“Genkyo” (現況) looks like an ordinary Japanese word meaning “the current situation”, but in a property contract it carries far more weight than that. A single line can mean that the seller owes you no repairs, that the floor plan you were shown is not binding, or that your property tax is calculated on a different basis than your registered title suggests. This guide separates the three distinct uses of the term and traces each one back to the statute, so you know exactly where liability is waived and where it survives.
Key points
- “Genkyo” covers three unrelated concepts: (1) as-is delivery in a sale, (2) floor-plan priority in a rental, and (3) the actual land category used for tax
- An as-is clause does not erase the seller’s duty to disclose or their liability for non-conformity. Concealing a known defect still exposes them to repair, price reduction, damages and rescission (Civil Code arts. 562–564)
- The buyer must give notice within one year of discovering the non-conformity (art. 566). If the seller is a licensed broker, a minimum two-year liability period is compulsory (Brokerage Act art. 40)
- Floor-plan priority in a rental settles which description governs. It does not release the landlord from the statutory repair duty (art. 606)
- Fixed-asset tax follows the actual land category as of 1 January, not the registered category. Demolishing a house can multiply the tax on the same plot roughly sixfold
Why this matters if you are used to contracts outside Japan. English-language contracts use “as-is” and, in some jurisdictions, rely on caveat emptor. Japanese practice is different in one decisive respect: an as-is clause limits the seller’s obligation to put things right before handover, but it does not neutralise the disclosure duty or the statutory non-conformity regime. A seller who knew about a defect and stayed silent remains liable no matter how the clause is drafted.
The three uses of “genkyo”
The word points to a different legal mechanism depending on context. Keeping these apart is where most disputes are avoided.
| Term | Where it appears | What it means | What it actually affects |
|---|---|---|---|
| Genkyo-watashi / genkyo-yushi (as-is delivery) | Sale contracts | The property is handed over in its present state, with no repairs or improvements | The seller’s repair obligation. Disclosure duty and non-conformity liability survive |
| Genkyo-yusen (actual condition prevails) | Rental listings and disclosure statements | Where the floor plan and the physical unit differ, the physical unit governs | Layout and fixture descriptions. The landlord’s repair duty remains |
| Genkyo-chimoku (actual land category) | Fixed-asset tax and inheritance valuation | The category derived from how the land is really used, not from the register | Tax base and tax amount. Changes even if the register does not |
As-is delivery in a sale
For land, genkyo means selling without any grading, levelling or infrastructure work; plots sold this way are marketed as “genkyo yushi” lots. For buildings, it means selling without repairs or renovation. Where the contract records “genkyo yushi”, the seller is signalling that the property changes hands in whatever state it is in at completion, even if that state deteriorates between signing and handover.
Floor-plan priority in a rental
Where a rental floor plan and the physical unit disagree, the physical unit prevails. Older buildings often reuse plans that were never updated, because redrawing them costs money, so listings carry a “genkyo yusen” caveat. In practice this note is a declaration that the plan is indicative only — and it shifts the risk of skipping a viewing onto the tenant.
Actual land category in tax
Every plot has a registered category and an actual category derived from real use. They diverge more often than people expect: land registered as farmland but used as a car park, land registered as residential but serving as a materials yard. Fixed-asset tax follows the actual category, so the mismatch feeds straight into the tax bill. This is covered in detail below.
How far does an as-is clause protect the seller?
An as-is clause waives the obligation to repair before handover — and nothing more. The duty of disclosure is untouched. Any defect, incident or repair history the seller knows about must be disclosed to the buyer or tenant.
