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Re-registering property: The lie of the land

by and

According to an article that appeared in the Asahi Shimbun last June, authorities are unsure of the title holders to 4.1 million hectares of land in Japan — in total, an area equivalent in size to the island of Kyushu. Though this problem has been evident at least since the 1980s, the government didn’t do anything about it until a few years ago when it appointed a group of scholars to study the matter. The group’s results were announced on June 26.

The main reason for the problem is that when a registered title holder dies, their heirs often don’t re-register the land under their own names. As years pass, and these heirs also die, their heirs also don’t re-register the titles. Though relevant authorities can search out the heirs, they may find they have to contact many people. According to Japanese inheritance law, all the children of a property owner have equal rights to that property, and if those heirs die, then all of their children also have rights to the property. So depending on how many generations have passed since the land was last registered, there could be dozens of people who have title claims to the land.

The problem was illustrated by the Asahi with a situation in Nagano Prefecture. Some years ago, a city government wanted to widen a prefectural road, which meant buying adjacent land. However, they couldn’t find the owners of one large section. It turned out that the tract was registered to a group of 26 people back in the Meiji Era (1868-1912), but these people have long since died and the title to the land was never changed.

The Nagano local government estimates there are 107 people now with claims to the land, and by law they would need consent from all 107 in order to widen the road. Trying to find these people has proven to be too much for officials in the local government, so they hired lawyers to locate the heirs, but the cost and time involved was prohibitive. Consequently, that section of the road, which is shared by large trucks and children walking to school, was not widened.

Unknown land ownership has also been a hindrance to recovery efforts in the Tohoku region and in Kumamoto, which suffered devastating earthquakes in 2011 and 2016, respectively. Local governments in those areas want to remove structures that were damaged or destroyed, but can’t identify the current owners. Though some local governments have laws that allow them to remove abandoned houses if owners can’t be located, the local governments have to shoulder the cost of demolition themselves, and most don’t have the funds.

Shoko Yoshihara, an expert on land use who works for the nonprofit think tank Tokyo Zaidan, has just published a book titled “Land Issues in an Age of Depopulation.” Yoshiwara estimates that one-fourth of all the land in Japan is registered to people who are no longer alive or otherwise unreachable. As she explained on a recent TBS radio talk show, she first became interested in the topic in 2008, when a professor of environmental sciences found that many owners of forested land were too old to maintain their properties properly and that their heirs had moved away. Poor forest management can lead to fires and damage watersheds, so the professor thought it would be better if the owners sold their land to someone who could take care of it and asked Tokyo Zaidan for help. However, they couldn’t find owners for many of the tracts.

In 2015, the land ministry did a survey of 400 tracts of land randomly chosen throughout Japan and found that 20 percent was last registered more than 50 years ago and 26 percent between 30 and 49 years ago, meaning that almost half the land was registered more than 30 years ago. The agricultural ministry did a similar survey of farmland and found that in 20 percent of cases, the owner of a piece of land had died and no one has since re-registered the title.

Another problem with not knowing who controls land is that it makes it difficult for local governments to collect property taxes, which are based on real estate records. Yoshihara surveyed 1,718 local governments plus Tokyo about the problem and received 888 replies, which is much more than she expected and shows how seriously these local governments take the issue. Sixty-three percent of the respondents said that trying to find landowners “caused problems” for them. In many cases, local authorities knew that a title holder was dead but continued sending bills to the registered address. As long as the bills were paid, they did nothing, but once funds stopped coming they would try to locate the owner or heir and often came up against a bureaucratic wall, especially if the owner or heir lived outside of their bailiwick.

This wall is built on a land registry system centrally managed by the Ministry of Justice in fudōsan tōkibo (real estate registries). The ministry supplies local governments with registry information so that they can levy and collect property taxes. This structure leads to a significant gap in procedure: Local governments rely on the central government for information about landowners, even though they are closer administratively to the matter than the justice ministry is. More importantly, there is no law that mandates re-registration of a title when the owner dies, so local governments have no means of compelling scofflaw heirs.

Heirs have many reasons not to re-register. The process is expensive and time-consuming. First of all, there’s a tax for changing the title to a property that amounts to 0.4 percent of its assessed value. The new title holder has to hire a notary to carry out the process, and from our research notary fees start at ¥50,000, but often go much higher because of expenses for requesting documents and filling out reams of forms. Sometimes, lawyers also have to be called in, raising the cost even more. If there are multiple heirs involved, each one must give separate permission to change the title and supply their own sets of documents — and if even one cannot be contacted or doesn’t want to participate, the title can’t be changed.

Much of the problem could be avoided if owners drew up wills or if the title of a piece of land could be transferred automatically when the owner dies, but there is no mechanism for such a transfer in the Ministry of Justice, which manages matters related to inheritance law. The government study group recommended that the system be completely overhauled, but that would mean close coordination between the justice, agriculture and land ministries, which is more difficult than it sounds.

In the end, the real source of the problem is decreasing land values. The cost for processing title registration has never changed, but the overall value of land throughout Japan has declined steadily since the early ’90s. In many cases, heirs don’t even want the land they could inherit, because they assume they won’t be able to sell it and they don’t want to pay taxes on it in the meantime. Legally, they can’t even give the land away. When the tax bill arrives in the mail, they just throw it in the trash, because they know the authorities won’t do anything about it.

A recent editorial in the Asahi Shimbun said that the absent-owner problem will only worsen as more boomers die and the population continues to decline. Land stewardship is a social issue, the editorial says, not an economic one. Unmanaged land is detrimental to the country as a whole.

Philip Brasor and Masako Tsubuku blog about Japanese housing at www.catforehead.wordpress.com.