Brochure on
Land Acquisition andCompensation
for Public ProjectJapan Organization for Land Acquisition and Compensation

park

Various Public Projects
dam

IntroductionThe

purpose

of

this
road

brochure is to provide landownersandotherswho

hand over their land or haveto remove their house oroﬃce that are required forthe public project with someoutlines of the procedures
to be followed to acquireland, the concepts to be
based on to calculate priceof land or removal costs ofthe buildings and other articles, or loss in business, andof the tax on compensationin general.

harbor2

river

subwayrailroadTypical Items ofCompensation

price of landnormal transaction priceCompensation for landremovalleaseholder

ownerprice of ownership interest(ground interest)
price of leasehold interest

Compensation for leaseholders

Compensation for removal
expenses of buildings

transplantation

et
re
G ard
c

g
in

shall be compensatedCompensation for overhead spaceor underground

Compensation for removalof structures

Compensation forstanding trees

Compensation for miscellaneous
removal expenses

grocery

grocery
for inesion
compensat f busosuspensionsmovinge
noticCompensation for removal
expenses of movable property

4Compensation for loss in businesscompenfor les sation
sees

Compensation for lessees ofhouse or roomFlowchart of the Procedures ofLand Acquisition and Compensation

1
2

Meetings to
explain project plans

p.6

5

Calculation of the amount ofcompensation p.10

Explanation of detailed plans
and acquisition of lands p.6
land
detailed process
and construction forthe planned project3

normal transaction price

6

Negotiation over
the Acquisition of Land

7

Contracts

8

Payment of compensationand delivery of land p.16

p.15

Setting up piles
for site width p.6

p.15

width of land
to be acquired

4

Surveying lands andexamining articles p.7

delivery of landpresent land lot

state of vacant land5

Ⅰ Process of
Acquisition of Land
and Compensation
1 Meetings to explain
project plans
The project initiator hold meetings to
explain the purposes of the project, outlineof the plan, a time for completion, amethod of construction, etc., to land owners and the neighborhood.

detailed process
and construction forthe planned project2 Explanation ofdetailed plans andacquisition of lands
On the basis of the designs, the project
initiator explains the details to the interested parties. It also provides explanationon the method of surveying land andexamining articles.

3 Setting up piles
for site width
In order to specify a land required for the
project, the project initiator sets up piles
into the land that show necessary extent
of land for the project.

6

width of land
to be acquired4 Surveying Land and Examining Articles(1) Surveying land
To conﬁrm the area of land to be purchased or that of "Superﬁcies for
Underground or Overhead Space" （SUOS）in case of constructing structures such as tunnels either in the air or underground, the project initiator
ﬁxes the boundaries and surveys the land with the attendance of thelandowners, the adjacent land owners and the interested parties.

①Attendance toconﬁrm the boundaries
In surveying the boundaries, theproject initiator asks every holderof right to the land such as theowners of the land, the adjacentland and leaseholders to conﬁrm inperson the boundaries.
The project initiator asks all theattendants for the signatures andseals on the conﬁrmation docu ments of land boundary.

I suppose
this is boundary
I agreewith youlandmark

adjacent land ownerlandowner②Surveying the landOn the basis of the boundary piles
conﬁrmed, the project initiator surveys the limits of the right such asleasehold etc., in the land invoalvedin the project according to address
numbers and draws up a surveyedmap.
The area and classiﬁcation of theland subject to compensation
results from the present situation
surveyed, not from the one recorded in the land registry.

7

(2) Examinatin of the buildings and other articles
Buildings, structures, standing trees and others are fully checked as totype, structure, quantity and others per every owner.

