JAPAN Law and Practice Contributed by: Eriko Ozawa, Satoru Hasumoto, Takahiro Sato and Fuyuki Uchitsu, Mori Hamada & Matsumoto
• TBIs – the trustee of a Property Trust is responsible for the management and disposal of the real estate assets, and the TMK needs to retain an asset manager who is a regis - tered investment adviser or manager under the Financial Instruments and Exchange Law. J-REIT Structure A J-REIT must have at least one corporate offic - er, supervisory officers outnumbering the direc - tors (by at least one person), a board of officers and an accounting auditor, which must be either a certified public accountant or an auditing firm. The fundamental matters with respect to a J-REIT are quite limited, and require the approval of its unitholders (in the form of a resolution). Pursuant to the Investment Trust and Investment Corporation Law, a J-REIT must retain the fol - lowing: • an asset manager who is a registered invest - ment manager under the Financial Instru - ments and Exchange Law and a licensed real estate transaction business provider with a discretionary agency permit under the Real Estate Transaction Business Law; • an asset custodian; and • an administrative agent. 5.6 Annual Entity Maintenance and Accounting Compliance Maintenance costs vary significantly on a case- by-case basis. However, generally speaking, the following applies: • the cost to maintain a TMK structure is higher than for a GK-TK structure; • the cost to maintain a J-REIT structure is significantly higher than for a GK-TK structure or a TMK structure; and
• the cost to maintain a publicly listed J-REIT is higher than for a private J-REIT.
6. Commercial Leases 6.1 Types of Arrangements Allowing the Use of Real Estate for a Limited Period of Time Leases are the most common arrangements by which to use another person’s land or building, but superficies ( chijo-ken ) is a common alterna - tive. The purpose of a lease is not limited, and leases are available for both land and buildings. In con - trast, superficies is available only for land to own buildings or trees. In general, holders of superficies are in a strong - er position than leaseholders against the land - owner, as they are holders of a “real right”. For instance, the landowner owes the superficies holder a duty to co-operate in the registration of the superficies that is required for perfection, but the lessor does not owe such a duty to the tenant. 6.2 Types of Commercial Leases There are two types of land or building leases based on the lease term – namely, a general lease and a fixed-term lease. A general lease is subject to renewal, which the lessor is entitled to refuse only when there is a justifiable reason, taking into account the les - sor’s and the tenant’s respective needs to use the property, the history of the lease, the present use of the property, and the amount of compen - sation being offered by the lessor to the tenant to vacate the property.
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