Reshaping Real Estate: Understanding Building "Division," "Partitioning," and "Merger" in Japanese Property Registration

Japanese Attorney at Law - Bengoshi L.L.

• 9 min read

The Japanese property registration system provides distinct legal pathways for altering the registered configuration of buildings. These processes—"division" (分割 - bunkatsu), "partitioning" (区分 - kubun), and "merger" (合併 - gappei)—are not interchangeable. Each serves a unique purpose in subdividing or consolidating the legal status of building units, and each has specific requirements, procedures, and implications for existing property rights. Understanding these distinctions is crucial for property owners, developers, and legal professionals navigating changes to building structures or their legal definitions in Japan.

1. Building Division (建物の分割 - Tatemono no Bunkatsu): Carving Out an Independent Unit

Definition and Purpose:
Building division is the legal process of separating a registered accessory building (附属建物 - fuzoku tatemono) from its main building (主たる建物 - shutaru tatemono) to create a new, independent registration record for that former annex. Once divided, the former accessory building becomes a standalone legal entity, capable of being independently sold, mortgaged, or otherwise transacted. This differs from merely physically separating structures; it's a formal change in the legal constitution of the registered property units.

Triggering Scenario:
This procedure is typically invoked when an owner wishes to dispose of or separately encumber an accessory building that was previously registered as a single unit together with a main building. For example, a homeowner might want to sell a detached guesthouse or workshop that sits on their property but is currently registered as an annex to their main residence.

Foundational Precedent (Meiji 34 [1901]):
The principle that an accessory building requires formal division before separate transfer was established early on. A directive from the Director of the Civil and Criminal Affairs Bureau of the Ministry of Justice on June 27, 1901 (Meiji 34, Min-Kei No. 643), clarified that an accessory building, being legally part of the main building unit when registered together, could not be independently transferred unless it first underwent a "division registration" (bunkatsu no tōki) to establish it as a legally separate building.

Legal Nature:
Building division is considered a "creative registration" (創設的登記 - sōsetsu-teki tōki). This means the act of registration itself legally brings into existence a new, distinct building unit from what was previously a component of another. It fundamentally alters the count and definition of registered building units.

Registration Procedure (under current Real Property Registration Rules, e.g., Rule 127):

  1. Application: The owner of the main building (which includes the annex to be divided) applies for the division.
  2. Creation of New Record: The registrar creates a new, separate registration record for the building being divided off (the former annex). This new record will have its own unique house number (家屋番号 - kaoku bangō).
  3. Notations on Records:
    • The heading section (表題部 - hyōdai-bu) of the new record for the divided building will include a notation such as "Divided from House No. X" (家屋番号X番から分割 - kaoku bangō X-ban kara bunkatsu), referencing the house number of the original main building.
    • The heading section of the original main building's record is amended. A notation is made, such as "Divided into House No. Y" (家屋番号Y番に分割 - kaoku bangō Y-ban ni bunkatsu), referencing the new house number of the now-independent former annex. The original description of the accessory building within the main building's record is then struck out or otherwise marked as divided and removed.
  4. Accompanying Documents: The application typically requires updated building plans (建物図面 - tatemono zumen) and floor plans (各階平面図 - kakkai heimenzu) for both the (now smaller) main building and the newly independent divided building.

Handling of Existing Rights:
A critical consideration is how existing rights, such as a mortgage that encumbered the original single building unit (main + annex), are treated. The mortgage would have covered the annex as part of that unit. Upon division, the scope of the mortgage needs clarification. This might involve:

  • A partial release of the mortgage by the mortgagee with respect to the newly independent annex.
  • An agreement for the mortgage to continue encumbering both the main building and the now-separate annex (if the terms allow and relevant procedures under rules like RPRA Rule 128 for transfer of rights to divided buildings are followed).
    This area requires careful attention and often negotiation with lenders to ensure all parties' rights are properly addressed in the registry.

