JOLAC
2015.2.18

Land Acquisition and Compensation
for Public ProjectJapan Organization for Land Acquisition and Compensation
2015-2-18

一般財団法人 公共用地補償機構

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park

Various Public Projects
roadrailroaddamharbor2015-2-18

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§1

Process of Acquisition ofLand and Compensation

1. Meetings to explain project plans
2. Explanation of detailed plans and acquisition of lands
3. Setting up piles for site width
4. Surveying lands and examining articles

5. Calculation of the amount of compensation
6. Negotiation over the Acquisition of Land
7. Contracts
8. Payment of compensation and delivery of land
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1. Meetings to explain project plans
The project initiator hold meetings to explain the purposesof the project, outline of the plan, a time for completion, amethod of construction, etc., to land owners and theneighborhood.

2. Explanation of detailed plans and acquisitionof lands
On the basis of the designs, theproject initiator explains thedetails to the interested parties.
It also provides explanation on themethod of surveying land andexamining articles.
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43. Setting up piles for site width
In order to specify a land required for the project, theproject initiator sets up piles into the land that show
necessary extent of land for the project.

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4. Surveying lands and examining articles(1)(1) Surveying land
① Attendance to confirm the boundaries
To In surveying the boundaries,
the project initiator asks every
holder of right to the land suchas the owners of the land, theadjacent land and leaseholders
to confirm in person theboundaries.
The project initiator asks all the attendants for thesignatures and seals on the confirmation documents of land
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4. Surveying lands and examining articles(2)② Surveying the landOn the basis of the boundary piles confirmed, the project
initiator surveys the limits of the right such as leasehold
etc., in the land involved in the project according toaddress numbers and draws up a surveyed map.
The area and classification of theland subject to compensation
results from the present situation
surveyed, not from the one
recorded in the land registry.
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4. Surveying lands and examining articles(3)(2) Examination of the buildings and other articles
Buildings, structures, standing trees and others are fully
checked as to type, structure, quantity and others per
every owner.

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4. Surveying lands and examining articles(4)① Concept of building and structure
Examination and calculation of the properties in a
residential site shall be made as to (a) building, and (b)structures respectively.

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4. Surveying lands and examining articles(5)(a) Building
A building shall be considered not only thesubstructure, pillars, roofs, walls, floor,
ceilings, doors, windows and screens,
fixtures, water pipes that compose it, butalso the annexed equipments such as
electricity, water and drainage pipes,
sanitation.

(b) Structures
Equipments fixed on the land other thanbuilding are called "structures".
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4. Surveying lands and examining articles(6)② Examination of structure of the building
Buildings within the planned area forthe project shall be examined as totheirs types, structure, size and the liketo obtain basic data to calculateremoval expenses.
Structures buried in the ground such as piles of the buildingon which land SUOS are set, shall be also subject toexamination, if considered necessary.

③ Examination of structures
Structures such as a lumber room, a garage, a concrete
block wall and a signboard to be compensated shall be
examined as to types, shapes, sizes and others respectively.
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4. Surveying lands and examining articles(7)④ Examination of standing trees
Standing trees such as garden trees shall be subject toexaminations as to kinds, height, the condition of growing,numbers and others.

⑤ Examination of movable property
Movable properties, generally considered as moving parcel,
are divided into interior movables and ordinary movables
and shall be examined as to a location, address andname of the owners and others.

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4. Surveying lands and examining articles(8)⑥ Examination of residents
Residents who live in the building to be removed shall be
examined as to the address, names and others.

⑦ Examination of tenants
Tenants of a building or rooms shall be examined as torental term, area, rent, premium and others, according tocontents of the contract with the owner.
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4. Surveying lands and examining articles(9)⑧ Examination of business
People who run business shall be asked to submit the copyof final income tax return submitted to the tax office andfinancial reports in order to grasp the actual condition of
the business and give explanation of its nature of business.

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4. Surveying lands and examining articles(10)(3) Confirmation of the results of examination
After surveying the land and examining the facilities, landowner and others shall be asked to confirm that there isno error in the findings.

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5. Calculation of the amount of compensation
The amount of compensation such as price of land or
removal expenses of articles and others in connection withacquisition of land that are required for the public projects
shall be calculated appropriately and fairly on the basis of“the Standard for Compensation” decided by thegovernment.

★ Typical Items of Compensation(1)2015-2-18

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5. Calculation of the amount of compensation★ Typical Items of Compensation(2)2015-2-18

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176. Negotiations for Land Acquisition
Project initiator explains the transaction price of land andcompensation for the removal of buildings and otherstructures to the land owner and interested parties suchas leaseholder individually.

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7. Contracts
When the parties reach an agreement, project initiator
enters into contract with the land owner and the interested
parties individually.

