Case for determination of rental fee

Lease agreements constitute one of the contract types regulated in the special provisions of the Turkish Law of Obligations. Provisions regarding the lease agreement are in articles 299-357 of the law. It is among the articles.

Based on this, it should be noted that the lease agreement is a gratuitous contract that imposes mutual obligations on both parties. The most important element of the contract is the price, and the lease contract is a type of contract with continuous performance.

As it is known, the principle of freedom of contract is valid in our legislation. Therefore, when establishing a rental agreement, the parties can freely decide on the rental fee. Again, the increase rates in rent can be decided freely. However, the legislator has imposed an upper limit on this freedom. Namely; According to Article 344 of the Turkish Code of Obligations:

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

If the parties have not made an agreement on this issue, the rental fee is determined by the judge on an equitable basis, taking into account the condition of the leased property, provided that it does not exceed the rate of "change in the consumer price index according to twelve-month averages" of the previous rental year.

The aim is to protect the tenant, who is seen as the weak side of the contract above, and to ensure that the lessor is not affected by inflation. There were not many problems with this provision in our country in the past years. Until the unpredictable increase in inflation in the 2020s and the incredible change in the supply and demand balance in the real estate market. In today's conditions, tenants and property owners often face these reasons. On the one hand, there are property owners who want a raise in line with inflation, on the other hand, there are the incredible increase in rental prices and the disruption of the supply-demand balance, and on the other hand, there are tenants who cannot keep up with the pace of inflation. Moreover, a law was passed in June 2022 regulating that the legal raise rate cannot be more than 25 percent until July 2023. With this law, it was decided that an increase of almost a quarter of the official inflation could be made. At this point, the rent issue has become inextricable.

However, since this Law is a temporary law, this rule will not be valid for increases to be made after July 2023. Although this period was later extended, the 25% rent increase limit is completely abolished as of July 1, 2024. As of this date, in renewed residential lease agreements, the general rule has been restored, just like in workplace leases, and the upper limit of increase is TCC Art. In accordance with Article 344, 'CPI has started to be applied as the rate of change according to 12-month averages'." Despite this, many property owners will rightly say that the rent increases cannot keep up with the inflation rate. There are also concerns for tenants that the wages they earn will not be enough for the rent. We believe that it is necessary to develop a solution instead of looking for a culprit here. Because inflation is not the only reason for the housing shortage in the country.

In today's conditions, the rate of property owners trying to evict their former tenants is quite high. However, as it should be, it is not always possible to carry out an evacuation as it is subject to very strict conditions. You can find our explanations regarding eviction in our article titled Tenant Eviction Case and Reasons .

Lessors who are not satisfied with the rental fee they receive have a lawsuit to determine the rental fee as a way to apply. In addition, tenants can also resort to this method in case of a decrease in rents. In our review topic, we will include the general characteristics of rent determination cases. We will also try to explain the filing period of this case, the competent and jurisdictional courts. Here, can an adaptation lawsuit be filed instead of a detection lawsuit? The question arises. It is necessary to answer this question in the negative. Because, judicial decisions rule that an adaptation lawsuit cannot be filed due to inflation or economy. Therefore, the only way to increase the rental price (in today's situation) is through a declaratory suit. Under normal circumstances, there is no obstacle to filing an adaptation lawsuit. However, the conditions required for the adaptation case must be met. Especially in the case law of the Supreme Court, as a rule, in short-term rental agreements made for a period of 1 year and extended, TBK Art. It is accepted that adaptation cannot be requested within the scope of Article 138 and that adaptation cases can only be brought to the agenda in long-term contracts. For this reason, in today's practice, the healthiest way to increase the rental price is through a declaratory lawsuit.

LEGAL NATURE OF THE CASE FOR DETERMINATION OF RENTAL FEE

As it is known, determination cases are generally cases related to determining whether a legal relationship exists. With this case, doubts and hesitations about the legal relationship are eliminated. Determination cases provide social benefit by ensuring the stability of rights. The purpose of the determination case is to eliminate legal uncertainty, in other words, to clarify the legal relations for the parties and thus to ensure peace.