2. Building Partitioning (建物の区分 - Tatemono no Kubun): Creating Condominium Units

Definition and Purpose:
Building partitioning is the legal process of dividing a single, existing non-condominium building (一棟の建物 - ittō no tatemono) into multiple distinct condominium units (区分建物 - kubun tatemono). Each newly created unit becomes capable of separate ownership, registration, sale, and mortgage under Japan's Condominium Ownership Act (建物の区分所有等に関する法律 - Tatemono no Kubun Shoyū tō ni Kansuru Hōritsu). This is fundamentally different from division, as it involves creating horizontally or vertically stacked, independently usable spaces within the envelope of what was previously a single, unified building.

Triggering Scenario:
This procedure is often employed when an owner wishes to convert a building previously used as a single entity (e.g., a rental apartment building, an office building) into individual units for sale. It can also apply, conceptually, to new constructions that are completed as a single shell and then internally partitioned into condominium units before their first registration as such. Precedent 49 in the source PDF specifically refers to partitioning an existing single building.

Requirements for Created Units:
Each part intended to become a separate condominium unit must satisfy the legal requirements for such units, primarily "structural independence" (構造上の独立性 - kōzōjō no dokuritsusei) and "functional independence" (利用上の独立性 - riyōjō no dokuritsusei) as defined in the Condominium Ownership Act (Article 1).

Registration Procedure (under current RPRA Rules 129, 130):

  1. Application: The owner of the building being partitioned applies for the partitioning.
  2. Creation of New Records: The registrar undertakes a significant restructuring of the registration:
    • A new registration record is created for the entire building as a condominium complex. This record includes a heading section for the entire building (一棟の建物の表題部 - ittō no tatemono no hyōdaibu), detailing its overall characteristics.
    • Separate new registration records are created for each individual condominium unit resulting from the partitioning. Each unit receives its own distinct house number.
  3. Closure of Original Record: The original registration record for the single, non-condominium building is formally closed. Its heading section is amended with a notation indicating that it has been partitioned into specified new house numbers (for the units) and that new records have been created.
  4. Transfer of Rights (移記 - Iki): Any rights (such as ownership, existing mortgages, leases) that were registered on the original single building are transcribed by the registrar to the corresponding sections of the newly created registration records for each individual condominium unit. The allocation of a mortgage that previously covered the entire building onto the newly formed individual units requires careful handling, often guided by the terms of the mortgage, agreements with the lender, and relevant legal principles concerning common elements and site rights.
  5. Registration of Common Elements (共用部分 - Kyōyō Bubun): The partitioning process also involves identifying and potentially registering common elements of the condominium complex (e.g., hallways, staircases, building systems) in accordance with the Condominium Ownership Act.

Historical Context (Showa 46 [1971] Minji-Ko No. 2073 Circular):
A circular issued on June 10, 1971, addressed a practice under older, now-superseded, legal provisions. At that time, when a building (say, Building X) was partitioned into Unit A and Unit B, the full details of existing rights might have been transcribed only to the new record for Unit A, with Unit B's record merely containing a cross-reference stating "same rights as House No. A exist". This abbreviated method caused significant practical difficulties when dealing with Unit B independently or when trying to obtain a complete certificate of registered matters for it. The 1971 circular allowed registrars to ex officio supplement these abbreviated records with the full rights details if necessary for a subsequent transaction or the issuance of a certificate. Importantly, a 1964 (Showa 39) amendment to the RPRA had already made the full transcription of rights to all new unit records the standard procedure, a practice that continues under current law.

3. Building Merger (建物の合併 - Tatemono no Gappei): Documentary Consolidation

Definition and Purpose:
Building merger is a primarily documentary process where two or more already registered, physically separate buildings are consolidated into a single registration record, provided they are owned by the same person and possess the requisite functional unity. In a typical merger, one building is designated as the "main building" and the other(s) become its "accessory building(s)" on that single, consolidated record. Crucially, gappei itself does not involve any physical construction, alteration, or combination of the buildings; they must already exist in a state that justifies their treatment as a single functional unit (e.g., a house and its existing detached garage). This clearly distinguishes merger (gappei) from amalgamation (gattai), where buildings are physically combined into a new structure.