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198. Payment of Compensation and Delivery of
the Land(1)After the conclusion of contracts, the interested parties
shall be asked to file necessary papers mentioned in thecontract and the project initiator takes responsibility toregister the transfer of the ownership.
① In the event the contracts for land without articles(a vacant lot)

After registering the transfer of ownership and deliveringof the land, compensation shall be paid in a lump.
② In the event the contracts for land with buildings and other articles

Removal of the building and other articles shall be asked
to remove by the owners.
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8. Payment of Compensation and Delivery of
the Land(2)(a) Payment in advance
After the conclusion of contract, the project initiator shall
pay a certain amount 'from the compensation according to theregulation settled by the initiator.
(b) Payment of the rest ( total amount of the compensation- payment in advance)
After removal of the building and other articles hascompleted by the owner, project initiator confirms thecompletion of removal (performance inspection) and thedelivery of land, then the remainder shall be paid.
(c) Means of payment for compensation
Compensation shall be paid through transfer to the bankaccount.
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2015-2-18§2Calculation of the amount ofcompensation

1. Compensation to land owners
2. Compensation to Leaseholder
3. Compensation to Owners of Building
4. Other Expenses caused by Removal
5. Compensation for Tenants

6. Compensation to People running Business7. Consumption Tax

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〔The difference between loss compensationand ordinary market transaction〕① Sales of detached house, etc. in ordinary market
Usually, the land and the buildings
are traded together.

Land andbuilding, etc.
are evaluated
together② Land acquisition compensation
The land and thebuildings on the land aretreated separately. As ageneral rule, forbuildings and structures,compensation is made for
their removal/transfer.
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Compensation for rights

Compensation for landCompensation forordinary loss

Compensation for removalof Building etc.

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1. Compensation to land owners(1)(1) General concept on compensation for land

① Acquisition
When surface of the land is used for a project, “land”
shall be acquired.

② Use of space or undergroundIn the event the space over the land or its underground isused for the project, SUOS and others shall be established,
and in the event the price of the land is recognized tohave declined due to undertaking the planned project theloss shall be compensated.
※ In that event, lithe surface of the land" shall be able to use as
before in general.
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1. Compensation to land owners(2)(2) Price of land (acquisition)① Price of land
The Standard for Compensation provides that “price ofland to be acquired shall be made on the basis of thenormal transaction price.”
Accordingly, for the acquisition of land, price of land shallbe calculated by focusing on the actual use (the present
land category classification), on the basis of the following
materials from (a) to (d), and shall be determined after
overall comparison and evaluation.
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1. Compensation to land owners(3)(a)Comparison with normal transaction price to the market.
(b)Official land prices and standard land prices announced
by national and local governments(c)Appraisal prices by real estate appraiser (forinformation)(d)Others (such as inspection of the spot)※ The present land category classificationrefers to the present purposes to use
land; such as "land for housing","farmland", or "mountains and forests".
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1. Compensation to land owners(4)② Compensation for remaining land
If the rest of the land acquired fora public project or “remainingland”is recognized to be sonarrow as to cause the decline inprice of land due to difficulty inusage, compensation shall be also
made to cover such loss occurredfrom the remaining land.

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1. Compensation to land owners(5)(3) Use of overhead space and underground(SUOS)

For the use of the overhead orunderground space of the land,compensation shall be calculated
multiplying the normal transaction
price of the land a ratio duly
determined according to the degree of
disturbance to use the land.

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2. Compensation to Leaseholder
In the event leasehold is established, the land owner andleaseholder are asked to decide mutually the apportion of
the rights on the land , then compensation for land shallbe calculated according to the apportion decided, andcontracts shall be made individually.

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3. Compensation to Owners of Building(1)① Compensation for removal of buildings
When there is a building on theland recognized to remove, themethod of the removal isdetermined after considering
the construction, uses andother conditions of the building,the necessary expenses shall becalculated and compensated.
Typical methods to remove
buildings are “rebuilding
method”, “towing method”
and “conversion method”.
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3. Compensation to Owners of Building(2)★ Standard service lives of wooden buildings
Usually an ordinary wooden residence is considered to have
48 years service life, which is the same as the buildings built
to Housing Loan Corporation’s standard.
Class

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Building durability level

Service life

１

Temporary housing

20 years

２

Public housing

35 years３

Housing Loan Corporation’s
standard

48 years

４

Superior-quality housing

60 years

５

Prime-quality housing

70 years

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3. Compensation to Owners of Building(3)★ Standard service lives of non-wooden buildings

RC, SRC

Steelframe(wallthickness:more than
9mm)

Brick,CB andstonebuilt

Steelframe(wallthickness:
9～4mm)

Steelframe(wallthickness:less than
4mm)
Light
gauge
steel

１

Factory or warehouse (wherechlorine, hydrochloric acid andother corrosive liquid/gas are
used)

40
years

40
years

35
years

35
years

30
years

２

Factory or warehouse（general）,
market and other similar use

65
years

60
years

55
years

50
years

45
years

３

Inn, hotel, department store,
theater, restaurant or othersimilar use

80
years

70
years

65
years

60
years

50
years

４

Office, residence, apartment,
store, hospital, school or othersimilar use

90
years

80
years

70
years

60
years

55
years

Class

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Use of building

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3. Compensation to Owners of Building(4)Estimatedreconstruction
cost
100％

Reconstruction
compensation
rate line

Investment period(0.8n/N)

50.4％

Remaining
value
20％

Present value

Loss of profit
frominvestment

Value adjustment

0％
Spent service life (n)2015-2-18

Remaining service life
(N-n)

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Service life(N)33

3. Compensation to Owners of Building(5)② Compensation for removal of structures
With regard to structures such as the door of a gate, afence, a lumber room, concrete-covered ground or steps
and others, necessary expenses for the removal shall becalculated and compensated.

