurrence of extraordinary circumstances and conditions through its own fault.


The changed circumstances and conditions should not be foreseeable. Although the discretion on this issue belongs to the courts; in practice, the courts determine whether the conditions for assessment have occurred / have occurred by obtaining reports from expert witnesses.


Finally, the debtor must not have fulfilled his/her obligation yet. Or he/she must fulfill his/her obligation with a “reservation” stating that he/she fulfills his/her obligation despite the changing circumstances and conditions.


Precautionary Measure


An interim injunction is defined in the doctrine as “…a temporary, broad or limited legal protection against damages that may occur in the legal status of the plaintiff or the defendant (in relation to the subject matter of the lawsuit) during the proceedings continuing until the final judgment.”[5]


In cases where there is a concern that it will be significantly difficult to obtain the right or that a damage will arise, a “precautionary injunction” may be granted to be applied until the final decision is made by the judge upon the filing of the lawsuit. As a matter of fact, the Court of Cassation 3rd HD. in its decision dated 2021/3452 E., 2021/6001 K. and dated 04.06.2021, ruled that “in the lawsuits filed by the tenants due to the effects of Covid-19, upon the request of the plaintiff, if the conditions are met, an interim injunction may be granted to reduce the rental price discretionarily during the trial.”[6]


Notice Requirement


In the event that the above conditions are met, the assessment lawsuit may be filed at any time without the need for notice.


Adaptation Claims for Merchants


Briefly speaking, merchants are expected to act more consciously and prudently within the framework of the Turkish Commercial Code. According to Baysal, “in the event that the contracting party, who is a merchant, requests adaptation, the fact that this person is a merchant shall be taken into consideration, but adaptation should not be rejected only because this person is a merchant.”[7]


Authorized Court


The authorized court in assessment lawsuits is the Civil Courts of Peace. The authorized court is the court of the defendant’s place of residence or the court where the immovable property is located.



DIFFERENCES BETWEEN RENT DETERMINATION AND ASSESSMENT LAWSUITS


Although they are considered to be similar lawsuits in practice, they are actually two different types of lawsuits.


In the rent determination lawsuit, it will be evaluated whether the contract is longer or shorter than five years and whether there is an agreement between the parties for an increase. In contracts of less than five years, the judge is bound by the consumer price index. In the rent assessment lawsuits, the judge is not bound by any limit other than equity.


Unlike the action for determination of the rental price, the assessment action can be filed for all movable and immovable lease agreements.


Author;

Atty. Yusuf Ozan ÖZTOP

Antalya Bar Association



Bibliography

  1. GÜMÜŞ, a.g.e., s.182.

  2. Özyakışır, Ö.: Konut ve Çatılı İşyeri Kira Sözleşmelerinde Kira Bedeli, Ankara 2019, s. 204

  3. Yargıtay Hukuk Genel Kurulu’nun 2017/2792 E. ve 2021/267 K. sayılı kararı

  4. Yargıtay 13 HD. 4.7.2002; 6347/8266

  5. (Medeni Usul Hukuku 12. Baskı Sh.714-Prof. Dr. Hakan Pekcanıtez, Prof. Dr. Oğuz Atalay, Prof. Dr. Muhammet Özekes).

  6. Yargıtay 3. HD. 2021/3452 E., 2021/6001 K. ve 04.06.2021 T.

  7. Baysal, Başak: 6098 Sayılı Türk Borçlar Kanunu M. 138 Hükmü Uyarınca Gelir Paylaşımlı İnşaat Sözleşmelerinin Uyarlanması, Gelir Paylaşımlı İnşaat Sözleşmesi Çalıştayı, Derleyen Doç. Dr. Emrehan İnal, İst. 2015, Sh. 149

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