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Issues of Rent 2: eviction

Will a business operator immediately be required to vacate a room in a building when it failed to pay the rent for the room, because it ran into financial difficulty by drop in sales caused by its compliance with a request from a prefectural governor for suspension of business based on the declaration of a state of emergency issued to prevent the spread of COVID-19 infection?

The lease contract for a room in a building is subject to Act on Land and Building Leases. Except in the case of a building lease contract without contract renewal (fixed-term building lease), the lessor of the lease contract can terminate the contract in the case of its having a lease period, by notifying the lessee of no renewal of the contract from between one year to six months prior to the expiration of the contract period (Article 26 of the Act); in the case of having no lease period, the lease contract will be terminated after six months from a notice of termination of the contract to the lessee (Article 27 of the Act).

However, in any of these cases, in order for the termination of the contract to be effective, there must be justifiable grounds for the termination on consideration of the history of the building lease, the conditions of the building's use, the current state of the building and, in cases where the building lessor has offered payment to the building lessee as a condition for surrendering the buildings or in exchange for surrendering the buildings, the consideration of said offer as well as the circumstances pertaining to the necessity of using the buildings on the part of the building lessor and the lessee (Article 28 of the Act). Any special provisions that are contrary to the provisions of these and disadvantageous to the building lessee are invalid (Article 30 of the Act).

In addition, in the event of the lessee's failure of paying the rent, whether or not the lessor can cancel the lease contract on account of the lessee's breach of contract, it is the established judicial precedents that such cancellation will not be approved unless, by any actions including breach of contract, the lessee had destroyed a trust relationship based on the lease contract between the lessee and the lessor.

Consequently, even if the building lease contract has a special provision of enabling the lessor to terminate the contract by an advance notice with less than six months, such termination notice from the lessor could be considered as violation of the Act. Even if the lessee failed to pay the rent, the cancellation from the lessor on account of such breach of contract could be judged invalid, if there were any circumstances that support such failure had not destroyed the trust relationship between the lessee and the lessor. Since the vacation from the leased room presupposes the termination of the lease contract, the lessee will not be required to vacate the room unless the lessor legitimately terminate or cancel the lease contract.

In any case, it is desirable for the lessee that at first the lessee informs the lessor that it has become difficult to pay the rent, and ask for some grace period for all or part of the rent, or deduction of money from a security deposit as the rent payment as an interim measure.

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