What is the minimum insurance coverage in the lease? As a general rule, the obligation of insurance rests with the owner. However, many homeowners (particularly in seismic areas and very old buildings) will only set themselves a very basic level of insurance. This generally exposes tenants to a high level of business continuity risk. A lease agreement often provides for the implementation and addition of a report on the condition premises. This means that the tenant must leave the premises at the end of the lease in the same condition as at the beginning, subject to fair dealing. This report must be completed shortly before the premises are taken over and must be attached to the rental price. 1. Understand your situation Recognize your occupancy rights, commitments and opportunities under your lease as well as any manoeuvrability granted to you by leasing habits and practices in the Japanese market. Traditional Japanese leases (futsu-shakka) give the tenant the right to demand a rent reduction at any time during the term of the tenancy (including the medium term), including the initial term of the tenancy and subsequent extensions.
This right is reinforced by the reality that a tenant can terminate at any time during the tenancy agreement. A fixed-term tenancy (Teiki-shakka) is generally less flexible, as the possibility of terminating the contract before expiry is prohibited, unless a break option or other specific provision has been introduced in the agreement. If the process is longer than 12 to 18 months in the future, an extend and blend agreement could be an attractive solution that offers prior concessions. The trend towards maximizing spatial efficiency in Tokyo has been modified by social redistricting requirements, as shown by the 6 Feet Office Employment Strategy. Goals should include setting guidelines for returning your employees to safe employment and longer-term strategies for an optimized office environment after the pandemic. Know the vacancy of your building Note the occupancy situation of your building, including outgoing tenants and empty spaces to come. Only a termination of tenancy could offer you the opportunity to restructure the leases to guarantee reduced rents or other benefits. Being strengthened with this information is essential to understand what pressure will be inside the owner.