How Has Rental Law Changed with the Civil Code Reform?—A Guide to Key Points Tenants Should Know
The 2020 Civil Code reform brought major changes to rental agreements. A real estate professional explains key revisions from the tenant's perspective, including rules on security deposits, restoration to original condition, and joint guarantors.
On April 1, 2020, Japan's Civil Code underwent a major overhaul—its first comprehensive reform in approximately 120 years. This revision has had a significant impact on rental agreements, which directly affect our daily lives. Many people wonder, "What exactly changed?" and "What happens to contracts signed before the reform?" In this article, as a real estate professional, I'll provide a detailed explanation of the major changes the reformed Civil Code has brought to rental agreements and the key points tenants should understand.
Overview of the Civil Code Reform—Why Was It Amended?
The primary purposes of this Civil Code reform were to update rules to reflect changing times and to codify existing court precedents and industry practices into law. Regarding rental agreements, many rules that were previously governed by court precedents (past judicial decisions) or guidelines from the Ministry of Land, Infrastructure, Transport and Tourism have now been explicitly written into law.
Before the reform, there was a situation where something "was written in guidelines but not in law," which often led to misunderstandings between landlords and tenants. The reformed Civil Code has clarified the legal basis, making dispute resolution more straightforward when problems do arise.
Security Deposit Rules Now Explicitly Defined—Standards for Return Obligations and Deductible Expenses
The Civil Code prior to the reform did not even mention the term "security deposit," leaving its rules to be determined by court precedent. The reformed Civil Code now explicitly defines security deposit rules as follows (Civil Code Article 622-2).
Definition of Security Deposit
A security deposit is defined as "money paid by a tenant to a landlord for the purpose of securing the tenant's obligation to provide money to the landlord arising from rental debt or other obligations related to the rental agreement, regardless of what it is called." In other words, even if something is called "key money," it may be treated as a security deposit if its substance is to serve as collateral.
Timing of Security Deposit Return
A landlord must return the security deposit at one of the following times:
•When the rental agreement ends and the tenant has vacated the property
•When the tenant's claims (such as rent) are transferred to the landlord during the continuation of the rental agreement (the so-called "transfer of security deposit")
In other words, it is now legally clear that the security deposit must be returned after the tenant returns the keys. To the question "When will I get it back?", the answer is "After vacating the property."
Deductible Expenses from Security Deposit
A landlord may deduct unpaid rent or damage claims from the security deposit. However, "wear and tear resulting from normal use (normal wear and tear)" and "deterioration due to aging (natural aging)" cannot be charged to the tenant. This point is also explicitly stated in the reformed Civil Code.
Restoration to Original Condition Rules Now in Law—Normal Wear and Aging Are Not Tenant Responsibility
While the Ministry of Land, Infrastructure, Transport and Tourism's guidelines had previously stated that "normal wear and aging are the landlord's responsibility," the reformed Civil Code now explicitly includes this in law (Article 621).
What Tenants Are Not Responsible For (Examples of Normal Wear and Aging)
•Discoloration of wallpaper and flooring due to sunlight
•Dents in flooring caused by furniture (in the case of normal-weight furniture)
•Small holes from pushpins (not penetrating to the backing board)
•Darkening of walls behind refrigerators or televisions (from electrical burn marks)
•Disinfection costs for kitchens and bathrooms
What Tenants Are Responsible For (Examples of Intentional or Negligent Damage)
•Discoloration and odor of wallpaper and ceilings from smoking
•Scratches and odor from pets
•Mold and rot from neglected condensation
•Scratches to floors and walls from moving furniture (due to carelessness)
•Lost keys and key cylinder replacement costs
If a landlord claims something is your responsibility upon move-out, it's important to evaluate it against these standards.
Joint Guarantor Rules Have Changed Significantly—Setting a Maximum Guarantee Amount Is Now Required
One of the most significant changes in this Civil Code reform affecting the rental market concerns the rules for individual joint guarantors.
Maximum Guarantee Amount Now Required
When an individual becomes a joint guarantor, the contract must now explicitly specify the maximum amount of the guarantee (called the "limit of guarantee amount") (Civil Code Article 465-2). Individual guarantee contracts without a specified limit are invalid.
Before the reform, a joint guarantor could potentially face unlimited liability. For example, if a tenant failed to pay rent over an extended period, a guarantor could be forced to pay hundreds of thousands of yen. By setting a limit on the guarantee amount, the guarantor's risk is now clearly defined and limited.
New Information Disclosure Obligation
A tenant (debtor) must now provide information about their assets, income, and financial obligations to any individual considering becoming a guarantor. If the tenant fails to provide this information and the guarantor enters into the guarantee contract based on incorrect assumptions, the guarantor may be able to cancel the guarantee contract.
Repair Rules Also Clarified
Tenant's Right to Make Repairs Now Explicitly Stated
Articles 606 and 607-2 of the reformed Civil Code now explicitly state that if a landlord fails to perform repair obligations, a tenant can make repairs themselves and bill the landlord for the costs. While courts had previously recognized this right, having it written in law makes it easier for tenants to assert.
Tenants can make repairs in either of the following situations:
•When the landlord was notified of needed repairs but failed to complete them within a reasonable time
•In cases of urgent circumstances (repairs requiring immediate attention)
Rent Reduction When Part of the Property Becomes Unusable
If part of the rental property becomes unusable (such as broken appliances), the law now explicitly states that rent will automatically be reduced in proportion to the unusable portion (reformed Civil Code Article 611). Previously, tenants had to "request" the reduction; now the reduction occurs automatically, even without the tenant asking.
Impact on Pre-Reform Contracts
The reformed Civil Code applies to rental agreements concluded or renewed on or after April 1, 2020. For contracts concluded before that date that have not been renewed, the old law may still apply in some cases; however, after renewal, the reformed Civil Code generally applies.
As of 2026, six years have passed since the reform, and the industry has become more settled in applying these new rules. If you have any unclear points or questions about your rental agreement, I recommend consulting with a real estate company, lawyer, or consumer consultation center. By understanding these legal changes, you can prevent unfair charges and avoid disputes before they arise.
