Advisor for RENOVATION, REPAIR, REAL ESTATE and CONSTRUCTION for foreigners living in Japan

What’s TEIKI SHAKKA KEIYAKU? “Fixed-term lease agreement”

The differences in between a regular lease contract and fixed-term lease contract

Regular lease contract Fixed-term lease contract
Measure of contract Oral contract is legally recognized. But most of cases, lease contact should be documented. The lease contract has to be documented. The period of the lease contract is fixed, and will not be renewed.
If the period of the lease contract is more than 1 year, the lessor has to deliver a written statement to notify the lessee when the lease contract is terminated between 6-month and 1 year advance of the expiration of a contract.
Term of contract Generally 2-years lease contract. It can not be less 1 year. No restriction for the period. It can be less than 1 year.
Renewal of contract The lessor cannot refuse to renew the contract unless there is a legitimate reason to do so. Basically the lease contract will not be renewed.
With both parties agree, the lease contract can be re-signing.
Cancellation of the contract in the middle of a contract period The lessor is required 6-months advanced notice for the termination generally with a legitimate reason.
The lessee is required 1-2 months advanced notice for the termination generally.
Basically the lease contract can not be cancelled in the middle of a contract period. However Exceptionally it meets one of the below-mentioned conditions, the cancellation should be approved.
– the purpose of the use is for residential
– the property is less than 200sq m
– the lessee has been unavoidable circumstances such as a job transfer or medical treatment and so on.
In other cases, it has to be followed by a special agreement. [TOKUYAKU]From the lessor, the cancellation can not be offered.
Revision of the rent Both lessee and lessor can demand a rent revision. It can be put about a rent revision on a contract. And both lessee and lessor have to follow it.
Merit Rent should be higher than fixed-term lease contract The term of lease contract can be set flexibly. In case the landlord has a plan such as re-building his property in the future, the lease contract can be terminated for sure without a legitimate reason.
Demerit The landlord can not cancel the lease contract, and refuse to renew the lease contract easily. If the landlord want to terminate the lease contract due to their circumstance, they may have to pay for the compensation for eviction. Rent should be lower than a regular lease contract because the lease contract may not be renewed or extended. That’s an anxiety factor for a lessee.