Japanese Law and Government/Property Law

Property rights

Property rights are defined by law and are not freely definable by transactional parties (Civil Code, article 175). The types of statutory property rights are:

• Possessory rights (senyūken)
• Title (honken)
  • Ownership (shoyūken)
  • Restricted rights (seigen bukken)
    • Usufructary rights (yōeki bukken)
      • Surface rights (chijōken)
      • Tenant farming rights (eikosakuken)
      • Easements (chiekiken)
      • Rights of common (iriaiken)
    • Collateral rights (tampo bukken)
      • Possessory liens (ryūchiken)
      • Property liens (sakidori tokken)
      • Pledges (shichiken)
      • Mortgages or hypothecs (teitōken)

Possessory rights

Possessory rights (占有権 senyūken) refer to the rights to control certain property. These rights arise when a person intentionally takes possession of property for themselves. Possession is completely independent of legal title, though it may be trumped by a claim of legal title.

A person who has been dispossessed may sue to have their possession restored. Such a suit may be brought within one year of losing possession (Article 201).

Ownership

Ownership (shoyūken) represents the right to freely use property, enjoy its benefits and dispose of it, within the restrictions of the law (Civil Code Article 206). Ownership of land extends above and below the land as far as can be managed (Article 207).

Ownership generally lasts indefinitely and does not expire unless another person acquires it by agreement, or by one of two unilateral methods:

• Acquisitive prescription (取得時効 shutoku jikō) is the Japanese equivalent of common law adverse possession. It is completed when a person openly possesses the real property of another for a period of twenty years (Article 162). At the end of this period, such person acquires ownership by prescription.
• Immediate acquisition (即時取得 sokuji shutoku) is the acquisition of rights over movable property by a non-negligent party acting in good faith. It occurs when such a party openly commences possession of such movable property by a transactional act (Article 192).

If movable property has no owner, a person may acquire ownership by voluntarily possessing the property (Article 239).

Neighbor relations

• Right to demand use of neighboring land (Article 209)
• Right to demand access to public roads (Article 210)
• Right to cut foliage (Article 233)

Joint ownership

Multiple persons may share ownership over one item of property by joint ownership.

The ownership share (mochibun) held by each party may be determined by agreement of the parties or by operation of law. Under the Civil Code defaults, joint ownership shares are equal (Article 250) and each joint owner may use the entire property to an extent proportional to their share (Article 249).

Ownership shares may be freely traded or waived. If a joint owner waives their ownership share or dies without a successor, their ownership share reverts to the other joint owners (Article 255). Transfers or other changes in ownership shares require the consent of all owners (Article 251) unless otherwise agreed.

Management of jointly-owned property is determined by a majority decision of the owners based upon the value of each of their ownership shares, but each joint owner may individually repair or otherwise preserve the property (Article 252).

Appurtenant liabilities (such as management fees and taxes) must be borne by the joint owners proportionally to their ownership. If a joint owner does not fulfill such a liability, another joint owner may acquire their share upon payment of just compensation (Article 253).

Joint owners may demand partition of their joint property at any time. This right may be waived by agreement of the joint owners for no more than a five-year period (Article 256).

Conveyances

Procedure

Rights in property may generally be conveyed by contract, by succession or by prescription.

Recording of real property transfers

When real property is conveyed, the conveyance must be recorded (tōki) at the Legal Affairs Bureau before it can be legally asserted against most third parties (Article 177). Certain parties may have property rights asserted against them despite lack of recording (Supreme Court, Dec 15 1901):

• Parties to a transfer (and their successors) with regard to that transfer
• Persons without legal rights
  • Illegal occupants are not considered to be third parties for purposes of Article 177 (Supreme Court, Dec 19 1950).
• Persons who obstructed the recording through fraud or intimidation
• Persons who have a duty to apply for the recording on another's behalf
• Persons acting in breach of trust (背信的悪意者 haishinteki akuisha)
  • Parties acting simply in bad faith (悪意者 akuisha) are considered to have third-party protection under Article 177 (Supreme Court, Oct 29 1998).

Article 177 applies to most assertions of ownership of real property. For instance, a recipient of leased property must record the transfer before asserting their rights against any of its tenants (Supreme Court, Mar 19 1974).

Article 177 also applies when asserting ownership based on adverse possession (Supreme Court, Mar 2 1918).

Recording in and of itself does not affect property rights; recording without right (無権利の登記 mukenri no tōki) within the chain of title may be challenged by a dispossessed owner of right. Some examples:

• Upon the death of an individual, one of their properties is inherited jointly by A and B as civil law successors. A records the property as their own, then transfers it to C. In this case, B retains the right to sue against C even if they have not recorded their share (Supreme Court, Feb 22 1963).
• In contrast, if A is bequeathed the property and then B inherits it under civil law, records the inheritance and transfers it to C, A must record their bequest in order to assert it against C (Supreme Court, Mar 6 1964).

Movable property

When movable property is conveyed, the key condition is delivery (hiki-watashi) (Article 178). Delivery may be physical, by directive or by a written instrument.

An exception is when property has been given to a third party for safe keeping. In that case, a lawful acquirer may assert their ownership against the custodian regardless of the Article 178 requirement (Supreme Court, Aug 31 1954).

Rescission and chain of title

If an agreement to sell property is rescinded by either party, each party is responsible for restoring their counterparty to their condition as it existed before the transfer, except where this would harm the rights of third parties (Article 545). This gives third parties limited protection when they have agreed to receive the same property from its recipient under the original sale agreement. However, this protection may only be asserted with regard to real property when that property has been recorded as transferred (Supreme Court, May 17 1921).

Leases

A lease is formed when one party allows another to use property, and the other pays consideration for this privilege (Article 601).

Duration

Leases over movable property and buildings have a maximum term of 20 years, and will be deemed to expire after 20 years if a longer term is provided in the contract. Land leases generally have a term of 30 years or more (Land and Building Lease Act, Article 3).

The maximum duration for a lease is shorter if the grantor does not have authority to enter a full lease. This is the case where the grantor is acting through an agent with unlimited authority or has no competency to dispose of property. In this case, the maximum terms are as follows (Article 602):

• Mountains and forests: 10 years
• Other land: 5 years
• Buildings: 3 years
• Movable property: 6 months

If there is no fixed term, the lease may be terminated by either party at any time (Article 617). The lease will then expire:

• Land: one year later
• Buildings: 3 months later
• Movable property: one day later

Upon expiration, a lease is automatically renewed, unless the owner objects or is unaware of the expiration (Article 619). Upon such an automatic renewal, the lease will become a non-term contract and may thus be terminated at any time.

Assignment and sublease

Any transfer of a lease requires the consent of the owner, and cannot be asserted against the owner if the owner has not consented. The transfer of a lease without the owner's consent is grounds for termination (Article 612). However, this termination right has been severely limited by precedent and is only recognized in practice when the tenant has not acted in bad faith (Supreme Court, Sep 25 1953).