Exit the IGP enter the IPCA; see what the court has decided in the fight between tenants and landlords

More companies are getting in court the replacement of the IGP-M (General Market Price Index) in their rental contracts. The central argument of these actions is that the rise in the index unbalanced agreements closed, in general, years before the beginning of the pandemic, in March 2020, which would justify their renegotiations.

For judge Maria Cristina Barros Gutierrez Slaibi, of the 3rd Civil Court of Rio de Janeiro, the legislation provides that, in cases where the provision becomes excessively onerous for one of the parties, representing an extreme advantage for the other, the debtor may request a review of the contract.

In a provisional decision (injunction), it determined the application of the IPCA accumulated in 2020 in the correction of the rent of a cosmetics store in a shopping mall in Rio. This contract was readjusted from R$ 9,669.64 to R$ 12,676.61 in May this year. The increase was 31.10%.

In São Paulo, at the end of November, a restaurant managed to apply the IPC, an inflation index calculated by Fipe (Fundação Instituto de Pesquisas Econômicas). Judge Claudia Akemi Okoda Oshiro Kato, of the 4th Civil Court, limited the replacement to the adjustment applied in November 2020.

She considered that “the exceptionality – in this case, the Covid-19 pandemic and its effects on the economy – appears to be temporary”, which would not justify making the replacement permanent. Therefore, the index provided for in the contract, the IGP-M, remains valid for the coming years.

The restaurant appealed for the change to become definitive. Attorney Daniel Cerqueira, who acted in these actions, says that the variation of the IGP-M remains high in 2021, which would justify extending the replacement.

Another sentence, that of the 31st Chamber of Private Law of the Court of Justice of São Paulo, considered that the “disproportion is latent”. Therefore, the traditional index of lease contracts could be exchanged for a less onerous one.

The action was initiated by a steakhouse installed in a shopping mall. Also in this case, the shopkeeper was only able to stop the use of the IGP-M in the correction applied in 2021. The other adjustments provided for in the contract with the shopping center will continue to be made by the index prepared by the FGV (Fundação Getulio Vargas).

“One cannot lose sight, on the other hand, that commercial activities have already substantially returned in almost all segments with the cooling of the pandemic, so that a gradual economic recovery is expected”, wrote rapporteur Rosangela Telles.

In early November, paint maker Sherwin-Williams also managed to replace the IGP-M as a correction index for its lease agreement with a property investment fund.

Starting this year, the lease agreement valid until 2029 will be adjusted by the IPCA. The sentence is from the 29th Chamber of Private Law of the São Paulo Court of Justice.

In May 2021, the 12-month accumulated IGP-M hit 37%, a peak in the historical series of the Getulio Vargas Foundation, which calculates the index. In the same period, official inflation was 8%. Until November, rent inflation was 17.89% in 12 months. The November IPCA rose to 10.74% in one year.

In other cases, the stores also went to court to fight for discounts on rents. At the 7th Civil Court of Campinas, a decision at the end of November confirmed an injunction that determined the application of discounts of 50% on the minimum rent, 30% on the condominium and 40% on the promotion fund.

The store that went to court also managed to reduce the R$610,000 fine for delivering the space before the end of the contract. The penalty was BRL 66,830.01.