Restoration obligations at move-out — known in Japanese as genjō-kaifuku (原状回復), literally “restoration to original condition” — are one of the most frequent sources of dispute between tenants and landlords in Japan. This is a distinctly Japanese framework: unlike many Western jurisdictions, where deposit-deduction rules are a short paragraph buried in the lease, Japan governs genjō-kaifuku through dedicated national guidelines, and the rules diverge sharply between residential and commercial properties. For international investors acquiring Japanese rental property — a Tokyo condominium or a suburban office building alike — misreading this framework is one of the most common causes of friction with tenants and of unbudgeted cost at move-out. This article walks through what genjō-kaifuku means, how cost-sharing is determined, and how to avoid disputes, drawing on the guidelines of the Ministry of Land, Infrastructure, Transport and Tourism (国土交通省, MLIT) that govern the practice.
What Does Genjō-Kaifuku Actually Mean?
Genjō-kaifuku (原状回復) is the real-estate term for restoring a rented unit to the condition it was in when the tenant moved in. It is easy to confuse with a near-homophone, 現状回復 — written with a different first character, 現状 (“current condition”) rather than 原状 (“original condition”) — which would describe restoring things to however they happen to be right now, not to their state at move-in. Even native Japanese speakers mix these up constantly, so it is worth fixing in memory: the correct legal term is 原状回復, and the pronunciation gives no clue to which kanji is meant.
For residential properties, however, genjō-kaifuku is not literally “return it to like-new.” MLIT’s guidelines state plainly that ordinary wear from daily living and deterioration from the simple passage of time (経年劣化, keinen rekka) are excluded from a tenant’s restoration obligation — a landlord cannot bill a departing tenant for a lease’s worth of accumulated aging. This is conceptually close to the “normal wear and tear” carve-outs found in many US and European security-deposit statutes, but Japan formalizes the line between normal aging and tenant fault in far more granular guidance than most Western leases ever spell out. For anyone underwriting the purchase of a Japanese rental unit, getting this distinction right at the outset avoids costly assumptions about who — tenant or landlord — is actually on the hook for what at each lease turnover.
How Are Restoration Rules Defined for Residential Properties?
A residential tenant’s genjō-kaifuku liability is limited strictly to wear or damage caused by use that exceeds normal living (通常の使用を超えるような使用による損耗・毀損). MLIT’s guideline sorts wear and damage into three categories — and this three-way split is itself a distinctly Japanese refinement, since most Western leases apply a simple binary of “normal wear” versus “tenant damage” with no intermediate case:
| Category | Description | Who pays |
|---|---|---|
| A | Deterioration over time and ordinary wear and tear | Landlord |
| B | Damage from the tenant’s intent, negligence, or a breach of the duty of care (善管注意義務, zenkan chūi gimu — a tenant’s statutory obligation to use the property with the diligence of a “good manager”) | Tenant |
| A+B | Ordinary aging compounded by tenant negligence | Tenant (adjusted for years elapsed) |
For example, a dent left in flooring by the weight of a refrigerator counts as ordinary wear (Category A, landlord’s cost), while a scratch gouged into the same floor while dragging furniture across it counts as tenant damage (Category B). One protection worth flagging for anyone reviewing a Japanese residential lease: because Japan’s Consumer Contract Act (消費者契約法) applies to residential tenancies, a special clause attempting to shift Category-A ordinary-wear costs onto the tenant can be ruled invalid by a court — even if the tenant signed it. That is a meaningfully stronger tenant protection than exists in many US states, where landlords retain wider contractual latitude to define what counts as “normal” wear.
How Does Commercial-Property Restoration Differ From Residential?
For commercial properties, the default flips entirely: the tenant, as a baseline, bears the cost of restoration including ordinary wear and time-based deterioration. This is the exact opposite of the residential default described above. For a foreign investor holding both residential and commercial assets in a Japanese portfolio, internalizing this reversal is one of the more consequential distinctions in the market, since it directly changes the restoration reserve a landlord should budget for at each lease turnover — commercial buildings shift that risk onto the outgoing tenant, residential buildings do not.
Characteristics of Commercial-Property Restoration
- In principle, the tenant is obligated to return the space to the exact condition it was in at move-in.
- Because commercial tenants use space for such varied purposes, there is little industry-wide standardization of what “restoration” requires.
- The precise scope of restoration is instead defined case by case in the lease contract and its special clauses (特約).
- When the landlord designates the contractor who must perform the work, costs tend to run significantly higher than under open competitive bidding.
