Original Article: 【これについては注意が必要】オーナーチェンジ物件の取引について

When you search for properties on “REINS,” you often see owner-change properties. As you may know, owner-change property is a transfer of ownership while the lease is maintained.

Usually, the cause of the transfer is a sale or purchase, so it would be easier to understand it as a sale or purchase of a rental property.

Since the owner-change property is already occupied by the lessee, there is no need to find new tenant(s).

In addition, the rent roll (list of lease terms and conditions, etc.) allows you to grasp in advance the operating conditions, occupancy status, etc., making it easier to plan for income and expenditures after purchase.

In addition, when financing is required for the purchase, the fact that the property is currently leased and the rent roll as evidence of the property’s performance will work in your favor, making it a positive for the screening process.

Because of these advantages, owner-change properties are recommended as first-time purchases for novice investors.

However, there are some points to note which are unique to owner-change properties.

We must advise them appropriately. If we gain your trust through appropriate advice, you will be more likely to ask us about further purchases.

It is an opportunity to grow together after the sale.

However, in order to give advice that hits the nail on the head, it is necessary to understand exactly what the problem is.

Therefore, we would like to explain the points to note when mediating an owner change housing.

Assumed yields cannot be reliable income

The most famous portal sites that actively list investment properties are “Rakumachi” and “Kenbiya”. In addition, “Homes” and “At Home” have dedicated pages for investment properties as well.

Since the general public does not have access to REINS, many people will consult with us after viewing property information on such portal sites.

Some consultants mistakenly believe that they will receive the “assumed full-occupancy yield” income listed on the site.

Certainly, if you browse the site, you will find properties with high yields of 20-40% or more.

This is especially true for condominiums and detached houses with low sales prices.

Certainly, if the property can be leased at a set rent, the surface yield will be as indicated in the listing.

However, the appropriateness of the rent must also be considered.

Before that, it is also necessary to consider whether there is rental demand for the location of the property, so a good “connoisseur” is required.

Owner-change properties are already occupied by renters.

For the time being and in this respect, they are suitable for beginners in real estate investing.

However, there are some issues unique to owner-change properties.

First, it is highly probable that you will not be able to preview (view) owner-change properties which are currently occupied.

The only way to judge the property is by looking at the interior photos provided by seller or seller’s agent.

From the renter’s point of view, there is no problem as long as there is no disadvantage caused by the change of owner.

Therefore, it is safe to assume that you are not obligated to cooperate with a private viewing that exposes your privacy to a third party, and therefore, a private viewing may not be possible.

What should be noted here is the deterioration of the interior (especially the equipment).

If you cannot inspect the interior, you have no choice but to judge the condition of the property based on photographs taken before (after restoration to its original condition), but it may be difficult to judge the condition with photos and the limited amount of photos available.

Next, “falsified occupancy” and “rent roll tampering” should also be noted.

Although we cannot deny the possibility that the timing of the investigation may be a factor, there is no doubt that we need to “look behind the scenes.”

It is a good idea to check if the electricity and gas meters are working at the site.

If the property is a condominium, you can check by opening the MB (meter box) located by the entrance.

Also, be sure to check the past repair history and remodeling details.

In particular, equipment (kitchen, bathroom, toilet, etc.) has a life span, and if replacement history cannot be confirmed, replacement may be necessary soon after the transfer of ownership.

In addition to having the details of the construction work provided and examining the contents, you should also have a “property condition report” provided prior to signing a contract to confirm the contents beforehand before making a purchase decision.

Contents of the rental agreement you want to make sure are kept in check.

In the sale or purchase of owner-change properties, the lease agreement is usually taken over in its entirety.

Therefore, if the terms and conditions of each contract are not carefully examined before signing, unexpected disadvantages may result.

It is not possible to change a contract which has already been concluded without the consent of the lessee.

If the contract is offensive to public order and morals, it may be possible to change it on the grounds that it is invalid, but this requires a lot of effort, including the need to go to court.

Particular attention should be paid to the following clauses.

1. Contract Renewal

The term of the contract needs to be confirmed. We often hear the story of an investor who was reassured that he or she could expect immediate rental income because the property was under lease, but the contract term soon expired and the property became vacant because the tenant had no intention of renewing the lease.

2. Increase/decrease in rent

Generally, rent can be increased or decreased through consultation between the parties to the contract.

However, even if the rent becomes unreasonable due to changes in economic circumstances, a request for an increase will not be easily approved (the same applies to a request for a decrease by the lessee).

Therefore, it is important to investigate the market rent in the neighborhood beforehand and examine whether it is appropriate.

This is because there are many cases where a contract is not renewed because the rent is too high.

