JAPAN Law and Practice Contributed by: Eriko Ozawa, Satoru Hasumoto, Takahiro Sato and Fuyuki Uchitsu, Mori Hamada & Matsumoto
A fixed-term lease allows for three alternative arrangements for land leases (each a “Fixed- Term Land Lease”), as outlined below. • Land leases relating to land on which a build - ing is built for business or residential purpos - es and that have a term of at least 50 years are not renewable, and must be executed in writing. • Land leases relating to land on which a build - ing used only for business purposes (ie, not for residential purposes) is built and that have a term of at least 30 years but under 50 years are not renewable, and must be executed by way of notarial deeds. • Land leases relating to land on which a build - ing used only for business purposes (ie, not for residential purposes) is built and that have a term of at least ten years but under 30 years are not renewable, and must be executed by way of notarial deeds (a “Category 3 Fixed- Term Land Lease”). A “Fixed-Term Building Lease” is also available. This lease must be in writing, is not renewable and will terminate upon the expiry of the lease term. 6.3 Regulation of Rents or Lease Terms General Lease In a general lease for land or buildings, lease terms that are contrary to or reduce certain stat - utory protections or rights granted to the tenant under the Land Lease and Building Lease Law are void. Several of these statutory protections and rights are outlined below. • The lessor must have a justifiable reason to refuse a renewal of the lease. • The tenant may demand that the rent be decreased in response to market condi - tions, and cannot be deprived of the right to
demand a decrease of the rent even if they explicitly agree not to exercise that right. • In the case of a land lease only, the leasehold interest in the land is perfected without reg - istration if the land tenant owns a registered building on the leased land. • In the case of a land lease only, the land ten - ant has the right to request the landlord to purchase the building upon the termination of the land lease. • In the case of a building lease, the leasehold interest in the building is perfected without need of registration if the leased building is delivered to the tenant. Otherwise, the rent and other terms of a general lease are freely negotiable and not regulated or subject to a voluntary code. Fixed-Term Lease The tenant may be deprived of the protections and rights under the first and fourth items listed above under a Fixed-Term Land Lease, and of the protections and rights under the first and second items under a Fixed-Term Building Lease. COVID-19 Pandemic Legislation On 27 January 2023, the Japanese government formally decided to downgrade the legal status of COVID-19 to “Class 5”, the same category as common infectious diseases such as seasonal influenza, with effect from 8 May 2023. With the downgrade, COVID-19 is no longer subject to quarantine, and other measures are to be termi - nated or relaxed, which is expected to normalise social and economic activities in Japan. 6.4 Typical Terms of a Lease The initial term of a land lease for owning a build - ing is required by law to be at least 30 years, and tends to range from 30 years to 50 years, except
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