Key Requirements for Merger:

  1. Common Ownership: All buildings to be merged must be registered under the exact same ownership.
  2. Functional Unity: The buildings must exhibit "functional unity" (kōyōjō ittai), justifying their treatment as a main building and its annex(es) (as per Junsoku Article 86, Paragraph 1).
  3. Specific Condominium Unit Merger Rule: If merging existing condominium units to form a single, larger unit within the same condominium building, those units must be contiguous (adjacent) (Junsoku Article 86, Paragraph 2).
  4. Restrictions on Encumbrances (Relaxed but Still Present): Historically, merger was heavily restricted if buildings had existing rights registered on them.
    • Old Restrictions (e.g., Showa 35 [1960] Minji-Ko No. 712 circular): Generally, buildings with almost any rights registered (other than simple ownership or certain servitudes on a servient tenement) could not be merged. This included mortgages, leases, provisional registrations of ownership, and even situations where one building had an ownership registration but another did not. Buildings forming part of a registered factory foundation (工場財団 - kōjō zaidan) also could not be merged. These strict rules severely limited the practical utility of the merger process.
    • The 1983 Reform (Showa 58 [1983] Minji-San No. 6400 Circular): A crucial circular based on amendments to the RPRA, issued on November 10, 1983, significantly relaxed these restrictions. It permitted the merger of buildings even if they were encumbered by prior rights, liens, or mortgages, provided that these specific security interest registrations were identical across all buildings being merged. "Identical" in this context means the registrations shared the same cause (登記原因 - tōki gen'in), date of that cause (その日付 - sono hizuke), purpose of registration (登記の目的 - tōki no mokuteki), and official reception number (受付番号 - uketsuke bangō). This provision also extended to provisional registrations of such identical security interests.
    • Current Law (RPRA Article 56, Rule 131): This principle of allowing merger with identical encumbrances continues today. If such identical security interests exist, the merged registration record will show that right as encumbering the entire consolidated building unit, typically with an annotation that the right now applies to the whole.

Continuing Prohibitions for Merger (RPRA Article 56):
Despite the relaxation, merger remains prohibited under several circumstances:

  • If the buildings have different registered owners.
  • If the buildings are co-owned, but the co-ownership share ratios are different across the buildings.
  • If one building has an ownership registration in the rights section (Kō-ku) and another does not (i.e., is only registered in the heading section or is entirely unregistered).
  • If non-identical security interests (other than those specifically permitted, as described above) or other types of restrictive rights (like provisional attachments) exist on only some of the buildings but not all, or are different across them.
  • If a building has a special registration indicating it's a "common element" (共用部分 - kyōyō bubun) of a condominium or a "complex common element" (団地共用部分 - danchi kyōyō bubun).

Distinguishing Division, Partitioning, Merger (and Amalgamation)

To summarize the distinctions:

  • Division (Bunkatsu): Transforms one registered building unit (main + accessory) into two or more independent building units.
  • Partitioning (Kubun): Transforms one single non-condominium building into multiple distinct condominium units within the physical shell of the original building.
  • Merger (Gappei): A documentary consolidation that transforms two or more registered building units (owned by the same person and functionally unified, e.g., a main building and a separately registered but functionally linked garage) into a single registered building unit (main + annex). No physical change to the buildings themselves occurs in a merger.
  • Amalgamation (Gattai): Involves physical construction work to combine two or more buildings into one new, physically unified structure, leading to the cancellation of old registrations and the creation of a new one for the resultant building (as discussed in a previous article).

Conclusion: Tailored Procedures for Evolving Property Configurations

The Japanese Real Property Registration Act provides a sophisticated and differentiated set of procedures—division, partitioning, and merger—to accurately reflect changes in the legal configuration and status of buildings. Building division facilitates the creation of independent legal status for what was once an accessory component. Building partitioning is the essential mechanism for creating condominium units from a single structure, enabling separate ownership and transferability. Building merger, on the other hand, offers a documentary route to consolidate functionally unified buildings under common ownership into a single registered entity, with modern rules providing much-needed flexibility for dealing with certain pre-existing identical encumbrances.

Each of these processes is distinct, serving different legal and practical objectives, and comes with its own specific set of requirements, application procedures, and implications for any existing rights attached to the properties. Navigating these procedures correctly is paramount for maintaining clear title and ensuring the smooth transaction and management of real estate assets in Japan.