JAPAN Law and Practice Contributed by: Eriko Ozawa, Satoru Hasumoto, Takahiro Sato and Fuyuki Uchitsu, Mori Hamada & Matsumoto
6.13 Tenant’s Ability to Alter and Improve Real Estate The extent to and the conditions under which the tenant is permitted to alter or improve the real estate are entirely up to the agreement between the lessor and the tenant. 6.14 Specific Regulations In principle, there are no specific regulations or laws that apply to leases of particular categories of real estate. 6.15 Effect of the Tenant’s Insolvency In the case of a bankruptcy procedure ( hasan tetsuzuki ) or a corporate reorganisation proce - dure ( kaisha kousei tetsuzuki ), a bankruptcy trus - tee – or a debtor in possession in the case of a civil rehabilitation procedure ( minji saisei tetsu- zuki ) – has a statutory right to determine whether to terminate the lease agreement or to continue the lease by performing its obligations. If the bankruptcy trustee of the tenant or the tenant as debtor in possession opts for the termination of the lease, the treatment of the unpaid rents depends on when the due date arose: unpaid rents accruing before the com - mencement of the relevant insolvency procedure are treated, in principle, as general insolvency claims and are therefore subject to the insolven - cy procedure and subordinated to preferential claims, while rents that become due after the commencement of the insolvency procedure are paid from the insolvency estate in preference to other general insolvency claims, and are not subject to the insolvency procedure. If continuation of the lease is chosen instead, unpaid rents accruing before the commence - ment of the relevant insolvency procedure would be treated as general insolvency claims, although there is a different academic view that
fees, insurance premiums and other expenses, such as for replacement of the keys. In addi - tion, it is market practice for the tenant to pay a renewal fee (a multiple of the monthly rent) for each renewal of the lease term. 6.9 Payment of Maintenance and Repair The maintenance and repair costs of common areas are paid by the building owner, primarily from the money paid by tenants as common area fees. 6.10 Payment of Utilities and Telecommunications Utilities and telecommunications serving a prop - erty occupied by several tenants are paid for by the building owner, primarily from the money paid by tenants as common area fees. 6.11 Insurance Issues Typically, a tenant pays for insurance cover - ing damage caused by accidents occurring in the real estate and by fire and, in some cases, earthquake and flood. Conventional business interruption insurance did not cover rent pay - ments or other costs in the event of a business interruption due to COVID-19, but since the out - break of the COVID-19 pandemic, a new type of insurance has appeared, which covers damages resulting from business interruption caused by the pandemic. 6.12 Restrictions on the Use of Real Estate There may be contractual restrictions on how a tenant uses the real estate, restrictions on the use of common areas, and prohibitions on the handling of hazardous materials or explosives.
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