On April 1, 2026, at the same time the amendments to the Act on Advancement of Proper Condominium Management came into force, the Ministry of Land, Infrastructure, Transport and Tourism revised the "Guidelines on External Manager Schemes in Condominiums." For the "external manager scheme," in which a management company also serves as the condominium manager, eight issues have now been newly clarified in writing, ranging from the implementation process to passbook and seal management and conflict-of-interest measures. For owners who hold condominium units and officers of condominium associations, accurately understanding these revisions will help preserve asset value over the long term. ## What Is the External Manager Scheme? - How Does a Management Company Also Serve as the "Manager"? Article 26 of the Unit Ownership Act establishes the role of the "manager," and ordinarily the chairperson appointed by the condominium association (one of the unit owners) serves in that role. In recent years, however, against a backdrop of difficulty finding officers and increasingly complex management needs, arrangements in which a management company itself also serves as the manager have spread. This is called the "external manager scheme," and among these arrangements, cases in which the management company serves as the manager are referred to specifically as the "management company manager scheme." These two terms are often confused, but the external manager scheme refers broadly to any arrangement in which an outside professional other than a unit owner becomes the manager, while the management company manager scheme is one form of that broader category. This guideline revision applies to the external manager scheme as a whole, but it has significantly strengthened the rules addressing conflict-of-interest risks, especially where a management company also serves as the manager. Behind the increase in external manager schemes are structural challenges such as officer shortages caused by an aging population and resident indifference. In smaller condominiums, it is not uncommon for the condominium association's function itself to become hollow. That is precisely why a checking framework is important when the manager function is entrusted to a management company, and this revision establishes an institutional framework to ensure that transparency. ## Effective April 2026 - Why Is the Background to the Guideline Revision Important? The "Guidelines on External Manager Schemes" were first established in 2017 and revised once in 2024. This April 2026 revision is a further revision linked to the enforcement of the amended Act on Advancement of Proper Condominium Management (effective April 1, 2026). At the same time, the following related rules were also newly established or revised.
- Standard Condominium Manager Administrative Services Agreement(newly established)
- Standard Condominium Management Outsourcing Agreement(revised)
- Standard Condominium Bylaws(revised through a replacement table)
Although these are not mandatory, as the word "standard" suggests, in practice they are widely used as templates referenced by condominium associations and management companies. With the guidelines and the standard bylaws and contract forms now developed as an integrated package, it can be said that the institutional foundation for condominiums adopting the external manager scheme has been strengthened. The MLIT press release (
Regarding the Revision of the Guidelines on External Manager Schemes in Condominiums (April 1, 2026)) sets out the purpose of the revision and its main points. ## Detailed Explanation of the Eight Issues in the Revised Guidelines The following explains, in order, the main issues presented in this revision. These points directly affect condominiums that have adopted, or are considering adopting, the external manager scheme. ### 1. Process for Introducing the Scheme to Existing Condominiums - Briefing Session Requirement and Decision-Making Rules When an existing condominium newly introduces the external manager scheme, it is first necessary to hold a
briefing session. At that session, matters specified by the guidelines, such as the manager's authority, scope of duties, compensation, conflict-of-interest risks, and auditor framework (corresponding to items 3 through 8), must be explained carefully. This procedure is intended to prevent a change in the management structure from being decided before residents have obtained sufficient information, and its purpose is to create an environment in which unit owners can make their own informed decisions. ### 2. How Explanations Should Be Provided for Newly Built Condominiums In the case of condominiums for sale, explanations to prospective purchasers are essential. Developers are required, during the
important matters explanation before the sale contract, to disclose whether the condominium adopts the external manager scheme, as well as information on the manager's authority, compensation, and conflicts of interest. This measure is intended to prevent cases in which buyers purchase without knowing that "the management company also serves as the manager." Because a condominium's management framework is directly tied to long-term asset value, disclosure before purchase is important. ### 3. Condominium Association Operations - The Manager's Term Is One Year in Principle The term of an external manager has been set at
one year in principle. In addition, the manager's duties (managerial services) and management outsourcing services (management administration services) are required to be operated separately, with separate contracts and separate personnel in charge. Setting a term helps prevent a particular management company from continuing to retain managerial authority over a long period. It ensures a mechanism under which the condominium association reconfirms its confidence each year. ### 4. Appointment of Auditors - At Least One Must Be Selected from External Professionals In condominiums adopting the external manager scheme, it has become the general rule to
