Securing Inherited Assets in Japan: What are the New "Perfection Requirements" for Asserting Rights to Inherited Property Against Third Parties?

Japanese Attorney at Law - Bengoshi L.L.

31 May 2025 • 9 min read

When an individual in Japan passes away leaving multiple heirs, the co-inherited estate can present complexities, particularly when it comes to how those heirs can definitively assert their rights to specific assets against third parties, such as purchasers or creditors. Historically, there were areas of uncertainty regarding what steps an heir needed to take to protect their share, especially if their entitlement, as determined by a will or an estate division agreement, differed from their basic statutory inheritance share.

To address these issues and enhance transactional safety, a new provision, Article 899-2, was introduced into the Japanese Civil Code, effective from July 1, 2019. This article clarifies the "perfection requirements" (対抗要件 - taikō yōken) necessary for heirs to secure their rights to inherited property, particularly concerning portions that exceed their fundamental statutory entitlements.

The Pre-Reform Landscape: Uncertainty for Heirs and Third Parties

Before the introduction of Article 899-2, the legal landscape concerning the assertion of inherited rights against third parties was not always straightforward:

Real Estate and Statutory Shares: For inherited real estate, while registration in the property registry (登記 - tōki) is the standard method of perfecting rights, case law created nuances. For instance, a Supreme Court decision on February 22, 1963 (Showa 38.2.22, Minshu 17-1-235) suggested that an heir could assert their statutory inheritance share (法定相続分 - hōtei sōzokubun) against a third party who had acquired another co-heir's share and registered it, even if the first heir had not registered their own statutory share.
"Sōzoku Saseru" Wills: A particularly significant area of uncertainty involved wills using the "相続させる" (sōzoku saseru – "to cause to inherit") phrasing, which typically designate specific assets to specific heirs. The Supreme Court, in a ruling on June 10, 2002 (Heisei 14.6.10, Kin'yu Homu Jijo 1660-35), held that an heir designated by such a will could assert their right to the specified real estate against third parties without needing to register the inheritance. This created a notable discrepancy between the actual legal ownership as per the will and the information available in the public property register, posing risks for third parties who might rely on the register. This situation could harm the reliability of the real estate registration system and lead to unforeseen losses for those who trusted in the statutory share reflected (or not contradicted) by the registry.
Inherited Claims: For inherited claims (like debts owed to the deceased), older legal precedents sometimes treated them as being automatically divided among heirs according to their statutory shares upon the commencement of inheritance. However, this could also lead to complexities, for example, when a will specified a different allocation or when the debtor was unsure which heir to pay.

These ambiguities could undermine the predictability and security of transactions involving inherited assets. Article 899-2 was introduced to bring greater clarity and to align the rules for inherited property more closely with general principles of property law, where perfection is key to third-party effectiveness.

The central tenet of the new Article 899-2, Paragraph 1, is that an heir cannot assert their rights to an inherited asset against a third party, with respect to the portion of that right which exceeds their statutory inheritance share, unless the appropriate perfection requirement for that type of asset is met.

Key Elements of this Rule:

