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  • “Tokyo Reader” on odd rental contracts for apartments: “lease” vs. “loan for use”? Plus Kyoutaku escrow for disputes

    Posted by Dr. ARUDOU, Debito on April 27th, 2009

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    Hi Blog. Turning the keyboard over to “Tokyo Reader”, who tells an interesting tale about how people are playing with contracts regarding residences for NJ, and how rents can be renegotiated if the asking price for new entrants in your building (or area) is lower than the current rent you’re paying. His redacted housing contract at the very bottom. But first, a KTO article from Michael Fox regarding Kyoutaku, the government escrow system which can hold your rent while a dispute with your landlord is in progress. Arudou Debito in Sapporo

    =======================================

    Rent Adjustment Problems

    by Michael Fox, courtesy of the author

    Published in Kansai Time Out March 2009

    Can anything be done if your rent is increased unfairly? Or what if people moving into your building are paying less? Good news, there is a designated process for alleviating overcharges.

    First, you should negotiate face to face with your landlord. Both parties should bargain in good faith. If your rent is reduced sufficiently, then the problem is solved.

    If negotiation fails, the next step is to deposit the money into escrow (kyoutaku 供託)with the local government. The papers for such procedure can be obtained from the Legal Affairs Department (Houmukyoku法務局) of your city/town office.

    If you start kyoutaku, you may once again negotiate with your landlord face to face. If no conciliation is reached, the next step is civil arbitration (minji-choutei). The arbitrator is an ordinary citizen who listens to both sides and encourgages a conciliation. You need not employ a lawyer, and you may bring a translator to help with language concerns. In the unlikely event that a conciliation is not reached, the issue may be continued in open court.

    Depositing rent into escrow is also recommended for the following situations:

    1) Several different people request the rent and you cannot decide whom to pay.

    2) Your landlord dies, and you do not know whom to pay.

    3) You want to pay the rent but it is refused by the party designated to receive it.

    It is important to pay your rent every month. As it is extremely difficult to evict tenants in Japan, the rent may be refused because the landlord is looking for a way to boot you out. Even if your building is sold, and the new owner wants it demolished, you are entitled to a consolation payment, which may very well be equivalent to one or more year’s rent.

    For more information, contact your local Legal Affairs Bureau. Many locales offer assistance in foreign languages.
    Michael H. Fox
    Kakogawa

    ===================================

    Tokyo Reader:

    Dear Debito.org. Here is one for the blog community.

    For over a year now, I have rented an apartment in Tokyo through a management company I will call “HT”.

    The building I rent in has eight different 1K apartments. For many months last year, a number of the rooms remained vacant. This was easy to tell based off things like lighting, the level of refuse in the garbage area, and even electric meters whose dial seldom moved. Plus, it was rare to see or hear anyone enter or leave the building, in which all apartments exit to the outside.

    For what I know, these may be rented out on a monthly mansion basis, in the style of a Leopalace 21. This is the method where a tenant pays a lump-sum amount to secure the apartment for a specific time period. There are usually no additional fees, even for utilities. It is an “all-in” pricing, and often with a discount for signing up a larger number of months.

    I am fairly confident that at least one other resident has a lease-style arrangement. This would be the standard one in Japan, where an original lease is contracted for a term of many months, where a security deposit is given, and the rent paid on a monthly basis. Sometimes a “key deposit” is involved. The key deposit is said to be additional rent paid at the beginning to help the landlord secure a profitable leasing in the event the tenancy ends early. But it’s not required to make a housing arrangement a lease in Japan.

    Utilities appear to be included in the rent. The apartments are furnished.

    I am currently in a dialogue with company HT. Over the winter, HT looks to have lowered rents on the 1K apartments. What used to be advertised as 150,000 yen a month is now 135,000 yen. (I say “used to be advertised” because there is some evidence that different parties are paying different rents, having nothing to do with a discount system.)

    Since I had been paying the higher rent, I proposed paying the new advertised price. According to the Land & House Lease Law (“LHLL”), Article 32, a tenant can propose a rent reduction when there is evidence that rents in a given neighborhood have declined. The landlord may disagree and then a mandatory arbitration panel is supposed to decide the matter.

    Company HT insists that my 1K is somehow special that it requires the higher price (150,000 yen). Funny is that when I moved into the building, there was no such tiered pricing.