3. Security Deposit or Deposit

It is natural to confirm whether or not there is a security deposit or deposit, but especially for owner-change properties, it is necessary to confirm what the agreement is regarding the amortization portion.

In our experience, there are many sales contracts (not lease contracts) which are quite vague regarding the amount for deductions.

Occasionally, one may find a purchase agreement which does not mention anything about security deposits or guarantees.

This is partly because there is no legal basis for taking over the security deposit or deposits in general

Nevertheless, a new lessor who purchases an owner-change property is obligated to return the security deposit (if the receipt of the security deposit, etc. is made in the original contract) if the lease contract is terminated, regardless of whether or not there is a handover.

It is important to understand the purchase agreement for an owner-change property and the taking over of the security deposit or deposit are two different things. Care should be taken to make sure that this is clearly stated in the purchase agreement.

4. Repairs during the contract period

The lessor is obligated to make the necessary repairs so the property can be used (livable) and in turn profitable.

The lessee cannot be exempt from the obligation except when there is a clear reason attributable to the lessee.

What you should pay attention to is the state of deterioration of the equipment and devices mentioned in the previous section.

Repairing or even replacing them may require a large amount of money, so it is necessary to check whether there are or were any requests for repair from the lessee in the current lease agreement.

5. Cancellation of Contract

There is no problem with ordinary termination of a contract, but what you should pay attention to is the clause regarding termination of a contract when rent is unpaid.

An impressive example of this is the December 12, 2022 court decision in which the validity of a clause allowing a rent guarantee company to cancel the lease without notice, and to sacrifice/surrender was disputed.

The case concerned the validity of a clause which allowed the joint guarantor (the rent guarantee company) to cancel the lease contract without notice if the rent was more than three months in arrears, and the merits of the so-called “kick-out clause.”

The case was argued all the way to the final appellate court, and the decision was changed two or three times, but in the end, both the no-notice cancellation and surrender/sacrifice clauses were declared injunctive (i.e., invalid).

Although it is not necessarily true that all clauses are “invalid” in all cases, depending on the contents of the clauses and preconditions, it can be said that the court case has increased the possibility of such cases.

Although three months in arrears still constitutes a reasonable period of time, it is necessary to explain that “no-notice cancellations” will not be accepted.

6. Restoration upon vacating the premises

Except for natural wear and tear and age-related deterioration resulting from normal use, the lessee is generally obligated to restore the property to its original condition.

However, if the condition of the room at the time of the lease contract cannot be ascertained, it may be confusing to determine whether the lessee is responsible for the damage.

Be sure to check whether there are any documents which can confirm the condition of the property before the tenant moved in.

In addition, it is necessary to provide information on the “Troubles and Guidelines Concerning Restoration to Original Condition,” which was revised in March 2023, and at the same time, deepen your own knowledge and be prepared to consult with clients.

In particular, it is necessary to explain the definition of “restoration to the original condition” as “restoration of wear and tear and damage caused by the lessee’s willful misconduct, negligence, breach of duty of care, or other use which exceeds normal use, among decreases in the value of the building resulting from the lessee’s residence and use of the property.” It is necessary to have the tenant understand that “this is not a request to return the property to the leased condition.”

It is also necessary to pay attention to how the contract stipulates the handling of items left after move-out.

Other notes

When you purchase an owner-change property, the tenant who is already occupying the property continues to occupy it, but you may not be able to ascertain the attributes and credit information of the tenant.

A history of rent delinquency would be able to be confirmed by rent rolls, but this does not apply to lifestyle or other aspects of the tenant’s attitude towards life.

Negative information such as failure to follow public rules or frequent troubles with other tenants may be concealed.

If there are any records of problems, ask them to provide them, and if not, be sure to confirm them, even if it is verbally. The content of the interview should be recorded in a written record of the meeting, and care should be taken to keep a record of the meeting.

Especially for properties that fall under the category of short-term transfer income (within 5 years of purchase) at the time of sale, you should also pay attention to the reason for the sale.

There is a possibility that an unexpected cause may be hidden.


Owner-occupied, owner-change properties are said to be suitable for beginner investors because they generate income immediately after purchase. There is no intention to deny this.

However, as explained in this blog, it is also true that there are some points to note which are unique to owner-change properties.

It is not a new concept that Japanese law is favorable to tenants, but in reality it has been interpreted in favor of landlords. However, due to repeated legal revisions, such methods no longer apply.

Therefore, when brokering an owner-change property, whether you are buying or selling, it is necessary to do all the necessary research and follow up to avoid mistakes.

Therefore, it is necessary to deepen knowledge, and if there is a problem, it is necessary to perform the investigation carefully so that it can explain it beforehand.

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