In 2020, as a response to the economic challenges arising from the COVID-19 pandemic, the government implemented measures to safeguard the rights and interests of tenants by capping the permissible increase in rental rates at 25% of the preceding rental amount.

What are the possibilities available to the lessor for increasing the rent?

In the realm of rental price adjustments, lessors have two primary legal avenues at their disposal: the "Declaratory Judgment Action for Determination of Rent" and the "Rent Adaptation Lawsuit. "

The most notable disparity between these two legal processes pertains to the requisite duration of the lease agreement. Specifically, in order to initiate a "Declaratory Judgment Action for Determination of Rent," it is imperative that the lease agreement has been continuously in effect for a minimum period of five years. In contrast, no such condition concerning the duration of the lease agreement is imposed in the context of a "Rent Adaptation Lawsuit."

What is adaptation?

Before going into the details of the article, we find it useful to explain what the concept of adaptation is. One of the fundamental principles in our law is the sanctity of contracts. This principle essentially dictates that a contract executed between parties should be strictly upheld as of the date of its execution. However, there exist certain situations wherein the equilibrium between the involved parties may be unduly disrupted due to unforeseeable circumstances beyond their control.

Under such circumstances, if all four conditions listed below concomitantly manifest, an aggrieved party can apply to the court to request an adaptation of the contractual terms. In other words, a person who believes that the balance in the contract has been disrupted to their disadvantage can petition for an adjustment. The aforementioned conditions are as follows:

  1. The occurrence of an extraordinary situation that was not anticipated by the parties at the time of contract execution and could not have been reasonably foreseen,
  2. This extraordinary situation is not caused by the debtor,
  3. As a result of this extraordinary situation, it may not be reasonably expected for the debtor to fulfill their obligation,
  4. In the event that the debtor has not yet discharged their obligation or, even if they have done so, they have done it while reserving their rights owing to the excessive difficulty in fulfillment.

With regard to lease contracts, adaptation often pertains to the rental fees. For the adaptation of the rental fee, the Court of Cassation that changes arising after the execution of the lease contract must be both extraordinary and of an objective nature. In other words, the altered conditions should neither have been foreseeable nor anticipated and should not have been within in the purview of the parties' prior consideration.

What are the unforeseen and unforeseeable extraordinary circumstances?

When scrutinizing the precedents set by the Court of Cassation, examples of these extraordinary circumstances can be exemplified as including war, severe economic crises impacting the country, drastic increases in inflation rates, sudden devaluation, and a substantial devaluation of the currency. In addition to these exceptional circumstances, the Court of Cassation recognizes that, in long-term lease relationships, if the aforementioned conditions arise due to changing economic conditions, cases seeking adaptation can be filed.

Given that adaptation cases take effect from the date of initiation, it is necessary for the lawsuit to be filed within a reasonably short period after the occurrence of the extraordinary circumstance. Otherwise, if a certain period has already elapsed and the parties have continued to execute the contract despite the extraordinary circumstance, there is a high likelihood, in line with the nature of an adaptation cases, that the lawsuit will be rejected.

Is it necessary to apply to a mediator before initiating a rent adaptation case?

Pursuant to the legal regulations introduced in the recent past, we would like to state that it is mandatory to apply to the mediation process before initiating the adaptation cases arising from the lease agreement.

Conclusion

In our legal system, it is possible to file an adaptation case for lease agreements with a duration of less than five years, with the burden of proof resting upon the plaintiff to substantiate the presence of the aforementioned conditions exist in the current situation. In conclusion, we maintain the view that in situations where these conditions are met, it is possible for landlords to file a lawsuit for the adjustment of the rental fee, even if the five-year period has not yet expired.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.