This is an article that explains the mortgage loan for purchasing a house in Japan where you or your relatives live. With Japanese home loans, the applicable interest rate is calculated by subtracting the amount of reduction according to the contract terms from the standard interest rate displayed at the store, so it is not possible to compare repayment terms just by looking at the low number advertised. Unlike the common view overseas of ``comparing the displayed interest rates themselves'', it is necessary to check the base interest rate, reduction amount, and conditions after the end of the period as a set. Furthermore, residential mortgage loans in Japan cannot be used for investment properties in principle, and screening and product characteristics are different from financing for income properties.
Checklist for rental management contract | 6 items to check before signing a contract with a management company
When entrusting the management of a rental property to a management company, it is important to check the scope of work, financial management, repair approval, reporting, and handover in the event of cancellation before considering the management fee. This text is based on the Ministry of Land, Infrastructure, Transport and Tourism's Rental Housing Management Business Act portal and standard management contract, and organizes the items that owners should consider before signing a contract in the order of practical use.
Key points of this article
- In the management outsourcing contract, confirm in the attached table how much of recruitment, collection, handling of delinquent payments, and repairs will be outsourced.
- Rent received is managed separately from the property of the management company, and the contents of periodic reports are also confirmed before signing the contract.
- The amount of repairs that can be done without prior approval is decided based on the amount and contact method.
- We plan the handover of tenant information, keys, deposits, and repair history necessary at the time of contract cancellation from the time of contract.
What is a rental management contract?
A rental management contract is a contract under which the owner entrusts the maintenance and maintenance of rental housing and financial management such as rent to a management company. The Ministry of Land, Infrastructure, Transport and Tourism's ``Rental Housing Standard Management Contract'' provides standard content common to the management of residential rental housing, but it is assumed that the content should be adjusted according to the property and scope of entrustment.
Management consignment and sublease are separate contracts. In the case of outsourced management, the lessor of the lease contract usually remains the owner, and the management company is responsible for the outsourced work. Sublease is a system in which a business operator leases a property and sublets it. Please also check Risks and confirmation items for sublease contracts.
Why do you check the important matters explanation and the contract separately?
Under the Rental Housing Management Business Act, registered management companies are required to provide written documentation and explanations before concluding a contract, and to provide written documentation at the time of concluding a contract. Rather than rushing to sign the contract, have a detailed schedule of work details, implementation methods, and costs handy and read them.
The Ministry of Land, Infrastructure, Transport and Tourism recommends allowing approximately one week from the explanation to the conclusion of the agreement so that the owner can make a decision. Businesses that manage 200 or more rental housing units owned by others are required to register, but check not only whether they are registered, but also the system in charge and reporting methods.
6 items to check in the management contract
1. Scope of work and response time
Use the separate table to confirm how much of the work will be outsourced, including recruitment, tenant screening, renewal/cancellation, delinquency reminders, complaint handling, patrols, and equipment inspections. Make it clear whether it will only be a primary response at night and on holidays, or whether it will also include reporting to the owner.
2. Separate management of rent etc. and remittance date
Check how to divide rent, common area fees, and security deposit into different parts, and when to send them. Registered businesses are required to separately manage rent, etc. In practice, it is important to be able to track vacancies, delinquencies, and deductible expenses on remittance statements.
3. Management fees and additional costs
In addition to the monthly management fee, we list advertising fees at the time of recruitment, renewal/cancellation work, key exchange, patrolling, emergency response, and remittance fees. Please use Rental Management Fees and Scope of Work as the basis for comparison.
4. Approved repair amount and ordering method
In the case of a water leak or water heater malfunction, the longer the initial response is delayed, the more damage will be caused. On the other hand, you should also avoid proceeding with expensive construction work without looking at the estimate. Decide on the maximum amount for emergencies, estimates and pre-approvals for regular repairs, communication methods and reporting deadlines.
5. Contents of periodic reports
Registered businesses are required to regularly report on the status of their business operations, etc. Check whether the monthly report includes deposits and withdrawals, delinquencies, vacancies, complaints, repairs, and next month's decisions.
6. Contract period/cancellation/transfer
When changing management companies, notices to tenants, keys, contracts, deposits, repair history, and unresolved matters will be carried over. In addition to giving notice of cancellation, we also decide on the list of materials, delivery date, and remittance cut-off date from the time of signing the contract. See also Steps to change rental management company.
What questions should I ask before signing a contract to avoid problems?
Using examples of rent arrears, nighttime water leaks, estimates when moving out, and changes to recruitment conditions for long-term vacancies, we will ask who will contact the owner when and who will decide on expenses. If the answer is only verbal, check where it is reflected in the contract, appendix, or operational documents.
INA's opinion｜Choose a system that does not delay decision making rather than management fees
A good management contract is not a document that promises that no problems will occur. This is the document that determines the initial response when contacted, reports to the owner, and approval of expenditures. Confirming not only the fees but also whether you have a system that allows you to continue making necessary decisions based on monthly reports will protect your long-term rental management.
Summary
- A management contract is a contract that determines the scope of work and division of decisions.
- Separately check the important matter explanation, contract, appendix, and cost list.
- We will confirm the specific operation of separate management, remittances, repair approvals, and periodic reports.
- Deciding on the transfer in the event of cancellation before signing the contract will prevent confusion when changes are made.
Frequently asked questions
Can I just use the standard format for the management contract?
The standard format is the basis for confirmation, but the content needs to be confirmed and adjusted according to the size of the property, scope of entrustment, costs, and emergency response.
Can I check if the management company is a registered company?
You can check it. Please check the Ministry of Land, Infrastructure, Transport and Tourism's Rental Housing Management Business Act portal, etc., and also check the person in charge, report details, and contact information in case of an emergency.
Can I leave the repairs to the management company?
Emergency response needs to be left to you, but for regular repairs, it is important to determine the pre-approval amount, estimate, and reporting deadline in the contract.
I also want to read
- How to choose a rental management company? 5 selection criteria taught by professionals
- What is bulk leasing (sublease)? Differences from management outsourcing/Points to note when signing a contract
Citations/References
- Ministry of Land, Infrastructure, Transport and Tourism "Rental Housing Management Business Law Portal Site: System Explanation"
- Ministry of Land, Infrastructure, Transport and Tourism "Business of management companies"
- Ministry of Land, Infrastructure, Transport and Tourism "Rental Housing Standard Management Contract"