Universal Application: This rule applies regardless of how the heir's specific entitlement (exceeding their statutory share) was established – whether through:
- A will (e.g., a specific bequest, a sōzoku saseru provision allocating more than the statutory share, or a testamentary designation of inheritance shares different from statutory ones).
- An estate division agreement (遺産分割協議 - isan bunkatsu kyōgi) among co-heirs.
The "Statutory Share vs. Excess Portion" Distinction: An heir can generally assert their basic, unadorned statutory share of an inherited asset against a third party (who has not perfected a conflicting right) without needing to undertake specific perfection measures beyond the fact of inheritance itself. However, if, through a will or a formal estate division, an heir becomes entitled to more than this fundamental statutory share of a particular asset (e.g., full ownership of a property when their statutory share was only one-half), it is this excess portion that requires perfection to be opposable to third parties. The rationale is that while the statutory share arises automatically from the status of being an heir, any deviation or specific allocation beyond that is a result of a further legal act (the will or the division agreement) which should be made known to the world to bind third parties.
Types of Perfection Requirements (対抗要件 - taikō yōken): The specific perfection method depends on the nature of the asset:
- Real Estate: Registration (登記 - tōki) of the heir's specific inherited share or full ownership in the official land and building registry.
- Movable Property: Delivery (引渡し - hikiwatashi) of the asset to the heir.
- Nominative Claims (e.g., monetary loans owed to the deceased, bank deposits): Notice to the debtor by the heir(s) or acknowledgment by the debtor, in accordance with Civil Code Article 467.
- Other Assets: Specific perfection methods prescribed by other laws (e.g., registration of transfer in the shareholder registry for company shares, registration for intellectual property rights).
Rationale: The primary goal is to protect third parties who might transact based on the apparent state of affairs, such as the information in public registries or the presumed statutory shares of heirs. It compels heirs to promptly clarify and formally record their specific entitlements if they wish those entitlements (especially those exceeding the baseline statutory share) to be robust against subsequent third-party claims. This aligns inheritance outcomes more closely with the broader principles of property law that prioritize publicity and certainty in transactions.

This rule effectively modified the previous judicial stance where rights derived from sōzoku saseru wills for real estate could be asserted against third parties without registration for the portion going beyond the statutory share. Now, for that excess portion, registration is necessary for third-party opposability.

Special Rule for Inherited Claims (債権 - Saiken): Simplified Notification by a Single Heir (Article 899-2(2))

When an inherited claim (such as a loan receivable by the deceased or a bank deposit) is specifically allocated to one or more co-heirs in a proportion that exceeds their individual statutory shares, a practical challenge arose under the old law. To perfect this specific allocation against the debtor, notice to the debtor would traditionally require the involvement of all co-heirs (as successors to the original creditor, the deceased). If some co-heirs were uncooperative, the heir(s) entitled to the larger share of the claim could face difficulties in formally securing their right vis-à-vis the debtor.

Article 899-2, Paragraph 2, provides a solution to this problem:

Unilateral Notification with Clarification: If a co-heir (or co-heirs) has succeeded to a monetary claim against a debtor in a proportion greater than their statutory share, either due to a provision in a will or as a result of an estate division agreement, that heir can perfect their right to this excess portion against the debtor by unilaterally giving notice to the debtor.
Content of the Notice: This notice is not just a simple statement of succession. It must "clarify the contents of the will or the estate division" that establishes the heir's entitlement to the specific (and potentially larger) share of the claim. In practice, this generally means the heir must present to the debtor objective documentary evidence supporting their claim, such as the original (or a certified copy) of the will or the formal estate division agreement. Merely orally stating the contents is usually insufficient; the debtor needs a reliable basis to recognize the specific allocation.
Deemed Notification by All Co-Heirs: When such a properly detailed notice is given by the entitled heir to the debtor, the law deems it as if all co-heirs had jointly given the notice. This allows the heir who is specifically entitled to the claim (or a larger portion of it) to effectively secure their position with the debtor without needing the active participation of other, potentially indifferent or uncooperative, co-heirs.
Perfection Against Other Third Parties (e.g., other creditors): While this simplified notification perfects the heir's right against the debtor of the inherited claim, if the heir wishes to assert their priority to this claim against other third parties (e.g., a creditor of another co-heir who might try to attach that other co-heir's presumed statutory share of the claim), the notice given to the debtor must also satisfy the requirements of Civil Code Article 467(2). This typically means the notice must be embodied in an instrument bearing a certified date (確定日付ある証書 - kakutei hizuke aru shōsho), such as a notice sent by content-certified mail. Article 899-2(2) facilitates the debtor relationship; it doesn't automatically grant this broader third-party perfection for the claim itself unless the notice meets these additional formal requirements.