    Further, Company HT claims that my lease is not covered by the Land & House Lease Law, but rather is a “Loan for use” under Civil Code, Article 593.

    I read that LHLL Article 28 stipulates that a lease over a period of time (several months) but less than a year, will be considered a lease with an indefinite period. Additionally, the LHLL requires six-months’ notice for a landlord to end the lease.

    Apparently, a rental relationship that fits a “Loan for use” is governed by different terms. My suspicion is that a hotel room would fit this type of contract. And maybe the Leopalace system, since the entire rental arrangement seems to be made to fit.

    But I don’t think that any landlord who decides to post a “Monthly Mansions” sign on the side of the building, and gets the occasional tenant, becomes one who can write a standard lease contract and then decide whether or not the Land & House Lease Law applies.

    My original lease contract looks like, well, a lease. The initial term was for three months, and there was a one-month security deposit required. There is no mention of “Loan for Use”, Civil Code article 593, or anything else that would suggest that my lease is anything other than a lease. I have simply been paying rent monthly along the way.

    There is one term that references a one-day eviction notice, but I think all landlord leases include this type of language regardless of what the actual law says.

    And if for some reason Company HT were correct on “Loan for Use”, if I am paying the advertised price I fail to see where I should have to pay more. Is my 1K simply more valuable because I would have to move from it?

    Tokyo Reader

    ****************

    lease-top-pagelease-page-1
    lease-page-2

    lease-page-3

    ENDS

    10 Responses to ““Tokyo Reader” on odd rental contracts for apartments: “lease” vs. “loan for use”? Plus Kyoutaku escrow for disputes”

    1. jim Says:

      I know that my comment isnt related to the above story, but my story needs to be told because it may effect other NJ households.Last friday night I came home after a long day at work and my wife handed me a letter from the Osaka city office. I looked at the letter and saw my wifes name on the heading and then saw my newborn childs name below, it was for the cash hand-out payment. But where was my name? The breadwinner in our family since my wife doesnt work. sure enough my name was not on the document at all, so I thought is this discrimination or just another common case of harrasement by our folks at the infamous and corrupt osaka city office. And then I started to think more about this, and if they forgot to add my name the husaband on this paperwork then they also must of forgot to do this to all other NJ in osaka. Beacause I seriously doubt that this was just an isolated mistake, see I stopped giving the folks at the osaka city office the benefit of the doubt a long time ago. So this makes my wife look like a single mother and it makes my daughter look like a basterd child, thanks again GOJ you just made my day…

      – This isn’t at all related to the blog post, so let me just say: Contact them. They owe you money.

    2. john k Says:

      tokyo reader

      whatever you have or have not signed with the agent/landlord, the landlord/agent will always find a way to evade payment. Japanese laws are as weak as dishwater and greyer than a winters day in England; principally because they have been set up by “interested parties” and not by joe bloggs or mr tanaka! As such the average citizen NJs and Js alike are being shafted day in day out by companies and the law supports the average citizen being shafted!!!

      It takes a monumental effort to get any form of “justice” here. I use this term advisedly, since justice in Japanese terms just means ensuring that the “custom has been maintained”, honesty, professionalism and integrity counts for nowt and is not mentioned in any law too! Once can lie with impunity, so long as the ‘custom’ has been maintained.

      Bottom line is, when dealing with Japanese companies, they do what they like, like it or lump it….or spend years and lots of money trying to get them sorted out.

      I’m currently trying..albeit it very slowly, to get the law changed in regards to buying/selling houses. Got caught myself!

    3. HO Says:

      You do not have to worry about “Loan for use” (shiyo-taishaku) under Civil Code, Article 593, because the provision is about lending/borrowing without rent.
      民法第五百九十三条  使用貸借は、当事者の一方が無償で使用及び収益をした後に返還をすることを約して相手方からある物を受け取ることによって、その効力を生ずる。
      If HT insists, ask them to state so in writing. Then they cannot collect any more rent and they have to refund what rent they have collected.

      But you have to be careful about “temporary use” (ichiji-shiyo) per article 40 of LHLL.
      借地借家法 第四十条  この章の規定は、一時使用のために建物の賃貸借をしたことが明らかな場合には、適用しない。
      If it is apparent that the purpose of the lease is for temporary use (like hotel), LHLL does not provide ant protection for the lessee. Most of “Monthly Mansion” contracts have this clause. But it seems your contract does not have the “temporary use” clause.

