Building in Stages: How "Skeleton-Infill" Condominiums Are Registered in Japan, Especially with Incomplete Units

The "skeleton-infill" housing model represents a modern approach to condominium development in Japan, offering homebuyers greater flexibility and customization. In this model, the developer constructs the building's structural frame, exterior, and common areas (the "skeleton"), and then individual unit buyers purchase this structural shell and subsequently commission their own interior fit-out, including walls, flooring, fixtures, and equipment (the "infill"). While this allows for personalized living spaces, it can create a unique challenge for Japan's property registration system, which traditionally favors the simultaneous, or "en-bloc," registration of all units in a newly constructed condominium building. What happens when some units have their infill completed while others remain in a skeleton state at the time of intended registration? This article explores how Japanese law and registration practice accommodate this innovative housing type.

The Skeleton-Infill Housing Model: Customization Meets a Registration Conundrum

The skeleton-infill approach (スケルトン・インフィル住宅 - sukeruton infiru jūtaku) offers several advantages, including the potential for highly customized interior layouts tailored to individual lifestyles, the use of durable, long-life structural skeletons, and easier future renovations as infill components can be modified without major structural work.

However, this flexibility in completion timelines presented a dilemma for the property registration process. Article 48, Paragraph 1 of Japan's Real Property Registration Act (RPRA) generally mandates that when a new building comprising multiple condominium units is constructed, the initial title registration (表示登記 - hyōji tōki, which establishes the building's physical description on the register) for any one exclusive part (専有部分 - sen'yū bubun, i.e., a unit) must be made "together with" (と共に - to tomo ni) the applications for all other exclusive parts within that same building. This "en-bloc application" (一括申請 - ikkatsu shinsei) principle is designed to ensure that the entire condominium complex—including all individual units and common areas—is comprehensively and consistently recorded from its inception. A strict application of this rule to skeleton-infill projects could mean that the registration of all units, even those fully completed, would be delayed until the very last unit had its infill finalized, potentially hindering sales, financing, and occupancy.

The Heisei 14 (2002) Solution: Enabling Registration with Incomplete Units

Recognizing the need to facilitate this innovative and increasingly popular housing model, Japanese authorities provided crucial clarification. An administrative response from the Ministry of Justice Civil Affairs Bureau, relayed via Minji-Ni No. 2474, dated October 18, 2002, addressed an inquiry from the Ministry of Land, Infrastructure, Transport and Tourism (MLIT). This directive aimed to promote the supply of skeleton-infill housing by confirming how such properties could be registered.

The core ruling was a pragmatic one: it is permissible to apply for the display registration of an entire condominium building even if some individual units within it are still in a "skeleton state" (i.e., their interior infill work is not yet complete). This was a significant step, allowing the registration process to proceed for the building as a whole, accommodating the staggered completion inherent in the skeleton-infill model. However, this permission is contingent upon meeting certain conditions and providing specific supporting documentation.

Describing Unit "Type" (種類 - Shurui) in Skeleton-Infill Registrations

A key aspect of the 2002 directive was how to accurately describe the "type" of these units in the property register, given their varying states of completion at the time of initial registration:

1. Infill-Completed Units: Units where the interior fit-out has been fully completed by the owner are registered with their final intended type, which for residential condominiums is typically "Residence" (居宅 - kyotaku). This follows standard building classification rules.
2. Skeleton-State (Infill-Unfinished) Units: For units where the infill work is not yet complete at the time of the en-bloc registration, a special designation was approved: "Residence (Interior Unfinished)" (居宅（未内装）- kyotaku (mi-naisō)).
   To use this "Interior Unfinished" designation, it's not enough for the unit to simply be an empty shell. The registration application must provide evidence demonstrating that:
   • The overall "skeleton" of the building, including its common areas and structural integrity, is complete.
   • Other units within the same building (those with completed infill) are in a finished, habitable state.
   • The skeleton-state unit is indeed planned and intended to become a residence once its specific infill is installed by its owner. This future intent and current status are typically proven by the set of supporting documents detailed below.

Essential Supporting Documentation for "Residence (Interior Unfinished)" Units

The 2002 MLIT inquiry, the principles of which were accepted by the Ministry of Justice, outlined a specific suite of documents generally required to justify the "居宅（未内装）" classification for skeleton-state units and to enable the overall en-bloc registration of the building. These documents aim to provide the registrar with assurance about the nature of the project and the intended use of all its parts:

