1. Rental Agreement must be related to the Residential Premises and Business Premises with Roof.

A lawsuit for the determination of rent shall only be filed in respect of the lease agreements of residential premises and business premises with roof. Pursuant to Articles 327-328-330 of the Turkish Code of Obligations (TCO), it is not possible to file lawsuit for determination of rent except for lease agreements of residential premises and business premises with roof.[1] Because, in other types of agreements, especially the lessor has the right to terminate the contract at the end of the term agreed in the contract for definite or indefinite contracts, or at the end of the termination period with a notice of termination in indefinite term contracts, it is possible for the parties to determine an increased rent for the new year by agreement, since it is possible to evict the tenant in the absence of an agreement on the new term rent. [2]

Judgment of the 3rd Civil Chamber of the Court of Cassation file numbered 2017/4297, Dec. No. 2018/11824, dated 21.11.2018;

“Pursuant to Articles 344 et seq. of the TCO, it is important to determine the prevailing qualification of the immovable property, considering that the request for rent determination can only be applied in disputes arising from leases of residential premises and business premises with roof, and rent determination cannot be requested otherwise.”

2. In Definite Term, Long Term or Indefinite Term lease agreements, after the end of 4 (four) years after the first lease year, a rent determination lawsuit can be filed from the beginning of the 6th (sixth) lease year.

After the end of 4 (four) years after the first lease year in Definite Term, Long Term or Indefinite Term lease agreements, after the end of 4 (four) years after the first lease year, from the beginning of the 6th (sixth) lease year, it has been accepted as a period of right and excellence. Thus, the lawsuit for determination of rent to be filed pursuant to Article 344/3 of the TCO may be filed as of the beginning of the 6th (sixth) lease year at the earliest.

3. Shall a lawsuit for determination of rent be filed in the following years if it is not filed in the 6th year?

We would like to clarify this question with an example. For instance, let’s assume that the contract dated 01.01.2012 is for 1 year and it is extended for 1 year periods. The 2nd year (01.01.2013-31.12.2013), 3rd year (01.01.2014-31.12.2014), 4th year (01.01.2015-31.12.2015), 5th year (01.01.2016-31.12.2016) are the periods of indexes, 6th year (01.01.2017-31.12.2017) it is accepted as a period of right and excellence. In the 6th year, the index will be applied again in the 7th, 8th, 9th and 10th years over the rent to be determined in the lawsuit for determination, and the 11th year again will be accepted as the period of right and excellence. In the 6th year of the agreement, a lawsuit for determination of rent may not be filed, but determination of rent may be requested in the 7th or 8th year. In this case the index will be applied for 4 years, following the year in which the rent determination is requested.

4. What are the issues to be taken into consideration in lawsuits for determination of rent?

In the aforementioned case, the judge, regardless of whether there is an agreement between the parties regarding the rent or not, determines the rent that the leased property will bring as empty, by taking into account the rate of change in the consumer price index according to the twelve-month averages, the condition of the leased, and the imputed rental value.

As a matter of fact, the judgment of the 3rd Civil Chamber of the Court of Cassation dated as 27.06.2019 and No. 2017/8186 and Dec. No. 2019/5879;

“In order to determine the rental fee in accordance with the principle of “fairness and equity” according to the Unified Decision of Court of Cassation dated 18.11.1964, numbered as 2/4 and the established Court of Cassation practices, first of all, all the evidences of the parties, if there is any, the original or certified copies of the precedent lease agreements should be taken into the file, the leased immovable and the parties’s precedents should be viewed and examined one by one by the expert, so that the data obtained should be embodied and compared with the place, being the subject of the lawsuit separately (location, environment, quality, type of use, lease terms, etc.), all qualities affecting the rental fee, the reason why the imputed rental fees are appropriate precedents should be explained with concrete grounds, the rental fee that the immovable property subject to the lawsuit can bring empty if it is re-rented as of the rental period requested to be determined should be assessed, and a rational rental fee should be ruled by the judge in accordance with the fairness and equity by taking this rental fee into consideration.”

The judgment of the 3rd Civil Chamber of the Court of Cassation dated as 22.01.2013 and No. 2012/22360 and Dec. No. 2013/879;

“In accordance with the principle of “fairness and equity” according to the Unified Decision of Court of Cassation dated 18.11.1964, numbered as 2/4 and established Court of Cassation practices, whilst the judge makes these restrictions, first of all, all the evidences of the parties, if there is any, the original or certified copies of the precedent lease agreements should be taken into the file, the leased immovable and the parties’ precedents should be viewed and examined one by one by the expert, so that the data obtained should be embodied and compared with the place, being the subject of the lawsuit separately (location, environment, quality, type of use, lease terms, etc.), all qualities affecting the rental fee, the reason why the imputed rental fees are appropriate precedents should be explained with concrete grounds, the rental fee that the immovable property subject to the lawsuit can bring empty if it is re-rented as of the rental period requested to be determined should be assessed, and a rational rental fee should be ruled by the judge in accordance with the fairness and equity by taking this rental fee into consideration. The court’s judgment based on an incomplete examination by relying on the general expert report that does not include the aspects explained above is contrary to the procedure and law, and to the Unified Decision of Court of Cassation, and the established Court of Cassation practices; thus is a reason for reversal.”

