Japanese Real Estate Lease

The Japanese treatment of land and buildings differs from that of most Western countries, where a building and the land it occupies form one estate. The Japanese law of property treats the land and any building on it as separate estates, subject to separate systems of registration. This follows the Japanese tradition that a building is an immovable property independent of its land. In most cases, both estates belong to the same person. If, however, a building is constructed on leased land, problems could arise if the lessor sells the ownership of the land, unless either the lease or the building has been registered.

A lease is an agreement allowing the use of property for payment. Leases over land or buildings may be ordinary renewable leases or fixed-term leases. The assignment of a lease or creation of a sub-lease by the tenant typically requires the landlord’s prior consent.

Ordinary land leases are usually for a minimum term of 30 years, automatically renewed for 20 years on first renewal and for 10 years on later renewals, unless the parties agree not to renew. Ordinary buildings leases are generally for much shorter terms, often one or two years, automatically renewed. Tenants generally have good protection against termination by the landlord. Fixed-term leases of land for residential or commercial use, for at least 50 years, and fixed-term building leases, which may be of any length, must be created in writing. They cannot be renewed but a new lease can be agreed when the first ends.

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