Accordingly, rent determination decisions made in rent determination cases do not determine a legal relationship, as in other determination cases. Its purpose is only to clarify the rental fee element of the lease agreement, which is not certain in the new period. Indeed, if the parties cannot reach an agreement, the legal consequence in determining the rent arises only with the decision of the judge. However, it is not necessary to obtain a court decision for the rent to be determined in the new period. Because if the parties agree, a legal result will arise without the need for a court decision. Only if the parties cannot reach an agreement should they file a lawsuit to obtain this legal consequence.

Thus, rent determination decisions are close to the decisions given at the end of construction cases, not the conviction decisions given at the end of performance cases. Therefore, in the lawsuit filed regarding the determination of the rental price, instead of making a decision regarding a legal relationship as in the determination case, a new legal situation arises regarding the existing legal relationship or a change in an existing legal situation is in question. YHGK 2021/267 K.

WHERE AND BY WHOM CAN A CASE FOR DETERMINATION OF THE RENTAL FEE BE FILED?

Who Files a Rent Determination Case?

Both the lessor and the tenant can file a lawsuit. In joint ownership, each partner can file a lawsuit on behalf of his or her own share, while in joint ownership, all partners must file a lawsuit together.

Authorized and Competent Court

The court of general jurisdiction in rental disputes is the civil court of peace. In the matter of authority, HMK art. 10 (Cases arising from the contract) and HMK art. 6 (General competent court) rules apply. Accordingly, the lawsuit can be filed in the court of the defendant's place of residence, or in the court of the place where the leased real estate is located, where the contract will be executed.

Compulsory Mediation

As a result of the legislative amendment made by Law No. 7445, as of 01.09.2023, disputes arising from the rental relationship (except for eviction through execution without judgment) have been subject to mediation as a condition of litigation. Therefore, it is mandatory to apply to the mediation office before filing a lawsuit to determine the rental price. If a lawsuit is filed directly without the mediation process, the court will decide to reject the case due to procedural reasons (lack of a lawsuit requirement).

WHEN SHOULD A CASE TO DETERMINE THE RENTAL FEE BE FILED?

In order to file a lawsuit for determination of the rental price, it is necessary to examine two different situations.

First of all, if a written or verbal lease agreement has been established between the parties, but there is no provision regarding rent increase in the contract, Article 344/2 of the Turkish Code of Commerce. Article applies. Accordingly:

"If no agreement has been made on this issue by the parties, the rental fee is determined by the judge on an equitable basis, taking into account the condition of the leased property, provided that it does not exceed the rate of "change in the consumer price index according to twelve-month averages" of the previous rental year.

As can be understood from the above provision, there is no obligation to file the case after the 5-year period has passed. If the lessor requests an increase, he can file a declaratory lawsuit before or during the renewal period. If the parties have determined the increase rate, a declaratory lawsuit cannot be filed.

5 Year Condition

Whether the rent increase rate is determined in the contract or not, if 5 years have passed since the conclusion of the contract, the lessor or the lessee has the right to file a lawsuit for determination of the rental price. Article 344/3 of the Turkish Code of Commerce regulates the subject. The article is as follows:

"Regardless of whether an agreement has been made by the parties on this issue, in lease agreements with a duration of more than five years or renewed after five years, and at the end of each five years thereafter, the rent to be applied in the new lease year is determined by the judge in an equitable manner, taking into account the "change in the consumer price index according to twelve-month averages" rate, the condition of the leased property and comparable rental prices. The rental price determined in this way in the lease year after each five years can be changed according to the principles in the previous paragraphs."

As can be understood from the above provision, in cases where the rental relationship lasts longer than 5 years, a declaratory lawsuit can be filed without the need for any other condition. Here, the new rent will be determined by the judge. It should also be said that the judge is not bound by the CPI.

In practice, the calculation of the 5-year period is often confused. According to the Supreme Court practice (1+5 rule), in order to request rent determination based on right and equity, the 5-year lease period must be fully expired and the case must be filed for the 6th year (or later). For example; In a 1-year lease agreement with a starting date of 01.01.2020, the first 5 extension years will expire on 01.01.2025. Therefore, determination according to the principle of right and fairness (precedents) can only be requested for the 6th lease period, which will start on 01.01.2025, and beyond.

