Rent Determination Lawsuit
RENT DETERMINATION LAWSUIT
Introduction
A rent determination lawsuit is a type of lawsuit filed by the tenant or the landlord in order to re-determine the rental fee in accordance with current market conditions.
Scope
Article 344 of the Turkish Code of Obligations provides that if the rental fee remains low compared to similar properties located in the same area, taking into account the purpose of use, characteristics, and location of the leased property, a rent determination lawsuit may be filed on the condition that the lease agreement has completed five years.
Although the Law limits rent increases to the rate of change in the CPI, since increases in residential rents often occur above general consumer inflation, rental fees in old lease agreements may fall behind market conditions over time. Taking this situation into account, the legislator, while observing the principle of protecting the tenant, has also granted the landlord the right to request that the rental fee be brought closer to comparable values at certain intervals. If the parties fail to reach an agreement on this matter, the new rental fee is determined by the judge as a fair rental fee by taking into account the condition of the leased property and comparable rental values, without being bound by the CPI rate, as a result of the rent determination lawsuit. In this context, the judge is not bound by the rate of increase in the consumer price index as an upper limit.
General Conditions of the Rent Determination Lawsuit
In order to file a rent determination lawsuit, certain conditions must be met. Accordingly:
- There must be a valid lease agreement: There must be a lease agreement between the parties regarding the leasing of a residence or workplace. This agreement may be written or verbal; no form requirement is stipulated by law.
- The lease agreement must have completed five years: Pursuant to the Turkish Code of Obligations, the determination of the rental fee according to market conditions depends on the continuation of the agreement for five years.
- The claimant must have a legal interest: The party filing the lawsuit must have a concrete legal interest in doing so; this issue will be evaluated by the judge in each specific case.
- A notice (written notification) may be required: Although a notice is not mandatory as a general rule, in order for the rental fee to be determined to be valid for the new rental period, a written notification to the tenant at least 30 days before the beginning of the period is required in most cases. If there is a provision regarding rent increase in the agreement, this requirement may be eliminated.
Retroactive Effect of the Rent Determination Lawsuit
According to the first paragraph of Article 345 of the Turkish Code of Obligations, a rent determination lawsuit may be filed at any time. As a rule, the decision has prospective effect and is applied for the rental period following the date of the lawsuit. However, in order for the determined rental fee to be valid as of the beginning of the current new rental period, certain conditions must be met. In this framework, two different situations arise depending on the existence of an increase provision in the agreement:
- If there is a provision in the lease agreement stating that the rental fee will be increased in the new rental period; in this case, the rental fee determined by the court in the lawsuit will be valid as of the beginning of the current rental period.
- If there is no provision in the lease agreement stating that the rental fee will be increased in the new rental period; in order for the rental fee to be determined by the court to be considered valid as of the current period, the landlord must have filed the lawsuit at least 30 days before the beginning of the new rental period or sent a written notification (notice) to the tenant within the same period. If one of these conditions is met, the determined rental fee will be applied as of the beginning of the new period.
Conclusion and Evaluation
A rent determination lawsuit is an important legal mechanism that ensures that the rental fee between the parties is brought into line with current market conditions and is applied within the framework of Articles 344 and 345 of the Turkish Code of Obligations. This lawsuit aims to balance the interests of both the tenant and the landlord in resolving rental fee disputes. Filing the lawsuit at the right time and meticulously evaluating the provisions of the agreement are of great importance in preventing loss of rights for the parties; therefore, in cases where the rental fee needs to be adapted to current conditions, a rent determination lawsuit must be filed by observing the procedures and time limits set forth in Articles 344-345 of the TCO.
Sincerely,
Atabay Law Office