Scope Considerations: Legacies vs. Inheritance

It's important to note that Article 899-2 specifically applies to the "succession to rights by inheritance (相続 - sōzoku)." This generally means rights that pass to statutory heirs or heirs designated by will to receive a portion of the estate or specific assets as an inheritance share or through a sōzoku saseru clause.

Specific legacies (特定遺贈 - tokutei izō), where a testator bequeaths a particular item to a named individual (who may or may not be an heir), are generally treated as specific successions (特定承継 - tokutei shōkei). The perfection of rights under such specific legacies (e.g., registering title to real estate bequeathed to a non-heir legatee) is typically governed by the general Civil Code provisions on property transfer and their respective perfection requirements (e.g., Article 177 for real estate, Article 178 for movables, Article 467 for claims) directly, rather than by Article 899-2.

Impact on Various Asset Types

The practical application of Article 899-2 varies depending on the asset:

Real Estate: For any share of real estate an heir acquires beyond their statutory proportion (e.g., full ownership via a sōzoku saseru will when their statutory share was one-half), registration of that specific inherited right in the property registry is now crucial to assert that excess portion against third parties.
Bank Deposits: While the 2016 Supreme Court ruling confirmed that bank deposits are subject to estate division, Article 899-2 would be relevant if, for example, a will or estate division allocates a particular bank account (or a share of it exceeding the statutory portion) to a specific heir. That heir would need to follow the notification rules (potentially using Article 899-2(2)) to secure their specific right to those funds, especially if facing claims from, say, a creditor of another co-heir who attempts to attach what appears to be that other co-heir's statutory share of the deposit.
Company Shares: If an heir inherits company shares in a quantity exceeding their statutory fraction, perfection of this larger holding (e.g., by having the share transfer recorded in the company's shareholder registry, or other methods depending on the type of shares) would be necessary to assert that full holding against third parties.

Transitional Application

The new rules under Article 899-2 also have a transitional application. According to Article 3 of the Supplementary Provisions of the amending act, Article 899-2 applies even to inheritances that commenced before its effective date of July 1, 2019, if the act of perfection (such as the notification to a debtor concerning an inherited claim obtained through an estate division) occurs on or after this effective date. This means, for example, that the simplified notification procedure for inherited claims under Article 899-2(2) can be utilized for estates where death occurred prior to July 2019, provided the actual notification to the debtor is made under the new rules.

The Importance for Transactional Safety

The introduction of Article 899-2 is a significant step towards enhancing the safety and predictability of transactions involving inherited assets in Japan.

It provides greater clarity for third parties (purchasers, lenders, creditors) when dealing with heirs, as they can now more reliably ascertain the extent to which an heir's claimed rights are perfected and opposable.
It reduces the risk that a transaction made in good faith, based on an heir's apparent (e.g., statutory) share, could later be upset by an unpublicized will or estate division agreement granting a larger share to another heir.
By requiring heirs to take positive steps to perfect rights that deviate from the baseline statutory shares, the law encourages a more prompt and formal clarification of entitlements, which benefits the overall stability of property rights.
It brings the treatment of inherited property rights more into line with general principles of property law, where public notice (like registration) and formal perfection are fundamental for establishing rights against the wider world.

Conclusion

Article 899-2 of the Japanese Civil Code represents a crucial modernization of the rules governing how heirs secure their rights to inherited property against third parties. The core principle—that rights to inherited assets exceeding an heir's statutory share must be formally perfected (e.g., through registration for real estate or proper notification for claims) to be asserted against third parties—introduces a much-needed level of clarity and predictability. The special simplified notification rule for inherited claims further facilitates the process for heirs in specific common scenarios. While heirs now have a clearer roadmap, they also have a greater responsibility to actively perfect their specific entitlements if they wish them to be fully effective against all potential third-party claimants. These changes ultimately contribute to a more secure and transparent environment for transactions involving inherited assets in Japan.