Switching property managers in Japan: the steps and what to check
When you want to change managers, the first thing to establish is whether your current contract is a management contract (kanri itaku keiyaku) or a master lease (sublease, or ikkatsu kariage). Both can look like "the company runs my building", but the law treats them very differently.
A management contract is one in which you ask a company to do the work of managing your building. Under the Civil Code it is a form of mandate, and Article 651 lets either side end a mandate at any time. If it is ended at a time that is unfavorable to the other side, however, damages may be owed. In practice most contracts set a notice period and any termination fee, so you normally follow those clauses.
A master lease is different. The sublease company rents the building from you and sublets it to the residents, which makes the company your tenant in law. Under the Act on Land and Building Leases, a landlord needs justifiable grounds to refuse renewal or to end the lease, so ending a master lease can be much harder than ending a management contract. If you are thinking of ending one, we recommend taking advice from a lawyer.
If you have a management contract, read its terms next: how much notice you must give, the contract term and whether it renews automatically, and whether ending it costs anything. Under the Rental Housing Management Business Act, a registered manager must give the owner a written contract setting out the management work, the fee, the term and the rules for renewal and termination, among other things. If you can't find your copy, you can ask your current manager for one.
Once you have decided to switch, list what the new manager needs from the old one: each tenant's lease and the copy of the explanation of important matters, all keys including spares, rent payment records and any arrears, and the repair history and equipment warranties. If tenants use a guarantor company, that company may need to be told about the change, so check which tenants have one.
Deposits need particular care. A deposit is money that you, as the landlord, owe back to the tenant when they leave (Civil Code Article 622-2). How it is handed over depends on whether the old manager held it or it sits in your own account. List whose deposit is where and how much it is, and agree how move-out settlements will work before the changeover.
Your tenants' leases carry on unchanged when the manager changes, and nobody has to sign a new lease. Tenants do need to be told in writing that the manager is changing. If the rent account changes, give a clear date for which month's rent goes to the new account, because this is the part tenants find most confusing.
Set the changeover date to fit the notice period. Lining it up with the rent cycle keeps the statement for that month easy to read. Give notice in writing and keep a copy, so there is no dispute about when the notice period started. For the changeover month, agree in advance which company remits the rent it collected and how that month's management fee is split.
If you talk to us, we start by reading your current contract with you. We write the letter to each tenant in your name, with the new account details and an invitation to our resident portal. Existing deposits stay with you, and we record each tenant's balance. Our management fee is 5% of rent plus common-area charges, tax included, and nothing on empty units. You receive a monthly statement, you see contractors' quotes as they are, and you decide which repairs wait for your approval.