establish an auditor and appoint at least one external professional (with exceptions provided). The auditor is responsible for overseeing the manager's execution of duties. When a management company also serves as the manager, there is a conflict-of-interest concern that it could effectively be auditing itself. The purpose is to secure a meaningful checking function over management operations by appointing a third-party external professional, such as a lawyer, certified public accountant, or condominium management consultant, as auditor. ### 5. Custody of Passbooks and Seals - Management Companies Are Principally Prohibited from Holding Seals It has now been made a general rule that a management company
may not keep seals and similar items. The same party keeping both the passbook and the seal (or an equivalent authentication method) creates risks such as embezzlement of funds, and the revision therefore points toward institutional separation of these functions. The condominium association's assets belong to the unit owners. A structure in which the management company controls both the passbook and the seal carries structural risk, even if the company is trustworthy. From the perspective of building a management system that does not rely on the assumption of universal good faith, this revision is a highly important point. ### 6. Process for Conflict-of-Interest Transactions - Prior Explanation Required for Transactions with Group Companies When a management company places construction orders or outsources work to a group company (subsidiary, affiliate, etc.), it has been made mandatory to
hold a briefing session in advance and explain material facts to unit owners. The aim is to create an environment in which unit owners can make decisions after understanding in advance the relationship and profit structure between the management company and the contractor. Cases such as "we did not know who the repair work had been ordered from" or "we did not notice that orders to an affiliated company were overpriced" have actually occurred. By explicitly codifying the prior-explanation requirement as a legal rule, this revision is expected to deter such problems. ### 7. Process for Major Repair Works - Repair Committee Required in Principle When carrying out major repair works, it has become the general rule to
establish a repair committee composed of unit owners and the auditor. This creates a mechanism in which unit owners themselves participate in decisions on repairs, rather than leaving everything to the management company. The use of repair reserve funds is directly linked to the condominium's long-term asset value. If the management company handles everything from planning to ordering the work, it becomes difficult to verify fair pricing and assess the appropriateness of the work content. Establishing a repair committee gives the unit-owner side a checking function. ### 8. Process When the Manager Leaves Office - Notice of an Extraordinary General Meeting Must Be Issued Within One Month If the manager resigns, it has been stipulated that the association must
issue notice of an extraordinary general meeting within one month from the date the resignation is decided. Clarifying the procedural rules for sudden manager changes helps prevent a management vacuum and confusion. Under the management company manager scheme, a change of manager has a major impact on the condominium association. By making prompt and transparent handover procedures mandatory, the aim is to minimize disadvantages to unit owners. ## What Should Unit Owners Check Right Now? In light of this revision, owners who hold condominium units should confirm the following points. First, please check
whether your condominium has adopted the external manager scheme (management company manager scheme). The management outsourcing agreement and condominium bylaws state who the "manager" is. If the name of the management company, rather than the chairperson, is listed, the external manager scheme may have been adopted. Next, confirm
whether an auditor has been appointed and whether an external professional is serving in that role. This can be determined by reviewing the condominium association's general meeting minutes and bylaws. In addition, it is also useful to ask the management company about the
custody arrangements for the passbook and seal. Whether operations are being conducted in line with the intent of the revised guidelines is one measure of the management company's reliability. As also noted in
What Is the Management Plan Certification System? Its Impact on the Used Condominium Market and Its Merits and Demerits, these matters are closely connected to building a management framework that protects a condominium's asset value over the long term. ## INA's View - A Transparent Management Framework Protects Long-Term Asset Value What we at INA&Associates have consistently valued in the field of real estate management and consulting is an attitude of "trust and honesty." This guideline revision points in the same direction as those values. The fact that a management company also serves as the manager should not itself be rejected. It is an effective measure for addressing the practical challenge of finding officers, and if operated appropriately it can also improve management quality. However, that assumes transparency and a system of checks and balances are secured. Conflicts of interest do not necessarily arise from bad faith in themselves. When people are placed in a structurally self-checking situation that is difficult, inappropriate conditions can continue unintentionally. That is why rules such as appointing auditors, separating passbooks and seals, and establishing repair committees should be understood not as measures to suspect a particular company, but as measures to create a structure in which everyone can feel secure. To protect asset value from a long-term perspective, it is essential that condominium associations do not remain passive, but exercise autonomous governance. There is now a real need to move away from the attitude of "it's fine because we leave it to the management company" and to build a habit of proactively checking the management framework of one's own condominium.
