JAPAN Law and Practice Contributed by: Satoru Hasumoto, Takahiro Sato and Fuyuki Uchitsu, Mori Hamada & Matsumoto
7.6 Liens or Encumbrances in the Event of Non-Payment The law grants contractors the right to retain ( ryuchi ken ) or refuse to deliver the completed building in the event of non-payment, as long as the contractor has possession of the building. This right to retain does not require any regis - tration. Construction contracts typically provide for the payment of the last instalment of the construc - tion price in exchange for the delivery of the completed building. 7.7 Requirements Before Use or Inhabitation The Construction Standards Law requires the owner to obtain an inspection certificate ( kensa zumi shou ) before it is allowed to use a newly constructed building. The process is as follows: • the owner must apply for inspection by the relevant local government or government- accredited private building agency within four days of the completion of the construction; • the inspection will be carried out within seven days of the application being accepted; and • if it is confirmed that the construction and the site comply with relevant laws and regula - tions, the inspection certificate will be issued.
of the building, pursuant to the Housing Quality Assurance Law (which is a special law aimed at ensuring the quality of residential buildings). 7.4 Management of Schedule-Related Risk Schedule-related risks can be managed by the payment of liquidated damages by the contrac - tor. These contractual arrangements are allowed under Japanese law and the courts are bound by the amount of liquidated damages agreed, without having to ascertain the actual damages incurred. In particular, the Form Terms and Conditions for Construction Contracts provide that if the con - tractor fails to deliver the completed work by the due date for any reason attributable to the contractor, the owner may claim liquidated dam - ages calculated at 10% per annum of the agreed construction price (minus a portion of the con - struction price equivalent to the part of the work already completed and delivered), calculated on the basis of the number of days delayed. On the other hand, the Form Terms and Condi - tions for Construction Contracts allow the con - tractor to seek an extension of the due date if there is any justifiable reason, such as a force majeure event or a need for adjustment of the works. If the reason for the delay is not attribut - able to the contractor and the owner agrees to extend the due date, the owner is not entitled to liquidated damages. 7.5 Additional Forms of Security to Guarantee a Contractor’s Performance For domestic construction projects, additional forms of security such as performance bonds or parent guarantees are not common. It is normal - ly difficult to get major construction companies to provide additional security.
8. Tax 8.1 VAT and Sales Tax
The sale of a building is subject to consumption tax (equivalent to VAT) at the rate of 10% of the purchase price of the building. The sale of land is not subject to consumption tax. Although the seller is liable for the consumption tax under tax law, in practice the buyer is con -
549 CHAMBERS.COM
Powered by FlippingBook