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3. Compensation to Owners of Building(6)③ Compensation for Standing Trees
Calculation methods of standing trees vary to the use or
kinds of the trees. For some sort of garden trees, thenecessary expenses for transplantation (digging up,
transport, planting and others) shall be usually calculated
and compensated.
For other sorts of standing trees, the necessary expenses
for cutting down (cutting down, transport and others)
shall be usually calculated and compensated.
※ Purposes to use standing trees
include garden trees (for ornamental
purpose), standing trees in forest(goods), harvesting trees and others.
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4. Other Expenses caused by Removal(1)① Removal Movable Property
Movable properties involved in the removal of building(furniture and household effects, goods, materials andothers) shall be compensated with the necessary expenses
for packing, transport and others.

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4. Other Expenses caused by Removal(2)② Miscellaneous Expenses on Moving
For expenses supposed to be paid for the removal ofbuildings and others, “expenses to look for new place”,“necessary expenses for legal procedures such as
notification for removal of house”, “expenses to givenotice to acquaintances the move” and others shall becompensated.

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5. Compensation for Tenants
If it is extremely difficult for the tenants to continueleasing building from the current lessor due to theremoval of the building, ordinarily necessary expenses torent the same level of building as tenants have lived inshall be compensated. (for instance, removal expenses ofmovable properties, miscellaneous expenses on moving,premium and others)

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6. Compensation to People running Business(1)
If there is reason to believe that a business is required tosuspend its operation temporarily due to the removal of
the store, the following losses shall be calculated andcompensated.
★ loss of earnings during the periodrequiring the suspension (loss of income
for self-employment)★ necessary expenses incurred bybusiness assets during the periodrequiring suspension, including taxes andpublic charges on business properties.
★ suspension allowance for the employees
during the period requiring suspension
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6. Compensation to People running Business(2)① Loss of earnings during suspension period.
② Necessary expenses incurred by business assets during suspension
period, including taxes and public charges on business properties.
③ Suspension allowance for the employees during suspension period.
④ Loss caused by temporary loss of customers.

Interval of the business
Sales
④
①

②
③
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Closing

Reopening
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Time
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7. Consumption Tax
In the event the compensation for land acquired for the
public project is paid to individuals (excluding
entrepreneurs) asked to remove from the land, project
initiator bears a sum equivalent to the consumption tax andlocal consumption tax put on compensation due to theremoval, the removing person shall be compensated withtaxable compensation multiplied by the sum equivalent to therate of the consumption taxes.
For a judicial person in business, the compensation shall beappropriately dealt with after the confirmation of the stateof its accounting concerning consumption taxes.
April 1, 2014

～ March 31, 2014５％

～ September 30, 2015８％

October 1, 2015 ～2015-2-18

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§3

Tax imposed on Compensation

1. Preferential treatments concerning taxation forowners in cooperation with public project

2. Procedure resorting to preferential treatments
3. Preference treatment for the offeror of substitutive
land

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Japan Organization for Land Acquisition and Compensation421. Preferential treatments concerning taxation forowners in cooperation with public project
The owner delivered the land for public project preferential
treatments under the Special Taxation Measures Law shallbe entitled as follows. However, (a) below is limited to thecase that the contract has closed within six months after the
project initiator offered the purchase.
(a)The owner is entitled to apply “aspecial deduction of 50 millions yen”.
(b) In the event the owner acquires
property as the substitute of delivered
estate, the owner shall be entitled tobe applied to “preference treatmentsof taxation for acquisition ofsubstitutive property”.
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2. Procedure resorting to preferential treatments
To be entitled to preferential treatments, the compensatedowner has to submit to the competent tax office of theplace of tax payment a declaration of final income tax
return described the will to apply to the special treatments
attached with “certificate of offer to purchase andothers” and “certificate of purchase and others”.

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3. Preference treatment for the offeror of
substitutive land(1)A land owner who offers the substitutive land for theacquired land for the project shall be also entitled topreferential tax treatment under the Special Taxation
Measures Law.
In the event the original owner of the land acquired for the
project, the offeror of substitutive land and the project
initiator enter into contract (tripartite contract), the offerorof substitutive land shall be entitled to a special deductionof 15 millions yen to the maximum.

To be entitled to the preference, the project initiator mustnegotiate on the treatment with the tax officer in advance.
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3. Preference treatment for the offeror of
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