Rent adjustment in Brazil: annual updates and review

The rules in the statutes

Free pricing, with two bans. Article 17 of Lei 8.245 says rent is freely agreed, “forbidding its stipulation in foreign currency and its link to exchange-rate variation or to the minimum wage”. Lei 10.192, article 1, requires payment obligations in Brazil to be stipulated in reais at their nominal value and voids clauses tied to gold or foreign currency, save where a law or Central Bank rule allows it. For a foreigner whose income is in dollars, pounds or Canadian dollars, this means the rent is a number of reais; any converted figure in a brochure is not the contractual rent.

One year minimum. Lei 10.192, article 2, allows an adjustment by general or sectoral price indices in contracts lasting a year or more, and paragraph 1 declares void “any stipulation of adjustment or monetary correction with a period shorter than one year”. Paragraph 3 voids any device that produces the financial effect of a shorter period. So a lease cannot lawfully provide for a six-monthly increase.

Which index. Neither Lei 8.245 nor Lei 10.192 names the index for private leases. It is whatever the contract says. If the contract names an index that has ceased to exist, or names none, the parties need to agree or ask a court; the statutes read do not supply a default.

Agreed changes. Article 18 lets the parties fix a new rent, and insert or change an adjustment clause, by common agreement, at any moment.

Judicial review after three years. Article 19 allows either the landlord or the tenant, “after three years of the contract or of the previous agreement”, to ask the court to adjust the rent to the market price when there is no agreement. The review action (ação revisional) is regulated in articles 68 and 69:

• the claimant states the rent they want;
• on request the judge sets a provisional rent due from the service of the claim: not above 80 percent of the amount claimed when the landlord sues, and not below 80 percent of the current rent when the tenant sues (article 68, II);
• the rent fixed in the judgment applies retroactively to the date of service, and differences are paid with correction (article 69);
• if the landlord asks, the judgment can also change the adjustment period or the index (article 69, paragraph 1).

How the arithmetic works

A contractual adjustment is a formula, not a published figure. If the clause says “annual adjustment by index I”, then: new rent = current rent × (1 + the variation of I over the 12 months defined in the clause). Check three points in the clause: the exact 12-month window, the index and its publisher, and whether the adjustment date is the lease anniversary. Lei 10.192, article 2, paragraph 2 says that after a contractual revision the next period starts on the date the previous revision took place.

Payotte did not read any official index series, so no percentage is given here; the issuer of the chosen index publishes its own figures.

Rent versus the other charges

The rent adjustment does not cover the other items: condominium fees follow the condominium budget, and the tenant is entitled to see the budget item and monthly apportionment (article 23, paragraph 2). The IPTU is set by the city, and the landlord bears it unless the lease says otherwise (article 22, VIII). See condominium fees and rules and IPTU. A landlord who demands money beyond the rent and the charges the Act allows commits a contravention (article 43, I).

Traps for foreign tenants

• A lease that quotes the rent “in USD” or “equivalent to USD” is hit by article 17.
• A clause adjusting rent every six months is void, whatever index it names.
• An adjustment applied before the first anniversary is not lawful. The first adjustment cannot be earlier than a year after the lease starts or after the previous revision.
• Increases after the lease has become open-ended follow the same clause unless the parties agree a new one; a landlord who wants to change the index unilaterally needs the other side’s agreement or a court order.

Which professional to consult

A lawyer registered with the OAB can read the adjustment clause and tell you whether it respects Lei 10.192; see the property lawyer page. A licensed broker or a property administrator can show how local landlords apply the contract index; see the real estate broker page.