5. After determining the rent that the leased property will bring as empty, the equitable reduction due to the former tenancy should be applied.

The equitable reduction of the defendant tenant due to the former tenancy should also be applied, and the claimant’s claim should be evaluated accordingly.

The judgment of the 3rd Civil Chamber of the Court of Cassation dated as 07.03.2019 and No. 2017/6030 and Dec. No. 2019/1791;

“The court, by evaluating the precedents of the parties, if necessary, by conducting ex officio precedent research, by obtaining an expert committee report in a way that is sufficient to rule on and suitable for supervision, determining the gross rental fee that the immovable property can bring if it is re-rented as empty, and determining the gross rental fee after making an equitable reduction from this amount, taking into account that the defendant is a former tenant, it is not correct to make a judgment based on an inadequate one-person expert report.”

The judgment of the 3rd Civil Chamber of the Court of Cassation dated as 22.11.2018 and No. 2017/4780 and Dec. No. 2018/11917;

“In the expert report taken as basis by the court, it is stated that if the immovable is re-rented as empty, it can bring a monthly rent of 1.413 Turkish Liras as of 01.08.2014 Whilst the court determines the rent by making an appropriate amount of reduction from the rent that the defendant can bring if the immovable is rented empty while determining the rent in accordance with the right and equity, considering that the defendant is a former tenant, it was not considered accurate to make a decision determining the rent without making a right and equity reduction as written, and it required a reversal.”

The judgment of the 6th Civil Chamber of the Court of Cassation dated as 12.05.2015 and No. 2015/1661  and Dec. No. 2015/4811;

 “In accordance with the established Court of Cassation Judgments, the court should make an equitable reduction of 10-20% from the gross rent determined by the experts in favor of the tenant in accordance with Articles 51, 52 of the TCO (Former Code Of Obligations Art. 43, 44), taking into account that the tenant has been living for a long time and is a former tenant, but it is erroneous to award the rent determined by the expert without an reduction.”

The judgment of the 6th Civil Chamber of the Court of Cassation dated as 07.11.2013 and No. 2013/4407 and Dec. No. 2013/15048;

“The expert report should be evaluated by the court in the light of concrete grounds, and the rent should be determined by the judge in accordance with the rights and excellence (by making some discount from the price determined by the expert committee, considering that the tenant is a former tenant).”

The judgment of the 6th Civil Chamber of the Court of Cassation dated as 24.11.2014 and No. 2014/12138 and Dec. No. 2014/12898;

“The court should make a reduction from the amount determined by the expert by considering that one is a former tenant”

6. If there is an increase clause in the lease agreement, the lawsuit for determination of rent can be filed at any time during the current rental period without the need for any prior notice. The rent to be determined shall be applicable as of the beginning of the current lease period. 

Article 345/3 of the Turkish Code of Obligations states;

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

According to the aforementioned provision, when the parties agree in their contracts that the rent will be increased over a certain rate or without specifying the rate in the extension periods after the first year, the tenant will know that the rent for the new period will be increased, so there is no requirement to file a separate lawsuit 30 days before the new period or to make a written notification containing the increase request.[3] The mere fact that it is stated in the contract that the rent will be increased without specifying the rate is sufficient for the action for determination to be filed during the period rather than before the period. [4]

The judgment of the 6th Civil Chamber of the Court of Cassation No. 2014/8948 and Dec. No. 2015/5710;

“In accordance with the established Court of Cassation Judgments: The increase clause in the lease agreement gives the right to request the determination of the rental price for the period (including the last day of the period) on the date of the lawsuit, without the need for a notice to be sent before the end of the period.”

The judgment of the 3rd Civil Chamber of the Court of Cassation No. 2007/8730 and Dec. No. 2007/8720;

‘“In accordance with the established Court of Cassation Judgments: The increase clause in the lease agreement gives the right to request the determination of the rent for the period (including the last day of the period) on the date of the lawsuit, regardless of the notice that must be sent before the end of the period.”

7. If there is no increase clause in the lease agreement, the lessor must notify the lessee regarding the rent increase no later than thirty days before the beginning of the new lease period.

In the absence of a rent increase clause in the lease agreement, in the event that the lessor has made a written notification to the lessee regarding the rent increase within thirty days prior to the beginning of the new lease period at the latest, in the event that a lawsuit is filed until the end of the new lease period subsequent to this notification, the rent determined by the court shall bind the lessee as of the commencement of the new lease period.

[1] Hikmet Kanık, Yargıtay Uygulamasında Kira Hukuku Davaları, s.857

[2] Kanık, s.857

[3] Kanık, s.912

[4] Kanık, s.912

Serkan Kolay
Partner | [email protected]