WHEN WILL THE NEW DETERMINED RENTAL AMOUNT BE VALID?

Article 345 of the Turkish Code of Obligations, which regulates the subject, is as follows:

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

However, if this lawsuit is filed at the latest thirty days before the beginning of the new period, or if it is filed by the end of the following new lease period, provided that the lessor has given written notice to the tenant that the rent will be increased within this period, the rent to be determined by the court will be binding on the tenant from the beginning of this new lease period.

If there is a provision in the contract stating that the rental fee will be increased in the new rental period, the rental fee determined by the court in the lawsuit filed until the end of the new rental period will be valid from the beginning of this new period.

As can be seen, if there is no increase requirement in the contract, the lawsuit must be filed 30 days before the new lease period in order for the determination amount to be valid from the new lease year. This mostly comes up in verbal lease agreements. Again, if there is no contractual obligation regarding the increase rate, it is necessary to file the lawsuit 30 days before the new lease year in order to avoid loss of rights. The same consequences will occur if a warning is issued. Some sample Supreme Court decisions are as follows:

"Since there is no increase requirement in the lease agreement between the parties and there is no notice sent or a lawsuit filed in due time, the determination of the rental fee for the period starting on 01.01.2015 cannot be decided in view of the fact that the main petition filed on 20.11.2014 was notified to the defendant on 08.12.2014 and the merged lawsuit was opened on 24.12.2014. However, the appeal cannot be made. Considering that the new term (01.01.2016) has started during the examination, the court should ask the plaintiffs whether they want the rental fee to be determined for the next period (2016), and if so, it should decide to determine the rental fee for the next period, otherwise the case should be rejected. Y3HD. 2019/435 K.

"The case is about the request for the determination of the rent. There is no dispute that the verbal lease agreement concluded between the parties has a starting date of January. The notice sent by the plaintiff regarding the rent increase, dated 10/12/2014, was notified to the defendant tenant on 17/12/2014, and the plaintiff's attorney filed a lawsuit on 18/02/2015. "He requested the determination of the rental fee as of 01/01/2015. In this case, since there is no lawsuit filed in due time, the determination of the rental fee for the period starting on 01/01/2015 cannot be decided by the court. If the plaintiff requests determination of the rental fee for the period starting from 01/01/2016, the case must be examined and decided, otherwise the case must be rejected." Y6HD. 2016/5259 K.

However, if there is a provision regarding the increase in the lease agreement, the lawsuit does not have to be filed 30 days ago in order for the increase provision to cover this new period. Some Supreme Court decisions are as follows:

"The clause 5 of the special conditions of the five-year lease agreement signed between the plaintiffs' deceased and the defendant states that "The rent increase rate every year will be in proportion to the rate announced by the Ministry." It has been decided that an increase will be made in renewed and five-year lease agreements, and since a lawsuit can be filed until the end of the lease period in accordance with the last article of the TCO, in accordance with the last article 345 of the TCO, there is no irregularity in requesting the rental price to be determined by increasing it. The essence of the matter by the court. "The decision to reject the case on the grounds that it was not filed in time, although it should have been examined and a decision was made, necessitated reversal." Y3HD. 2018/5902 K.

"The case is about the request to determine the rental fee of 1.050,00 TL as 1.750,00 TL. The court decided to determine the monthly rental fee as 1.600 TL gross, effective as of 01.10.2012, due to the rental period to which it belongs as of the date of opening of the case, and to reject the excess request. "Although it is accepted that there is an increase condition in the lease agreement, it is not correct to decide on the determination of the rental fee as of the next period, 01.10.2012, on the grounds that the lawsuit filed on 07.06.2012 was not within the due date. In this respect, the court should determine the current rental fee in accordance with the method as of 01.10.2011." Y3HD. 2017/363

HOW IS THE NEW RENTAL FEE DETERMINED?

