Court reverses ruling on housing renewal fees

The Osaka High Court has ordered the landlord of an apartment building in Kyoto to return lease renewal fees paid by a former tenant, reversing a lower court decision.

In the lawsuit, the 54-year-old male company employee of Kyoto had asked the landlord to return about 550,000 yen, claiming he had paid the money according to a clause in his rental contract that he now believed violated the consumer contract law.

In Thursday’s ruling, presiding Judge Kitaru Narita stated that the clause unilaterally undermines the interests of consumers and therefore is void under the consumer contract law.

The judge ordered the landlord to return about 450,000 yen to the man.

The ruling reversed a Kyoto District Court decision given in January last year dismissing the man’s request that the money be returned.

The landlord plans to appeal.

Four similar rulings over renewal fees have so far been handed down at district courts in Tokyo, Kyoto and other places.

While tenants lost in three of the four rulings, the Kyoto District Court in July became the first district court to rule in favor of a tenant in the cases.

Thursday’s ruling was the first of its kind given by a high court.

According to the ruling, the man signed a contract in 2000 to pay 45,000 yen in monthly rent and an annual renewal fee of 100,000 yen.

He paid the renewal fees five times until August 2005, and he moved out in November 2006. He filed the lawsuit in 2007.

The first ruling regarded the fees as advance rental payments. However, the judge at the high court said the amount was unreasonably high for an advance payment.

The judge also said the Land and House Lease Law stipulates that landlords cannot refuse to renew a contract without sufficient cause, but that the landlord had demanded the tenant pay the contract renewal fees without any explanation.

The judge further said it could be presumed the landlord had given the tenant the impression that his monthly payment was low by collecting renewal fees, leading him to renew the contracts.

The judge then ordered the landlord to reimburse the total amount of the renewal fees the tenant had paid since the revised consumer contract law was put into effect in 2001, as well as a deposit he paid when he first entered the apartment after deducting his unpaid rent from it.