• A. Building Permit Application and Confirmation Notice (建築確認申請書及び同通知書 - Kenchiku Kakunin Shinseisho oyobi dō Tsūchisho): These are foundational documents issued under Japan's Building Standards Act (建築基準法 - Kenchiku Kijunhō). For a skeleton-infill project, these documents (covering the entire building) should ideally indicate that the intended overall use of the building, including those parts that will initially be skeleton-state units, is for "multi-family dwelling" (共同住宅 - kyōdō jūtaku) or an equivalent residential purpose. This establishes the planned residential nature from the outset.
• B. Provisional Use Approval Application (仮使用承認申請書 - Kari Shiyō Shōnin Shinseisho): Article 7-6 of the Building Standards Act allows for completed portions of a building to be lawfully used before the entire project (including all infill in all units) receives its final completion certificate. Developers of skeleton-infill projects often apply for this "provisional use approval" for the already completed common areas and the units whose infill is finished. The application for such approval should ideally also reference the units remaining in a skeleton state and acknowledge their intended future residential use upon completion of their individual infills.
• C. Provisional Use Approval Notice (仮使用承認通知書 - Kari Shiyō Shōnin Tsūchisho): This is the official notice from the building authorities granting provisional use for the completed (non-skeleton) parts of the building. It serves as evidence that the building's main structure and common areas are considered safe and compliant for at least partial occupancy, which supports the registrability of the entire building.
• D. Construction Completion and Handover Certificate (工事完了引渡証明書 - Kōji Kanryō Hikiwatashi Shōmeisho): This certificate, typically issued by the developer or main construction contractor, confirms the completion of the building's "skeleton" structure and common areas. Crucially, for skeleton-infill projects, it should also specifically list or identify those exclusive parts (units) that are being handed over to their respective buyers in a skeleton (infill-uncompleted) state.

This collection of documents provides a comprehensive picture to the registrar, verifying that the skeleton-state units are not abandoned or indefinitely unfinished spaces but are integral components of a planned residential condominium development, awaiting their final, individualized interior completion.

Implications for Taxation and Tax Incentives

The "居宅（未内装）" (Residence (Interior Unfinished)) designation carries specific implications, particularly concerning taxation:

• Registration and License Tax (登録免許税 - Tōroku Menkyozei): This tax is levied upon the registration of real property rights, such as ownership preservation (所有権保存登記 - shoyūken hozon tōki) or ownership transfer. The tax amount is typically based on the property's assessed value. For a unit registered as "居宅（未内装）," if it does not yet have an officially registered assessed value on the fixed asset tax rolls (固定資産課税台帳 - kotei shisan kazei daichō), its taxable value for calculating this tax is determined by analogy. The 2002 directive indicated that its value would be assessed as if it were a "Warehouse" (倉庫 - sōko). This analogous valuation likely reflects the fact that a bare skeleton unit, lacking interior finishes and residential amenities, has a current utility and market value more akin to basic enclosed storage space than a completed dwelling.
• Eligibility for Residential Property Tax Incentives: Japan offers various tax incentives and reductions related to the acquisition and ownership of residential property, often under the Special Taxation Measures Act (租税特別措置法 - Sozei Tokubetsu Sochi Hō). Eligibility for these housing-related tax breaks typically requires that the property be formally acquired as a residence and, critically, be used for residential purposes.
  According to the understanding outlined in the 2002 directive, a unit registered with the type "居宅（未内装）" would generally not immediately qualify for these residential tax incentives. To become eligible, the owner would typically need to undertake the following steps:
  1. Complete the interior infill work, transforming the skeleton unit into a habitable dwelling.
  2. File a "change registration of description" (表示の変更登記 - hyōji no henkō tōki) with the Legal Affairs Bureau to formally change the unit's registered type from "居宅（未内装）" to "居宅" (Residence). This requires submitting evidence of the completed infill work.
  3. Once the type is officially changed to "居宅," the ownership preservation or transfer registration (if already made on the "未内装" basis, its tax implications might be re-evaluated or a new application for incentives made) would reflect its status as a completed residence.
     Only after these steps are taken, confirming its completion and use as a proper residence, would the unit typically qualify for the housing-related tax incentives.

The Path to "Completed Residence" Status in the Register

For the owner of a unit initially registered as "居宅（未内装）," the journey to full "居宅" status involves a subsequent registration process. After completing the infill work to their specifications, making the unit fully habitable:

1. The owner must apply for a change registration of the building's description to update the unit's registered type from "Residence (Interior Unfinished)" to "Residence."
2. This application would typically require:
   • Evidence of the completed infill construction (e.g., a certificate of completion from the infill contractor, detailed invoices, photographs of the finished interior).
   • Updated floor plans for the unit if the final internal layout differs from any preliminary plans associated with the skeleton or common area plans.
   • Potentially, a new inspection or certification under the Building Standards Act confirming that the completed unit, with its infill, meets all applicable codes for residential use.

Conclusion: Balancing Innovation with Regulatory Integrity

The 2002 directive addressing skeleton-infill condominiums represents a significant adaptation of Japan's property registration system to modern housing trends. It provides a crucial pathway for the timely en-bloc registration of such projects, accommodating their inherent staggered completion schedules for individual unit interiors. By allowing units to be initially registered as "Residence (Interior Unfinished)" when supported by appropriate documentation, developers and initial buyers can proceed with legal formalities and handovers without waiting for every single unit's custom infill to be finalized.

However, it's essential for buyers of skeleton units to understand the implications of this initial registration status, particularly concerning tax valuation and eligibility for residential tax incentives. A subsequent change registration to "Residence" after infill completion is a necessary step to fully reflect the property's final, habitable state on the public record and to unlock certain benefits. This framework carefully balances the promotion of flexible and customizable housing models with the enduring need for an accurate, informative, and legally sound property register.