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Fixed Term Building Lease

Two kinds of lease contract in Japan

In the case a investor rents out her real estate in Japan, she will make lease contract with her renter.

In general, there are two kinds of lease contract in Japan.

One is ordinary Building Lease and another is Fixed Term Building Lease.

With respect to ordinary Building Lease contract.

If she ( landlord = owner of building ) wants to terminate a building lease, unless there are justifiable grounds for doing so, she can not terminate the building lease without renter’s consent.

So, even if her renter has not paid rental fee for consecutive two months, she can not terminate this lease contract.

Or if she wants to increase amount of monthly rental fee, but her current renter ( hereinafter referred to Nancy ) does not agree, or if she wants to demolish her building because of deterioration, or if one of her renter causes trouble with neighbors and some neighbors leave her building apartment due to this nuisance, she wants to evict Nancy.

But, in the case of ordinary building lease contract, it is difficult to evict Nancy.

Even if she and renter agree special provision that stipulates that when a renter does not pay her rental fee by due date, she can terminate building lease contract.

This special provision is disadvantageous to the renter and this agreement is invalid.

This provision is rather disadvantageous to investor.

So, there is another kind of building lease contract in Japan.

If she and her renter agree a fixed term building lease and it stipulates that when  agreed period has elapsed, this lease contract shall not shall not be renewed and she and renter make document that can prove their agreement, their building lease shall be terminated at the elape of lease period.

In the case of this fixed term building lease, she can terminate the lease agreement when lease period has elapsed.

So, if she wants to prepare for evicting her renter, she may select fixed term building lease.

But, if a renter is really nuisance, he will not pay his rental fee at all and even if his fixed term building lease contract is terminated, such kind of person will not leave his house voluntarily.

So, she may still need to file civil suit.

And for renters, fixed term lease contract is not attractive. Because, even if a renter does not cause any trouble, he may be evicted without good reason.

So, he may think that his life is unstable.
Some potential renter may not prefer fixed term building lease.

And in the case of fixed term building lease contract, if the duration of lease is one year or more, unless she delivers her renter a notice during the period from one year to six months prior to expiration of the period, she may not terminate her fixed term building lease.

On the other hand, in the case of fixed term building lease, renter can not terminate his lease agreement during lease period.

But, in the case purpose of building lease is a residence and floor area is less than 200 square meters, when renter wants to terminate his lease contract due to an unavoidable circumstance such as a work-related transfer, the receiving of medical care, or the necessity of providing care to a relative, the renter can request to terminate the building lease.

In this case, the building lease shall be terminated when one month has passed since the day of the request to terminate.

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