The buyer’s four remedies (Civil Code arts. 562–564)
The amended Civil Code, in force since April 2020, replaced the old “defect warranty” with liability for non-conformity with the contract. Where the delivered property does not conform to the contract in kind, quality or quantity, the buyer has four remedies.
| Remedy | Article | Content | Condition |
|---|---|---|---|
| Cure | Art. 562 | Demand repair, a substitute, or delivery of the shortfall | The non-conformity must not be attributable to the buyer |
| Price reduction | Art. 563 | Demand a reduction proportionate to the non-conformity | As a rule, only after demanding cure within a reasonable period |
| Damages | Art. 564 (via 415) | Claim losses caused by the non-conformity | General principles of non-performance apply |
| Rescission | Art. 564 (via 541, 542) | Terminate the contract | Notice first as a rule; immediate rescission where the purpose fails |
Source: Civil Code (e-Gov Law Search)
Even under an as-is clause, a seller who hands over a property while concealing a known defect is liable for non-conformity. The common reading that “as-is means no liability at all” is wrong. What the clause covers is matters neither party could have known; matters the seller knew and withheld fall outside it.
Notice within one year of discovery (art. 566)
The deadline is what people miss. For non-conformity in kind or quality, the buyer must notify the seller within one year of becoming aware of it, or lose all four remedies (art. 566). The limit does not apply where the seller knew of the non-conformity at handover, or was grossly negligent in not knowing.
The practical point is that you do not have to complete your claim within the year — you only have to notify that a non-conformity exists. Investigation and negotiation can follow. Send the notice first, in writing or by email so a record survives.
A licensed broker as seller must give at least two years (Brokerage Act art. 40)
Where the seller is a licensed real estate broker and the buyer is not, any term less favourable to the buyer than the Civil Code is void. Article 40 of the Real Estate Brokerage Act prohibits such terms, except where the liability period is set at two years or more from delivery.
| Seller | Buyer | Liability period | Full waiver clause |
|---|---|---|---|
| Licensed broker | Private individual or company | Two years or more from delivery is compulsory (art. 40) | Void |
| Private individual | Private individual | Freely agreed (three months is common) | Valid — but not for defects the seller knew of (art. 572) |
| Licensed broker | Licensed broker | Freely agreed | Valid |
So a clause limiting liability to one year after delivery is void when the seller is a broker, and the Civil Code default applies instead. This is why an as-is purchase from a company and one from a private seller carry very different real-world weight.
How far does “actual condition prevails” go in a rental?
The unit you viewed becomes the contract
Where a listing carries “genkyo yusen”, the layout, fixtures and dimensions on the plan are indicative, and the unit as viewed is what forms the contract. If the plan shows a Western-style room but the unit has tatami, or storage sits where the water heater actually is, the caveat makes it hard to demand correction on the strength of the plan. The risk of applying without viewing transfers to the tenant.
The landlord’s repair duty survives (art. 606)
This is the most commonly misunderstood point. Article 606 provides that “the lessor shall bear the obligation to make repairs necessary for the use and profit of the leased property”. Floor-plan priority is a rule about resolving conflicting descriptions; it does not release the landlord from repairing equipment that fails after move-in, or defects that interfere with daily living.
The 2020 amendment added one exception: where the need for repair arises from causes attributable to the tenant, the landlord’s duty does not apply. Damage caused by how the tenant used the property falls on the tenant; wear from age or equipment reaching end of life falls on the landlord.
Five things to record at the viewing
- Operate the water fittings, water heater, ventilation fan and air conditioner — actually switch them on
- Check ceilings and walls for water stains, condensation marks and mould
- Test floor creak, door operation and window alignment
- Measure storage yourself rather than trusting the dimensions on the plan
- Photograph everything above, in a form that carries a date
Actual land category vs. registered category — the tax changes
Land is valued for fixed-asset tax under the national valuation standard set by the Minister for Internal Affairs and Communications, category by category. The category used is not the one on the register but the actual category as of 1 January, the assessment date. Change how the land is used and the tax treatment changes, whether or not you amend the register.
