Japan Property Ownership

Abstracts of title and title searches, in American sense, do not exist in Japan. Although not decisive, ownership normally can easily be determined from registration record.

Japan Transaction Information

Open listings for agents are: Available.
Exclusive listings for agents are: Available.

There is information that suggests that other sources are also available for real estate agents.

Japan Trade Associations

National Federation of Real Estate Transactions Associations (NFRETA)
Fudosan Kyokai - The Real Estate Companies Association

Japan Land Rights

No property rights can be created other than those provided for in Civil Code or other laws. Following are rights that exist in Japan: (1) Ownership (Shoyuken) is complete property right: "fee"; (2) possession (Senyuken) is a condition which will be protected against parties without rights. Possession is presumed bona fide and legal; (3) superficies (Chijoken) is right to use land of another for purpose of owning structure or trees thereon; (4) emphyteusis(Eikosakken) is right to use another’s land for cultivation or gazing; (5) servitude (Chiekiken) is right to use another’s land for benefit and convenience of one’s own land and corresponds to an easement in American law; (6) commonage (Iriaiken) is based on old custom whereunder residents of a village use a forest or plain in common. fee simple estates (freehold estates): Shoyuken (fee) is the most basic ownership rights in Japan. leasehold estates: Although lease is not yet considered property right, trend in recent legislation and litigation is to give it similar qualities. Statutory estates: Dower and curtesy do not exist in Japan.

Japan Forms of Ownership

Severalty: This is the most commonly held forms of ownership in Japan. concurrence - tenancy in common: A form of ownership whereby each owner holds undivided interest in property(similar to the U.S. law.).

Partnership: Anglo-American institution of partnership is not known to Japan. Two categories of associations, namely, partnership corporations and informal associations (Kumiai) as provided in Civil Code, have many features similar to partnership.

Corporation: Joint stock corporation is the most common in business circles and one which most closely resembles Anglo-American stock company or business corporation.

Japan Real Estate Info Summary

Deeds: Although title to real property, as well as other forms of property, may be transferred simply by means of agreement between parties, registration is necessary if this fact is to be set up against third parties. adverse possession: Real property is acquired by adverse possession in 20 year and ten year period when possession initially was acquired in good faith.

Recording (or registration) of title is not necessary to make it valid. However, to impart constructive notice to the world of the existence of the document and its content it is necessary to register.

Validity of contract is determined by law of place expressly or implicitly chosen by parties. In event of no choice governing law is that of place of act of creation of contractual relationship. performance and discharge: Either party to bilateral contract may refuse performance until other party tenders performance, except in situations where obligation to perform has not yet accrued. Right of rescission may arise out of terms of contract, or by operation of law. breach - causes and remedies: With exception of monetary obligation, nonperformance for reasons not attributable to responsibility of obligor, such as force majeure, can be invoked as a defense for nonperformance. standard form - types: Standard forms of contracts are governed by special provisions of Civil Code. However, these provisions may be modified by agreement of parties to contract. prepared by: Real estate contracts are generally prepared by either the seller or an attorney.

Property Taxes:

Taxation is both local and national. Limits both as to extent of local taxes and as to categories of local taxes are imposed by national law. Ad valorem taxes are levied on real property of various categories.

Land Use & Control:

The ministry of Construction and the National Land Agency (NLA) are the chief organs of Japanese government engaged in land use legislation. The principal laws are Urban Planning Law and Building Standards Act. The laws set zoning designations for every plot of land, which in turn determine how much of the land may be used for a building, and the size and kind of building that may be erected upon it. One factor affecting any property development, for example, is the width of the road on which it borders. The height of a building is figured as a percentage of road width and the higher floors are often set back from the road's edge in compulsory "set back lines" that are fixed against the same reference points, resulting in the distinctive sloping profile- and often, reduced floor space - of many buildings in Tokyo. One of the activities of NLA is publishing of prices that are intended to serve as guidelines for real estate transactions and property reevaluations. This device is for the control of land speculation. The Land Use Law regulates speculative investments and trading. For all sales of land over the size limit pre-determined by the local government - 300 square meters in the case of Tokyo - the parties involved must seek government advice beforehand to ensure that their sales price and projected land use fall within NLA guidelines for the area. Prices above the prescribed range may be subject to revision and incorrect land use may result in suspension of the contract.

Japan Mortgages & Financing

Mortgage is encumbrance on specific item of property whereby creditor obtains preferential position in regard to settlement of obligation out of proceeds which could be realized from sale of the property, but without obtaining transfer of title or possession. Mortgages can be created only for purpose of securing performance of obligation which must be specifically described. debt priorities: Priority as between mortgages on same item of property is determined by dates of registration. Although recording is not a legal requirement, it is virtually essential since through this means alone can mortgage be asserted against third party having due interest in mortgaged property. foreclosure: Mortgage is enforced through application to a district court for auction sale of mortgaged property. Only that portion of interest on an obligation which has become due in previous two-year period may be satisfied from proceeds of mortgage sale in priority to third parties’ claims, unless registration of interest followed maturity of obligation which it secures.

Commercial: The four chief methods of financing commercial real estate in Japan are business loans, key money deposits of tenants, joint ventures, and real estate security sales. Mortgage financing is seldom done on a direct basis. Once a decision has been made to make a credit loan for real estate purposes, the lender may accept the real estate as an auxiliary form of collateral (One of the reasons in that it is difficult to foreclose on an income property due to tenant rights which are protected by the legal system). The credit standing of the company or the individual is the first and most important consideration and collateral for the real estate loans is usually a secondary consideration. Therefore, most loans for real estate acquisition as well as development are commercial loans. Key money refers to money that is paid to the owner of the property for the privilege of signing a contract. Key money deposits are often
paid on a square meter basis in addition to regular security deposits. Industrial:
Industrial property is usually financed through the issuance and sale of corporate securities by the industrial company needing the industrial premises. In Japan, company rarely leases the premise. financing sources: In most nstances, local financing is available to foreign investors on the same basis as it is to domestic companies. Loans from financial institutions usually require some form of tangible or financial collateral or guarantees from the parent Company.