Japan’s land ministry eyes bill to prevent overpriced condo repairs

Japan’s land ministry aims to submit legislation to parliament next year that would prevent condominium owners from concluding repair and cleaning contracts at prices higher than going rates.
Under an envisaged revision of related laws, companies commissioned to manage the operations of condos’ boards by associations of the unit owners will be obliged to obtain approval at the associations’ general meetings when the companies ask their group entities to perform condo repairs and cleaning work.
The ministry plans to impose supervisory penalties on companies that are found to be in violation of the rules. Also being considered is a system to toughen penalties with each violation, with the punishments starting out as guidance, then moving on to business suspension and finally to the cancellation of registration as a condo management business.
Under normal circumstances, a condo’s board members, picked from among unit owners, will consider which company they should use to order repair and cleaning work as well as deciding the budget of such work. The board then places orders with the selected company.
In recent years, however, there has been an increase in cases in which the entire process is entrusted to condo management companies in order to reduce the workload of the board.
The ministry has determined it is necessary to take measures to prevent unit owners from being put at a disadvantage, given that a management company may face a conflict of interest between its own profit and the clients’ benefit achieved through cost cuts if it and the company given the job of cleaning and repair are within the same group.