The nine categories used for valuation
| Category | Description |
|---|---|
| Residential land | Building sites and the land needed to maintain them |
| Paddy field | Land cultivated using irrigation |
| Upland field | Land cultivated without irrigation |
| Mineral spring land | Spring outlets, including hot springs, and land needed to maintain them |
| Pond and marsh | Water storage other than for irrigation |
| Forest | Land growing bamboo and trees other than by cultivation |
| Pasture | Land used for grazing livestock |
| Wilderness | Land growing weeds and shrubs other than by cultivation |
| Miscellaneous land | Anything not falling into the above — car parks, materials yards, private roads |
Source: Ministry of Internal Affairs and Communications, “Outline of Fixed Asset Tax”
Worked example: demolishing the house multiplies the tax roughly sixfold
The residential land concession is where the actual category bites hardest. Land carrying a dwelling has its tax base compressed: the portion up to 200 square metres (small-scale residential land) to one sixth of the assessed value, and the portion above 200 square metres to one third. Demolish the house for a vacant plot or a car park and the concession falls away.
Taking 200 square metres, an assessed value of 20 million yen and the standard rate of 1.4%:
| Actual condition of the land | Concession | Tax base | Annual fixed-asset tax (approx.) |
|---|---|---|---|
| Dwelling standing (small-scale residential land) | One sixth | approx. ¥3.33m | approx. ¥46,700 |
| Vacant plot or car park (miscellaneous land) | None | ¥20m | approx. ¥280,000 |
A difference of roughly ¥233,000 a year — about six times. This structure is the reason the demolition question keeps coming up for vacant houses. In practice a burden-adjustment mechanism applies, and city planning tax (standard rate 0.3%) is charged separately in urbanisation promotion areas. The table above is an approximation to show the scale of the effect; confirm the exact figure against your tax statement and with the municipality.
What happens if you leave the registered category alone
Because assessment follows actual use, an outdated register does not mean the land escapes tax. What a mismatch does create is friction elsewhere: loan underwriting at the point of sale, whether Agricultural Land Act consent is required, and inheritance valuation. Land still registered as farmland is the sharpest case — Agricultural Land Act procedures can be triggered even where nothing has been cultivated for years, and that lands directly on the transaction timetable.
Practical checklist for avoiding “genkyo” disputes
- Always view the property and photograph its condition, in a form that carries a date
- Where the contract records “genkyo yushi” or “genkyo yusen”, confirm in writing what the clause actually covers
- Ask the seller or landlord in writing about known defects, repair history and incidents — verbal exchanges leave no record
- Establish whether the seller is a licensed broker. The minimum liability period changes
- If you find a defect after handover, notify within one year without waiting for your investigation to conclude
- For land, check that the registered and actual categories match. If they do not, check tax, financing and the Agricultural Land Act
- Keep walking away on the table where the gap between the description and reality is unacceptable
- For investment purchases, use a specialist second opinion
Related reading
Frequently asked questions
Q. What does a contract marked “genkyo yushi” mean?
The seller or landlord hands the property over in its present state without repairs or improvements. The disclosure duty still applies, so known defects must be disclosed.
Q. Can I still claim for non-conformity under an as-is sale?
Yes, where the seller knew of the defect and did not disclose it. An as-is clause covers defects nobody knew about; it does not cover defects the seller knew about and concealed (art. 572).
Q. The rental was marked “actual condition prevails” and the layout differs from the plan. What should I do?
The unit as it stands forms the contract. View it, confirm the physical reality, and decline the contract if the gap is unacceptable. Note that the landlord’s repair duty for equipment failing after move-in (art. 606) survives regardless.
Q. I found a non-conformity. What must I do and by when?
Notify the seller that a non-conformity exists within one year of becoming aware of it (art. 566). You do not need to settle the amount or complete repairs inside that year. Notify in writing or by email, then investigate and negotiate.
Q. If the registered and actual categories differ, which one is taxed?
The actual category. Fixed-asset tax valuation follows the actual category as of 1 January regardless of the register, so the tax changes when use changes, even without a registration amendment.
Q. What should I check when viewing an as-is property?
Operate the fittings (water, water heater, ventilation), look for water stains and condensation marks, assess wear on floors, walls and ceilings, and measure the storage yourself. Keep photographs as a record.
