One of the unavoidable risks in real estate investment is rent arrears. If appropriate action is not taken against a delinquent tenant, there is a risk of losing the right to claim payment due to the statute of limitations. This article organizes the legal points that property owners should understand.
How many years is the statute of limitations for rent arrears?
The statute of limitations for rent (a periodic payment claim) is 5 years. If the right is not exercised for five years and the tenant then invokes the statute of limitations, the claim is extinguished. Because this can be invoked without going to court, leaving arrears unaddressed is a serious risk.
What conditions must be met for the statute of limitations to apply?
The statute of limitations applies when all three of the following conditions are met and the tenant invokes it.
More than 5 years have passed
Under Article 169 of the Civil Code, rent is extinguished if the right is not exercised for five years. If five years have passed since the last payment, the claim becomes time-barred.
No payment has been made even once during those 5 years
If even a single payment is made, the statute of limitations is reset (interrupted). Even a partial payment restarts the limitations period from the beginning.
No collection procedure has been taken at all
If no "exercise of rights" has taken place, such as sending a demand letter, using certified mail, filing a lawsuit, or seeking attachment, the statute of limitations will apply. Sending certified mail can extend the period by 6 months, and filing a lawsuit can extend it to 10 years.
Under what conditions can a contract with a delinquent tenant be terminated?
Arrears of 3 months or more
If rent has been unpaid for 3 months or more, a claim for surrender of the building (court proceedings) becomes a practical option for forced eviction. However, legal procedures take time and money, so early action is important.
Breakdown of the relationship of trust
If the tenant still does not pay despite repeated negotiations and demands, it may be determined that the "relationship of trust between the owner and the occupant has broken down," which becomes grounds for terminating the contract.
It can be proven that there is no intention to pay
For a forced eviction, it is necessary to prove that there is "no intention to pay." Preserving records of demands, delivery records for certified mail, and records of communications is important when moving forward with legal procedures.
Frequently Asked Questions (FAQ)
Q. Where can certified mail be sent from?
It can be sent from a post office counter or through "e内容証明" (Japan Post's online service). Because it provides proof of the sending date, content, and receipt, it is effective as evidence for interrupting the statute of limitations.
Q. If I use a rent guarantee company, does that eliminate arrears risk entirely?
Because the guarantee company makes payments on the tenant's behalf, the owner's income is secured. However, subrogated payment by a guarantee company is subject to coverage limits and conditions, and the speed of response to long-term arrears also varies by company. It is therefore important to confirm the guarantee details carefully when signing the contract.
Q. Can anyone apply for attachment?
Attachment requires court approval, such as a petition for provisional attachment or compulsory execution. In addition, if there are no attachable assets, it will not be effective in practice, so a prior asset investigation is recommended.
Q. How many times should a demand letter be sent?
There is no clearly prescribed number, but a common approach is to send a demand letter after one month of arrears, certified mail after two months, and consult a lawyer once arrears exceed 3 months. What matters is taking staged action while keeping proper records.