      If your contract is not for “temporary use”, you can ask for reduction of rent per article 32 of LHLL. If the landlord refuses your demand, you can file arbitration per article 24-2 of civil arbitration law.
      民事調停法 第二十四条の二  借地借家法 (平成三年法律第九十号)第十一条 の地代若しくは土地の借賃の額の増減の請求又は同法第三十二条 の建物の借賃の額の増減の請求に関する事件について訴えを提起しようとする者は、まず調停の申立てをしなければならない。
      Until the court decides the “fair rent”, you have to pay the present rent. But once the fair rent is determined, you can get the refund from the landlord the amount in excess of fair rent and 10% pa interest on that excess amount. Because of this “interest”, the landlord may give in and agree to reduce the rent.

      There is a serious error in the article about escrow. You can pay into the escrow account only after the landlord refuses to receive rent payment. In that case, you have to safe keep the evidence of the refusal of receipt of rent payment. Without that evidence, you are considered to be in default of rent payment, even if you are paying into the escrow account.

      I ask you to see a lawyer, for I am not a lawyer and my advice may contain some errors.

    4. Asterisk Says:

      Did I read Article 4 of the lease correctly to say that the tenant pays 525 (Five hundred twenty-five) yen a day for utilities?

      That’s about 15,750 a month!

      What are you doing, recharging car batteries on the outlet?

    5. GiantPanda Says:

      Was any Japanese lease agreement signed? Based solely on the English lease agreement, it seems quite clear that this is a building lease which comes under the Land Lease and House Lease Law. I also note that there is no provision which tries either to (i) exclude application of the LLHLL, or (ii) exclude application of Article 32 of the LLHLL. Therefore Art. 32 should apply.

      Art. 32 also has a clause (Art. 32(3))which allows you, if you are successful in a case against the landlord, to claim backpayment of the disparity between the rent you consider reasonable, and the amount you are currently paying, plus 10% pa interest.

      Japanese landlords tend to try and obfuscate – especially with a foreigner who they think has no real understanding of the law they may pull all kinds of excuses out of the hat. However, if you show them that you are serious and know what you are talking about, most do not want a legal dispute on their hands and will back down. However, in order to show that you are serious, you may need to send them a warning letter written by a lawyer and sent contents certified (naiyo shomei). Most lawyers should be able to give you a fixed quote for drafting and sending such a letter, and it should not cost more than a few man. Hopefully, a letter like this should be enough to help arrange a settlement. You could of course send a naiyo shomei letter yourself, but you need to have a good command of Japanese, or a knowledgeable friend who can help you out. Sending a letter naiyo shomei basically means “I am treating this as a legal claim and may take further legal measures if you do not respond”.

      (for the aggrieved Jim in comment no. 1, there has been no mistake, the govt simply distributes the stimulus cash in different ways to J / NJ. As an NJ you cannot be head of household, so your wife is. She automatically gets the cash for all othe members of the J household. As an NJ you are registered as an individual not a household, and your notification will come separately).

    6. Mumei Says:

      [Off topic. Sorry Debito.]

      Jim,

      I got one of those letters last week too. However, mine was properly addressed to me.

      As a foreigner, though, you will get a “special” application form and instructions. I was a little annoyed and half wrote a letter in complaint. However, they are giving me free money, so I decided not to complain.

      Issues:
      1) They addressed the letter to me with my kanji alias. However, the instructions specifically say (in four languages) to write your name as it appears on your alien card and passport, which invalids registered aliases.

      2) Where as Japanese are allowed to attach a copy of various IDs, several of which I have, foreigners are specially instructed to attach copies of their alien card. City hall issues the cards, so they should already have the info.

      3) An inappropriate comment regarding the alien cards: “Check your residency term here. Is it still valid?” Why ask me, I’m sure they’ll check anyway.

      Anyway, as Debito said, they made a mistake and owe you money, so just go down to your local city office and talk to them about it. They should be reasonable.

    7. Tokyo reader Says:

      Everyone, thank you for your comments. They are all helpful, and I will update everyone if anything new comes about.

    8. Japan expat rental scene: When your apartment is always defined as a hotel! « Hoofin to You! Says:

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