Nathália Guedes Brum
Lawyer at Marcos Martins Advogados Associados
It is very common for tenants to make improvements and/or accessions to the leased property during the term of the lease, in order to meet the needs of their business, i.e. the commercial lease, which are incorporated into the property and, consequently, increase the value of the property.
The controversy is over whether this increase in value of the property, arising from improvements and/or accessions made by the tenant himself, can be reflected in the calculation basis for adjusting the rent in favor of the landlord during the term of the lease.
There is no specific provision in the law regarding the increase in the built-up area, for example, but there is express authorization in article 19 of Law No. 8.245/1991[1] to review the rental value after three years of the contract, with the aim of adjusting it to the market price, and thus re-establishing the contractual balance.
In this sense, it is important to distinguish between the contractual revision regulated by the aforementioned article and the readjustment provided for in the contract. Sylvio Capanema de Souza[2] teaches that:
The revision action, as will be seen in due course, when we discuss it, is the mechanism that ensures the commutativity of the contract, keeping the rent at the market level, sometimes raising it, sometimes reducing it, according to its oscillations, and if it is not possible to conclude an agreement, which is always more recommendable. The aim of the revision action is to adjust the rent to the market level, re-establishing the original balance of the contract. Therefore, there are no percentage limits for the increase in the rent, which will depend on the reality of the market at the time of the action. The legal and/or contractual corrections made over the course of the three-year period do not inhibit the revision action, unless they have been sufficient to keep the rent up to date, which, in general, has not been the case (emphasis added).
It is therefore possible to judicially review the value of the rent, during the term of the lease, seeking to balance the contract, either to increase or reduce it, based on the market value of the property, taking into account all the circumstances capable of affecting the price of real estate.
Thus, given the legal possibility of judicial review of the rent to bring it into line with the market value, the controversy over the possibility of considering the increase in value of the property arising from improvements made by the tenant and not yet compensated by the landlord, as grounds for readjusting the value of the contract.
Law No. 8.245/91[3] and Article 1.255 of the Civil Code
Article 35 of Law No . 8.245/91[4] and Article 1.255 of the Civil Code[5] establish that improvements or accessions built by the tenant with the landlord’s consent must be indemnified at the end of the contract .
Along these lines, there is an understanding that the revision of the rent must take into account the value of the property at the time the lease agreement was signed, under penalty of unlawful enrichment of the landlord. This is because compensation for the increase in value made by the tenant will only occur, in theory, at the end of the lease. If the compensation were paid to the tenant immediately after the work, it would be appropriate to consider the increase in rent based on the appreciation of the property.
Under this approach, it is argued that the contractual imbalance is measured considering only external elements of the contract, related to the location of the property, for example, and that the improvement or access does not cause damage to the landlord, nor does it unbalance the contract to justify a review on this basis; on the contrary, it increases the value of the property for future leases. It is understood that this would be a double favor to the landlord to the detriment of the tenant, which would be prohibited by our legal system.
Embargos de Divergência[6], the Special Court of the Superior Court of Justice (STJ)
On the other hand, in a judgment on a Motion for Leave to Disagree[7], the Special Court of the Superior Court of Justice (STJ), by a majority, held that it is possible to increase the rent in a commercial lease review action as a result of the property’s appreciation due to improvements or accessions made by the tenant, since these accessories have been incorporated into the domain of the landlord, who owns the property, regardless of who will bear the cost of such investments.
In the judgment of the motion for clarification, Justice Nancy Andrighi stated that
The hypothesis that only when the investment is made at the landlord’s risk would the increase in rent be authorized, in fact, greatly limits private rental relationships and ends up displacing the logic that underlies these contracts with regard to the linking of the value of the property to the corresponding rental price.
From this point of view, it is understood that there is no unlawful accumulation for the landlord, since the law guarantees the owner the right to the fruits and other products of the property that belongs to him, as set out in Article 1.232 of the Civil Code[8].
Added to this is the fact that landlords must, at the end of the contract, compensate for the improvements and/or accessions made, under penalty of retention by the tenant.
Furthermore, to admit that the landlord/owner of the property is obliged to pay the tenant for the improvements made, but is prevented from earning the profits from this appreciation, would be to admit the unjust enrichment of the tenant and not the landlord.
Thus, based on the above-mentioned legal rules and a ruling by the Special Court of the STJ, it can be said that improvements or accessions made by the tenant, with the landlord’s authorization, must be reflected in the new rental value, obtained in the sphere of an action to revise a lease agreement, even if they have not been previously indemnified.
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[1] Art. 19: If there is no agreement, the landlord or tenant, after three years of the contract or the agreement previously made, may request a judicial review of the rent, in order to adjustit to the market price.
[2] SOUZA, Sylvio Capanema. A Lei do Inquilinato Comentada. 9 ed. Rio de Janeiro: Forense, 2014, pp. 100/101.
[Art. 35: Unless expressly provided for in the contract to the contrary, necessary improvements made by the tenant, even if not authorized by the landlord, as well as useful improvements, provided they are authorized, shall be compensable and allow for the exercise of the right of retention.
[4] Art. 35: Unless expressly provided for in the contract to the contrary, necessary improvements made by the tenant, even if not authorized by the lessor, as well as useful improvements, provided they are authorized, shall be compensable and allow for the exercise of the right of retention.
[5] Art. 1.255. Anyone who sows, plants or builds on someone else’s land loses the seeds, plants and buildings for the owner’s benefit; if he has done so in good faith, he shall be entitled to compensation.
[6]STJ, EDcl nos EDcl nos Embargos de Divergência em RESP nº 1.411.420 – DF (2013/0349083-6), Reporting Justice Nancy Andrighi, Date of Judgment: September 4, 2019.
[7]STJ, EDcl nos EDcl nos Embargos de Divergência em RESP nº 1.411.420 – DF (2013/0349083-6), Reporting Justice Nancy Andrighi, Date of Judgment: September 04, 2019.
[8] Art. 1.232. The fruits and other products of the thing belong, even when separate, to its owner, unless, by special legal precept, they belong to someone else.