Typical Commercial Restoration Costs
Commercial restoration costs are conventionally quoted per tsubo (坪) — a traditional Japanese unit of floor area with no direct Western equivalent, equal to roughly 3.3 square meters (about 35.6 square feet) — a pricing convention every investor evaluating a Japanese office lease needs to recognize, since a square-meter or square-foot quote from a Western contractor is not directly comparable without converting it first.
| Office size | Typical cost per tsubo |
|---|---|
| Small to mid-size (up to approx. 100 tsubo / 330 sqm) | roughly ¥20,000–50,000 per tsubo (approx. $130–325 USD at 155 JPY/USD) |
| Large (100+ tsubo / 330+ sqm) | roughly ¥50,000–100,000 per tsubo (approx. $325–650 USD) |
What Should Landlords and Tenants Do to Avoid Restoration Disputes?
Because real money changes hands, genjō-kaifuku disputes are common — but they are largely avoidable with the right precautions at each stage of the tenancy: signing, move-in, occupancy, and move-out. For an overseas owner who will not be physically present in Japan at move-out, front-loading these checks is the single highest-leverage way to avoid a dispute conducted entirely in Japanese, often without the owner in the room.
What to Check When Signing the Lease
1. Read Every Clause of the Lease Agreement
Always review the restoration clause and any special provisions (特約) line by line. Because special clauses are far more likely to be enforced in commercial leases than in residential ones, scrutinizing their exact wording matters even more for commercial tenants and their advisors. Ask the landlord to state, in concrete terms, exactly which items the tenant will be responsible for and roughly what they will cost.
2. Document the Move-In Condition Thoroughly
Most move-out disputes come down to disagreement over whether damage existed before move-in or arose during the tenancy. Photographing every room — with a visible date stamp — before bringing in furniture is one of the most effective ways to settle this question later. It is also worth testing that fixtures and appliances function correctly as soon as possible after moving in.
3. Scrutinize the Move-Out Settlement Statement
Before signing the final settlement statement (精算書), check for the following:
- Is the landlord being billed for anything that should legally be the landlord’s own cost?
- Is a single scuff or scratch being used to justify billing for the renovation of an entire room?
- Does the charged amount properly account for how many years the item had already depreciated?
What to Watch for During the Tenancy
Report Every Malfunction to the Property Management Company
Under the tenant’s duty of care (善管注意義務, zenkan chūi gimu), a tenant is legally obligated to report equipment malfunctions promptly. Leaving a water leak or a broken air conditioner unaddressed can itself be treated as a breach of that duty, which can then be used to justify billing the tenant for the resulting restoration cost. No malfunction is too minor to report — always contact your property management company right away.
Common Examples of Who Pays for What
| Cases where the tenant typically pays | Cases where the landlord typically pays |
|---|---|
| Tobacco tar staining and burn marks | A dent in the flooring from furniture placement |
| Pet-related scratches or odors | Wallpaper discoloration from sun exposure |
| Mold or grease buildup from neglected cleaning | Small pinholes from thumbtacks |
| Damage from unauthorized DIY renovations | Replacing a screen door worn out by age |
Frequently Asked Questions
The questions below come up most often for landlords and tenants navigating a Japanese lease turnover — including overseas owners managing the process remotely.
Q. What is the difference between genjō-kaifuku (原状回復) and the near-homophone 現状回復?
原状回復 — restoring the original condition — is the correct real-estate and legal term. 現状回復, which sounds identical but uses a different first character meaning “current condition,” is not a defined legal term in Japanese lease law, even though it is a common colloquial mistake.
Q. Can a landlord bill a residential tenant for ordinary aging?
No. Under MLIT’s guidelines, the cost of repairing ordinary aging and normal wear and tear is treated as already priced into the rent the landlord collects over the life of the tenancy, and cannot be billed separately to the tenant.
Q. What if a commercial tenant is quoted an excessive restoration cost?
Start by negotiating directly with the landlord. If the two sides cannot reach agreement, the dispute can escalate to mediation involving a specialist or, in more serious cases, litigation. If the lease does not designate a specific contractor, the tenant can also obtain competing quotes from multiple contractors to test whether the quoted price is reasonable.
Q. What exactly should a move-in inspection cover?
Check the floors and walls for existing scratches or stains, and confirm that fixtures and appliances are operating correctly, all before moving furniture in. Document everything with date-stamped photographs, and report any defects to the property management company immediately.
Q. Can a tenant dispute the settlement statement after already signing it?
It is possible to claim a refund for an unjustified charge even after signing, but doing so may involve legal costs. Reviewing the statement carefully before signing remains by far the most reliable protection.