As mentioned above, if 5 years have not passed since the establishment of the lease agreement and if other conditions are met, a rent determination lawsuit can be filed. In this case, when determining the new rental price with the increase rate, the judge applies Article 344/2 of the Turkish Code of Obligations. It will depend on the article. Accordingly; If the parties have not made an agreement on this issue, the rental fee is determined by the judge on an equitable basis, taking into account the condition of the leased property, provided that it does not exceed the rate of "change in the consumer price index according to twelve-month averages" of the previous rental year.

On the other hand, this rule will not be valid for contracts longer than 5 years. In other words, it cannot be said that the judge is bound by the CPI rate. In such cases, provision 344/3 of the Turkish Code of Obligations is applied. Accordingly:

"Regardless of whether an agreement has been made by the parties on this issue, in lease agreements with a duration of more than five years or renewed after five years, and at the end of each five years thereafter, the rent to be applied in the new lease year is determined by the judge in an equitable manner, taking into account the "change in the consumer price index according to twelve-month averages" rate, the condition of the leased property and comparable rental prices. The rental price determined in this way in the lease year after each five years can be changed according to the principles in the previous paragraphs."

For contracts longer than 5 years, precedent lease agreements are used when determining the new rent. Again, in this regard, all characteristics of the real estate are taken into consideration. The increase is made in accordance with the principle of fairness and fairness. The following Supreme Court decision contains explanations on the subject:

In order to determine the rental amount in accordance with the principle of "right and fairness", first of all, if the parties have all the evidence, the original or approved copies of the precedent rental agreements should be put into the file, the rented immovable property and the counterparts of the parties should be seen and examined one by one with the help of an expert, thus the data obtained should be concretized, and all the qualities that affect the rental money should be compared with the place in question (location, environment, quality, type of use, rental start date, rental periods, etc.) separately, and why the precedent rental prices are appropriate. It should be explained with concrete reasons whether there is a precedent or not, and if the immovable property in question is re-leased as of the rental period for which determination is requested, the rental amount that it may bring as vacant should be determined, and the judge should rule on a reasonable rental amount in line with justice and fairness, taking this rental amount into consideration. The court must have a report drawn up in the light of the stated principles, determine the monthly rental fee that the leased property in question may bring if it is re-leased as of the requested period, and make a decision based on the result by making a reduction in rights and deductions based on this." Y3 HD. 2019/5879 K.

EQUITY DEDUCTION IN THE CASE FOR DETERMINATION OF THE RENTAL FEE

We explained above that as a result of the declaratory case, a decision will be made within the framework of the principle of fairness and fairness. Here, the judge must make a reduction in favor of the tenant, which is reflected in the judicial decisions as an equity reduction. In practice, it is seen that the discount is made in the range of 10 to 15 percent. However, we believe that an increase in the equity discount rate should be made considering today's conditions. Some Supreme Court decisions reflecting the equity reduction are as follows:

"When determining the fair and equitable rent, an equitable amount of reduction must be made from the rent that the property could fetch if the property is re-leased vacant, not lower than the rent determined by increasing the last paid monthly rent according to the index (PPI), taking into account that the defendant is the former tenant." Y3HD. 2021/8864 K.

"In order to determine the rental money in accordance with the principle of "right and fairness", first of all, if the parties have all the evidence, the original or approved copies of the precedent rental agreements should be put into the file, the rented immovable property and the counterparts of the parties should be seen and examined one by one with the help of an expert, thus the data obtained should be concretized and all the qualities that affect the rental money should be compared with the place in question separately (location, environment, quality, type of use, rental start date, rental periods, etc.) and why the precedent rental amounts should be determined. "It should be explained with concrete reasons whether there is a suitable precedent or not, and the rental amount that the real estate in question can bring if it is re-leased as of the rental period for which determination is requested should be determined, and the judge should decide on a reasonable rental amount in accordance with the rights and deductions by taking this rent money into consideration, and the court should make a decision in accordance with the result by obtaining a report prepared in the light of the specified principles, determining the monthly rental fee that the subject matter leased property can bring if it is re-leased as of the period for which determination is requested, and making a deduction for the rights and deductions based on this." Y3HD. 2019/5789 K.

CAN A CASE FOR DETERMINATION OF RENTAL FEE BE FILED AS AN UNDETERMINED RECEIVABLE CASE?

