Rent review action: how to adjust the rent to the market price?

Is your lease nearing its end? Check the statutory window with our commercial lease renewal lawyer in São Paulo. Is it only the annual adjustment? Work it out in the rent adjustment calculator and check the rules in our guide to Brazilian tenancy law.

Lease contracts last for years — and, over that period, the market changes. One neighborhood appreciates, another loses traffic; the economy fluctuates. The result is common: the rent agreed long ago no longer matches what is charged today for comparable properties. When this happens and there is no agreement to adjust it, there is a solution: the rent review action.

It serves both sides: the landlord who sees their rent fall behind can seek an increase; the tenant who pays above the market can seek a reduction. In this guide, you will understand what the rent review action is, when it applies, what the term is, how the provisional rent works and how it differs from the renewal action — with a practical example.

What is the rent review action?

The rent review action allows the rent to be adjusted to the market price when the parties cannot reach an agreement. The basis is art. 19 of Tenancy Act 8.245/1991: “where there is no agreement, the landlord or tenant, after three years of the contract or of the previously made agreement, may seek a judicial review of the rent in order to adjust it to the market price”.

Note two points. First, it is a two-way route: both the landlord (to increase an outdated rent) and the tenant (to reduce a rent above the market) can bring it. Second, it applies to residential and commercial leases. The aim is simple and fair: to make the rent reflect the reality of the market, rather than an old and outdated snapshot.

What is the difference between the rent review action and the renewal action?

These two actions are often confused, but they have distinct purposes:

• The rent review action (art. 19) primarily adjusts the rent to the market — without changing the term of the contract, which remains in force.

• The commercial lease renewal action (art. 51) seeks renewal of the contract, subject to statutory requirements, for a new period, protecting the business premises (goodwill) — and, in that process, the rent may also be renegotiated.

In short: if the contract remains valid and the problem is only the price, the route is the rent review action; if the contract is coming to an end and the business owner wants to secure continued occupation of the premises, the route is the renewal action. In some situations, the strategies connect — so it is worth analyzing the stage of the contract and the goal (adjust the price, renew, or both) before deciding.

When can I request a rent review?

The rent review action requires that a term be met: three years of the contract or of the last agreement/review. It is necessary to distinguish applying the existing index from agreeing a new rent:

• A mere annual adjustment by an index (IGP-M, IPCA) does not restart the three-year term — after all, it only corrects for inflation, it does not change the real value.

• An agreement that sets a new rent (beyond applying the existing contractual index) may restart the count of the three-year period.

That is, to know whether the three-year period has already been met, the contract history must be analyzed: when it began, what adjustments and agreements there were, and whether any of them set a new agreed rent. This calculation is the starting point of the rent review action — and getting it wrong can lead to dismissal of the action for failure to meet the requirement.

A rent review claim is unavailable while a statutory, agreed or court-ordered period to vacate is running (Article 68(1)). In built-to-suit leases, check for a waiver of rent review during the lease term (Article 54-A(1)). Although review does not extend the lease, the judgment may change the adjustment interval or index at the landlord’s or sublandlord’s request (Article 69(1)).

How does the provisional rent work?

One useful feature is provisional rent. On request and based on the evidence, the court may set rent payable from service of process (Article 68(II)). If the landlord brings the claim, it cannot exceed 80% of the amount requested; if the tenant brings it, it cannot fall below 80% of the current rent. Neither limit means the court automatically awards 80%.

During the case, provisional rent governs payments and remains subject to applicable adjustments. An expert appraisal is ordered if necessary (Article 68(IV)). The defendant may request reconsideration of provisional rent before the hearing, providing supporting evidence. The final rent is backdated to service of process (Article 69); after crediting provisional payments, the adjusted differences become payable only when the decision fixing the new rent is final and no longer subject to appeal. Both parties should plan for that settlement and retain payment records.

Practical example: Dona Helena’s restaurant

Imagine that Dona Helena owns a property in São Paulo, leased to a restaurant at a current monthly rent of R$ 8,000. The lease began five years ago and has only undergone annual index adjustments. Comparable properties on the same street now rent for around R$ 14,000, but the tenant declines to negotiate. This is a hypothetical example.

If the three-year period and other requirements are met, Helena may seek R$ 14,000, supported by a market appraisal. For this landlord claim, provisional rent would be capped at R$ 11,200 (80% of the request), with the actual amount depending on the evidence; the court may order an expert appraisal if necessary. If final rent is set at R$ 14,000, the arithmetic difference from current rent is R$ 6,000 a month. Settlement depends on service, payments made and the judgment becoming final. These figures illustrate a calculation, not a verified case outcome or a guaranteed award.

