JAPAN Law and Practice Contributed by: Satoru Hasumoto, Takahiro Sato and Fuyuki Uchitsu, Mori Hamada
According to a notice issued by the Ministry of Envi - ronment, even if the borrower assigns its land to a lender for the purpose of security ( joto-tampo ), the borrower, but not the lender, is deemed to be the “owner” of the land and will be responsible for any investigations and countermeasures under the Soil Contamination Countermeasures Law. 3.9 Effects of a Borrower Becoming Insolvent The creation of a security interest by a financially distressed borrower may be invalidated (by the insol - vency trustee or the debtor-in-possession under the theory of bankruptcy avoidance) if the security interest was created to secure existing debt after the filing of an insolvency petition with respect to the borrower. The perfection of a security interest may also be avoided, even where the creation of a security inter - est itself cannot be avoided, pursuant to these criteria. The requirements for this avoidance include perfec - tion after the suspension of payments or the filing of an insolvency petition. The perfection of the security interest may also not be made within 15 days of the creation of the security interest. 3.10 Taxes on Loans There are no recording or similar taxes in connection with mortgage or mezzanine loans secured by real estate in Japan. Regarding the registration and licence tax required for registration of a mortgage, please see 3.4 Taxes or Fees Relating to the Granting and Enforcement of Security . The City Planning Law is the main source of land-use regulations. It categorises land into various zones, requires permits for certain land developments in certain zones and imposes limitations on land use and the buildings that can be built in each zone. The authority over planning and zoning regulations resides with the local governments. The Construction Standards Law is the primary law regulating the construction of new buildings and the refurbishment of existing buildings. It establishes 4. Planning and Zoning 4.1 Planning and Zoning Framework
minimum standards concerning building sites, struc - tures, equipment and building use. Under this law, the relevant authorities must confirm the construction or refurbishment details of new buildings or any major refurbishment of existing buildings. Authorised entities include local governments such as cities, towns, and villages, as well as private building agencies accredited by the government. 4.2 Development Process, Challenges and Enforcement A building developer or owner must apply for confir - mation with the relevant local government or a govern - ment-accredited private building agency to develop a new project or complete a major refurbishment. The requirements for this confirmation, including the steps to be taken vis-à-vis third parties, may differ under the relevant local ordinances. Theoretically, it is not impossible to litigate against an authority’s decision, although such litigation is not commonly seen in practice. The contractor of a building under construction in violation of the Construction Standards Law or the City Planning Law, or the owner of a building that has been so constructed, may be ordered to suspend the construction or to demolish or refurbish the building, or ensure that the building complies with the relevant legal requirements. 5. Investment Vehicles 5.1 Types of Entities Available to Investors to Hold Real Estate Assets Generally speaking, real property is owned directly by joint stock companies ( kabushiki kaisha , or KK), which is the most popular form of corporate entity under the Companies Law. When it comes to real estate investment, there are three typical investment structures, each of which uses a different type of entity to acquire property: • the GK-TK structure; • the TMK structure; and
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