It is not possible to file this lawsuit as an indefinite debt lawsuit or a partial lawsuit. This situation is expressed in the following decision of the General Assembly of Law:

"As mentioned before, cases for determination of the rental price are a unique case and are close to the decisions given at the end of construction cases. In these cases, only the determination of the rental price that will be valid during the relevant rental period is requested and the case for determination of the rental price has a limited subject. As a result of the case, the judge determines the rental fee to be applied for a period of one year in the future and the rental fee in the lease agreement is changed by the judge's decision. Due to this nature of the case, the request for the determination of the rental fee cannot be divided and the rental fee is declared by the plaintiff at once. and must be requested clearly. In other words, in cases of determination of the rental price, the rights regarding the excess cannot be reserved and no amendment can be requested regarding this reserved right.

On the other hand, since the request for the determination of the rental price is related to the period specified in the petition, if the price is increased through improvement, a request will be made to cover a later period, and this is contrary to the nature of the rental fee determination cases. YHGK 2021/267 K.

In this case, the judge is bound by the request and cannot decide more. Before filing a declaratory lawsuit, an investigation must be made by the plaintiff and the requested rental fee must be clearly stated in the petition. This is also important in terms of attorney fees.

FEES AND ATTORNEYS' FEES IN THE CASE FOR DETERMINATION OF RENTAL FEE

In cases of determination of the rental price; In accordance with the provision of Article 9 of the Lawyer Minimum Fee Tariff, the attorney fee must be calculated for the benefit of the plaintiff based on the one-year amount of the difference between the monthly gross rent awarded and the gross rent paid in the last period, and for the benefit of the defendant based on the one-year amount of the difference between the monthly gross rental fee requested in the case and the monthly gross rental fee decided, and a decision must be made according to the result, taking into account that these amounts cannot be less than the fee determined by the court where the case is heard in the second part of the second part of the Tariff. Y6HD. 2015/3359 K.

Due to the different practices among the appellate courts regarding the fee issue in the rental price determination cases, the issue was brought to the Supreme Court. The 3rd Civil Chamber of the Supreme Court of Appeals resolved the dispute between the regional courts of justice on 25.11.2024 and decided to continue the practice of determining the fee based on the monthly rental fee. Relevant parts of the decision are as follows:

"Considering the above-mentioned legislative provisions and their justifications, it is understood that there is no obstacle to the Supreme Court practice, which has established that the decision and judgment fee should be collected based on the difference in monthly rent in cases where the monthly rent is determined, to continue after the entry into force of Law No. 6098. Accordingly, practices to the contrary will violate the principle of equal application and will also result in the tenant, who is a party to these cases related to public order, coming under an obligation that has no legal basis.

In this respect, it has been decided to resolve the disagreement in opinion and practice between the final decisions given by the Ankara Regional Court of Justice 15th and Antalya Regional Court of Justice 6th Civil Chambers and the Bursa Regional Court of Justice 4th Civil Chambers." 2024/3821 K.

CASE FOR DETERMINATION OF RENTAL FEE, APPEAL AND APPEAL

In the case of determination of the rental price, it is possible to appeal the decision if the appeal limit is reached. Moreover, since the decision is a declaratory decision, it cannot be enforced before it becomes final.

However, decisions regarding the determination of the rental price cannot be appealed. A recent precedent decision of the Supreme Court on the subject is as follows:

"In Article 362/1-b of the Code of Civil Procedure, it is stated that, excluding the receivable cases arising from the rental relationship and which can be appealed in terms of amount or value, the decisions regarding the cases stated in the 4th article of the same Law (except for the cases related to the same real estate arising from the Condominium Law No. 634 dated 23/6/1965) and the cases stated to fall within the jurisdiction of the civil court of peace in special laws cannot be appealed. Accordingly, the nature of the dispute between the parties Considering this, the decision given as a result of the appeal review in accordance with HMK Article 362/1-b is final.

Pursuant to Article 352 of the same Law, with reference to Article 366 of the HMK, the Supreme Court may decide to reject the appeal request regarding final decisions." Y3HD. 2020/2267 K.