JAPAN Law and Practice Contributed by: Satoru Hasumoto, Takahiro Sato and Fuyuki Uchitsu, Mori Hamada & Matsumoto
6.2 Types of Commercial Leases There are two types of land or building leases based on the lease term: a general lease and a fixed term lease. A general lease is subject to renewal, which the lessor is only entitled to refuse when there is a justifiable reason, taking the lessor’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 compensation being offered by the lessor to the tenant to vacate the property into account. A fixed term lease allows for three alternative arrangements for land leases 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 will be a fixed term lease. • Land leases relating to land on which a build - ing only used 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 will be a fixed term lease. • Land leases relating to land on which a build - ing is only used 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 and is not renew - able meaning it will terminate upon the expiry of the lease term.
• an administrative agent. 5.6 Annual Entity Maintenance and Accounting Compliance Maintenance costs vary significantly and vary 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 another person’s land or building can be used, but superficies ( chijo-ken ) are a common alternative. The purpose of a lease is not limited and leases are available for both land and buildings. In con - trast, superficies are only available 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 “real right” . For instance, the landowner owes the superficies holder a duty to co-operate in the registration of the superficies that are required for perfection, but the lessor does not owe such a duty to the tenant.
543 CHAMBERS.COM
Powered by FlippingBook