Japan’s Land Ministry is planning to introduce new legislation next year aimed at preventing condominium owners from entering into overpriced repair and cleaning contracts.
The proposed law revision would require companies managing condominium associations to seek approval from the associations’ general meetings before engaging their affiliated companies to carry out maintenance and cleaning work.
To enforce this rule, the ministry intends to impose penalties on companies found in violation, with a potential system that increases penalties with each infraction. Initial violations could result in guidance, followed by business suspension, and eventually cancellation of the company’s registration as a condo management business.
Typically, condominium boards, made up of unit owners, decide which company to hire for repairs and cleaning, as well as the budget for these services. However, in recent years, more boards have delegated the entire process to condo management companies to lessen their workload.
The ministry has recognized the need for safeguards to prevent conflicts of interest. If a management company and its affiliated repair or cleaning company are the same, it could lead to decisions based on profit rather than securing the best value for unit owners.
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