The most common (and costly) mistakes

• Calculating the three-year period wrong. Confusing an index adjustment with a real increase leads to filing the rent review action too early.

• Failing to prove the market value. The rent review action depends on solid evidence (appraisal and, if necessary, expert examination); without it, the claim is weakened.

• Forgetting the provisional rent. Failing to request it means giving up the chance to adjust the amount during the proceedings.

• Confusing it with the renewal action. Each action serves a purpose; using the wrong one undermines the strategy.

• Passively accepting the gap. Both the landlord and the tenant can correct an unfair amount.

Checklist: before filing the rent review action

• Check whether three years have already elapsed since the contract or the last agreement setting a new rent.

• Compile the history of adjustments and agreements of the contract.

• Gather evidence of the market value (appraisal, comparables for the area).

• Set the amount sought and prepare the request for provisional rent.

• Assess whether the case is one for a rent review action (price) or a renewal action (renewal/premises).

• Structure the action with a Business and Real Estate Law attorney.

Frequently asked questions about the rent review action

What is the rent review action?

It is the action that allows the rent to be adjusted to the market price when there is no agreement between the parties. It is set out in art. 19 of Tenancy Act 8.245/1991: where there is no consensus, the landlord or tenant may, after three years of the contract or of the last agreement, seek a judicial review of the rent. It serves both the landlord seeking to increase an outdated rent and the tenant seeking to reduce a rent above the market. It applies to residential and commercial leases.

What is the difference between the rent review action and the commercial lease renewal action?

They are distinct actions. The rent review action (art. 19) primarily adjusts the rent to the market, without changing the term of the contract. The commercial lease renewal action (art. 51) seeks renewal of the commercial lease, subject to statutory requirements, for a new period, protecting the business premises (goodwill) — and, in it, the rent may also be renegotiated. In short: if the contract remains valid and the only problem is the price, the rent review action applies; if the contract is coming to an end and the business owner wants to secure continued occupation of the premises, the renewal action applies.

When can I request a rent review?

When there is no agreement and three years have already elapsed since the contract or the last agreement/review (art. 19 of Tenancy Act 8.245/1991). An important detail: a mere annual adjustment by an index (IGP-M, IPCA) does not restart this three-year term; whereas an agreement that sets a new rent (beyond applying the existing contractual index) may restart the count. For this reason, the contract history must be analyzed to determine whether the three-year period has already been met.

How does the provisional rent work in the rent review action?

On request and based on evidence, the court may set provisional rent payable from service of process (Article 68(II)). In a landlord claim, it cannot exceed 80% of the amount requested; in a tenant claim, it cannot be below 80% of current rent. It is not automatic. An expert appraisal is ordered if necessary. Final rent is backdated to service (Article 69); after crediting provisional payments, the adjusted differences become payable when the decision fixing the new rent is final and no longer subject to appeal.

Is it worth filing a commercial rent review action in São Paulo?

It can be well worth it, depending on the gap. In São Paulo, where the real estate market varies considerably by region, it is common for rents to become outdated over the years — too high or too low. If there is a significant difference between the rent paid and the market rate for comparable properties, and three years have already elapsed, the rent review action allows this distortion to be corrected through the courts. An appraisal of the property and of the local market indicates whether the claim has merit.

Do I need a lawyer for the rent review action?

Yes, this action requires representation by a lawyer. And technical work is especially relevant here: the rent review action depends on proving the market value (with an appraisal and, if necessary, a court expert examination), on correctly calculating the three-year period and on requesting the provisional rent. A Business and Real Estate Law attorney in São Paulo structures the claim with the appropriate evidence, whether for the landlord seeking an increase or for the tenant seeking to reduce the rent to a fair level.

A fair rent is one that keeps pace with the market

The rent review action exists to correct a common distortion: the rent that, over the years, has drifted away from what the market charges. It gives the landlord and the tenant a way to rebalance the contract — upward or downward — without having to end the relationship.

Assessing the rent review action depends on three things: the three-year period correctly calculated, the evidence of the market value and the use of the provisional rent. With these elements well handled, the parties can assess a claim concerning rent that differs from the market, without any guarantee of the outcome.

At Falchet e Marques Sociedade de Advogados, a firm in São Paulo (Av. Paulista), we handle rent review and renewal actions and Business and Real Estate Law matters — structuring the claim with the appropriate evidence, for the landlord seeking an increase or the tenant seeking to reduce the rent to a fair level. If your commercial rent is out of step with the market, it is worth assessing a rent review action.

Talk to our team on WhatsApp: +55 11 95901-1854 — and assess whether your rent can be adjusted to market value.