JAPAN Law and Practice Contributed by: Eriko Ozawa, Satoru Hasumoto, Takahiro Sato and Fuyuki Uchitsu, Mori Hamada & Matsumoto
In 2024, the draft revision of the Act on Build - ing Unit Ownership, etc. is under discussion. The proposed revisions include the relaxation of the majority requirement for resolutions for reconstruction from four-fifths to three-fourths. If the revised bill is submitted and passed, it is expected that the reconstruction of deteriorated condominiums will progress.
In addition, many real properties are held under trust arrangements, in which case the investor would acquire a trust beneficial interest (TBI) in respect of the entrusted real property. Under a trust arrangement, the real property is owned by the trustee (usually, a licensed trust bank in Japan) as part of the assets of the trust, and the investor becomes a beneficiary of the trust by acquiring the TBI. 2.2 Laws Applicable to Transfer of Title The Civil Code generally governs the transfer of title. Other laws may also be relevant, depend - ing on the ownership structure. For example, the Law on Unit Ownership of Buildings provides for certain rules on the transfer of unit ownership. Specific restrictions may apply to specific types of real estate. One such restriction is the require - ment under the Agricultural Land Law that the acquisition of agricultural land is subject to gov - ernmental permission. 2.3 Effecting Lawful and Proper Transfer of Title How to Effect a Title Transfer A transfer of title to real estate is effected pursu - ant to an agreement between the seller and the buyer. Most sale and purchase agreements pro - vide that the transfer of title takes effect upon the full payment of the purchase price by the buyer. Registration of Title to Real Estate Japan has a real estate registration ( toki ) system where title to and certain other interests (such as mortgages) on real estate are registered. In prac - tice, parties to a real estate transaction usually rely on the real estate registration because it is generally the best indication of the true owner of or holder of interest on a real property.
2. Sale and Purchase 2.1 Categories of Property Rights
In the current Japanese market, the most com - mon subject properties or interests for invest - ment purposes are: • ownership (equivalent of fee simple absolute) of the land or the building, or both; • a combination of the right to use the land (leasehold interest or superficies) and fee simple ownership of the building; • co-ownership ( kyo-yu ) of the land or the building, or both; and • a combination of co-ownership of the land and unit ownership of private units in a multi- unit building. Co-ownership refers to a type of ownership where one person owns a certain percentage interest in the entire property and other owners own the remaining percentage interests. Unit ownership is a type of ownership recog - nised for a multi-unit building under the Law on Unit Ownership of Buildings. A unit owner is entitled to own exclusive private units in the building, to own and use common areas (such as the entrance hall of the building) jointly with other unit owners, and to use the underlying land in the form of co-ownership, leasehold interests or superficies.
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