How Will Rental Property Management Change Under the 2026 Unit Ownership Act Revision? The Management Company Manager Scheme and Its Practical ImpactReviewing that article as well should make the overall picture of the legal revision and the position of the guideline revision even clearer. ## Summary The following summarizes the key points of this revision to the "Guidelines on External Manager Schemes" (effective April 1, 2026).
- 1. A briefing session is required when introducing the scheme to an existing condominium(on the premise that unit owners receive sufficient information)
- 2. Information must be disclosed in the important matters explanation to prospective purchasers of newly built condominiums
- 3. The manager's term is one year in principle(with separate contracts and personnel for managerial services and management administration services)
- 4. An auditor must be established, and at least one external professional appointedas a general rule
- 5. Management companies are in principle prohibited from keeping seals and similar items(asset separation to prevent conflicts of interest)
- 6. For transactions with group companies, a briefing session must be held in advance and there is a duty to explain material facts
- 7. A repair committee is required in principle for major repair works(composed of unit owners and the auditor)
- 8. When the manager leaves office, notice of an extraordinary general meeting must be issued within one month from the decision date
These rules do not require condominiums to adopt the external manager scheme. They are simply the rules that apply if the scheme is adopted, but conversely, operations that do not satisfy them will need improvement. We recommend checking whether your condominium's management framework aligns with the guidelines at the next condominium association general meeting or when the management outsourcing agreement is renewed. If anything is unclear, consulting a specialist such as a condominium management consultant, lawyer, or real estate consultant is also an effective option.
## Frequently Asked Questions (FAQ)
Q1. Will the external manager scheme (management company manager scheme) become mandatory for all condominiums?
A. No. The external manager scheme is one management structure that a condominium association may choose. This revision to the guidelines strengthens the rules that apply when this structure is adopted, and it does not forcibly apply to condominiums that have not adopted it. However, if adoption is being considered, it is important to fully review the contents of the revised guidelines in advance.
Q2. What should a condominium that has already adopted the external manager scheme do?
A. Existing condominiums are expected to move to a management framework consistent with the revised guidelines. Specifically, confirm whether (1) an external professional has been appointed as auditor, (2) the custody arrangements for the passbook and seal are separated, and (3) the manager's term is clearly defined. If the response is insufficient, consider reviewing the arrangements when renewing the management outsourcing agreement or through a resolution at a general meeting.
Q3. How should the auditor be selected?
A. The guidelines make it a general rule that at least one external professional be appointed. Candidates include condominium management consultants, lawyers, certified public accountants, and judicial scriveners. It is important to appoint the auditor by resolution at the condominium association's general meeting and to specify the auditor's duties, authority, and compensation in the bylaws or contract documents. As for introductions to professionals, consulting industry bodies such as the Condominium Management Center is also one option.
Q4. If construction orders to a group company constitute a conflict of interest, what disadvantages can arise for unit owners?
A. When a management company places orders with a group company, risks can arise such as inflated construction costs, approval of unnecessary work, and weak quality control. This revision requires prior briefing sessions and disclosure of material facts, but it is also important for unit owners to proactively confirm matters such as the relationship with the contractor and whether comparative estimates were obtained. If there is no disclosure, or the explanation is insufficient, unit owners have the right to request an explanation from the management company.
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