Real Estate

Lease-related disputes are among the most common real estate issues in Japan.

Security deposit returns (Civil Code Art. 622-2): The 2020 Civil Code reform codified security deposit rules. Upon lease termination, the landlord must return the deposit minus any unpaid rent. Normal wear and tear (wall fading, tatami discoloration, thumbtack holes) is the landlord's responsibility per MLIT's "Guidelines on Restoration to Original Condition."

Eviction (Land and Building Lease Act Art. 28): Landlord-initiated termination or non-renewal requires "just cause," assessed by considering both parties' need for the premises, lease history, building condition, and any relocation payment offered. Without just cause, statutory renewal (Art. 26) keeps the lease in effect.

Rent arrears: Case law generally recognizes destruction of the trust relationship — permitting lease termination — after 3 or more months of non-payment. Shorter arrears periods (1-2 months) typically do not justify termination.

Real estate transactions involve substantial amounts and require careful legal procedures.

Non-conformity liability (Civil Code Art. 562+): Replacing the former warranty against hidden defects since 2020, buyers can demand repair (Art. 562), price reduction (Art. 563), damages (Art. 564/415), or rescission (Art. 564/541/542). Notification to the seller within 1 year of discovering the non-conformity is required (Art. 566). Licensed brokers selling as principals must allow at least 2 years (Real Estate Brokerage Act Art. 40).

Important matters explanation (Art. 35): Licensed real estate transaction specialists must explain registered rights, zoning restrictions, infrastructure, and contract terms before signing.

Earnest money: Typically 5-10% of the purchase price. The buyer may forfeit the earnest to cancel, or the seller may return double the amount, until the other party commences performance (Art. 557).

Boundary determination system (Real Property Registration Act Art. 131+): The Legal Affairs Bureau determines official boundaries faster and cheaper than litigation. Costs include application fees and surveying (several hundred thousand yen).

Boundary confirmation lawsuit: For disputes over private ownership boundaries or challenges to official determinations. Courts independently determine the boundary regardless of the parties' claims.

Encroachment: Removal can be demanded under nuisance abatement rights (Art. 198). The 2023 Civil Code amendment allows landowners to trim overhanging branches from neighboring trees under certain conditions (Art. 233-3).

Sunlight rights and noise: Buildings violating building code shadow regulations or noise/vibration exceeding reasonable tolerance levels are subject to injunction and damages claims.

Housing Quality Assurance Act: Mandates 10-year warranty on structural elements and waterproofing for new homes (Art. 94-95). This period cannot be shortened by contract.

Housing Defect Liability Performance Act: Requires builders and brokers to carry defect insurance or make deposits, ensuring repair funds even if the company goes bankrupt.

Response process: Document defects with photos/video; request professional inspection; notify seller/builder in writing; consider ADR through Housing Dispute Resolution Boards; file litigation if necessary.

Common defects: Water leaks, foundation cracks, insulation failures, sick building syndrome, ground subsidence. Inspection costs typically range from ¥200,000-500,000.

The Sectional Ownership Act governs condominium management and operations.

Management association (Art. 3): All unit owners form the association. Management rules (Art. 30) set specific regulations, and decisions are made at general meetings (Art. 34).

Voting requirements: Ordinary resolution requires majority of owners and voting rights. Special resolution (rule changes) requires three-fourths (Art. 31). Rebuilding requires four-fifths (Art. 62).

Maintenance fee arrears: Associations can sue for payment and even request court-ordered sale of the unit (Art. 59). Successors (buyers) inherit arrears obligations (Art. 8).

Mandatory inheritance registration (from April 2024): Heirs must register inherited real estate within 3 years, with fines up to ¥100,000 for non-compliance. This addresses Japan's ownersless land problem affecting approximately 24% of national land.