①Concept 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.

building

structures(a) Building

A building shall be considered not only the substructure, pillars, roofs, walls, ﬂoor,
ceilings, doors, windows and screens, ﬁxtures, water pipes that compose it, but also
the annexed equipments such as electricity, water and drainage pipes, sanitation.
*1 "Fixtures" contain stairs, closets, built-in shoe box and others.
*2 Main examples of equipments annexed to the building
Electric equipments: service wiring; entry phone; air conditioner; TV antenna.
Water and drainage equipments: rigid PVC pipes for water; liquid measures for savingdrainage; liquid measures for sewage; a solar water heater.
Sanitary: a washstand; a water-puriﬁcation tank, a tank for excreta; a bath heater; a bathtub; a shower.
Others: an extractor fan; a chimney; LP gas.
(b) Structures

Equipments ﬁxed on the land other than building are called "structures".
* Main examples of structures
a door of a gate; a fence; a lumber room; a vinyl plastic hothouse; a carport; a wisteria trellis;
a frame for drying laundry; concrete-covered grounds and steps; a water well; water pipes;
garden stones; a signboard.

②Examination of structure of the building
Buildings within the planned area for the project shallbe examined as to theirs types, structure, size andthe like to obtain basic data to calculate removal
expenses.
Structures buried in the ground such as piles of thebuilding on which land SUOS are set, shall be also
subject to examination, if considered necessary.

8

③Examination 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.

④Examination of standing trees
Standing trees such as garden trees shall be subject to examinations as to kinds,
height, the condition of growing, numbers and others.

⑤Examination 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.

interior movable
properties

ordinary movable
properties⑥Examination of residents
Residents who live in the building to be removed shall be examined as to the address,
names and others.

⑦Examination of tenants
Tenants of a building or rooms shall be examined as to rental term, area, rent, premium and others, according to contents of the contract with the owner.

⑧Examination of business
People who run business shall be asked tosubmit the copy of ﬁnal income tax return
submitted to the tax oﬃce and ﬁnancial
reports in order to grasp the actual conditionof the business and give explanation of its
nature of business.

ﬁnal incotax retu me
rn(copy)(3) Conﬁrmation of the results of examination
After surveying the land and examining the facilities, land owner and others shall be asked to conﬁrm that there is no error in the ﬁndings.

9

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 with acquisition of land that are required for the
public projects shall be calculated appropriately and fairly on the basis of "theStandard for Compensation" decided by the government.

●●● Compensation to land owners ● ● ●(1) General concept on compensation for land
①Acquisition
When surface of the land is used for a project, "land" shall be acquired.

②Use of space or undergroundIn the event the space over the land or its underground is used 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 the loss shall be compensated.
* In that event, "the surface of the land" shall be able to use as before in general.

(2) Price of land (acquisition)①Price of land
The Standard for Compensation provides that"price of land to be acquired shall be made on
the basis of the normal transaction price."
Accordingly, for the acquisition of land, price ofland shall be calculated by focusing on the actuland
al use (the present land category classiﬁcation), on the basis of the following materials
normal transaction pricefrom (a) to (d), and shall be determined after overall comparison and evaluation.
(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 (for information)(d) Others (such as inspection of the spot)

The present land category classiﬁcation refers to the present purposes to use land; such as "landNote for housing", "farmland", or "mountains and forests".

10

②Compensation for remaining land
If the rest of the land acquired for a public project or "remaining land" is recognized to be so narrow as to cause thedecline in price of land due to diﬃculty inusage, compensation shall be also madeto cover such loss occurred from theremaining land.

rema
land ining(3) Use of overhead space and underground (SUOS )For the use of the overhead or underground space of the land, compensation shall becalculated multiplying the normal transaction price of the land a ratio duly determinedaccording to the degree of disturbance to use the land.

●●● Compensation to Leaseholder ● ● ●In the event leasehold is established,
the land owner and leaseholder are
asked to decide mutually the apportionof the rights on the land , then compensation for land shall be calculated
according to the apportion decided, andcontracts shall be made individually.

Leaseholder

Land owner

price of ownership interest(ground interest)
price of leasehold interest

11

●●

● Compensation to Owners of Building ● ● ●①Compensation
for removal of buildings
When there is a building on the land recognized to remove, the method of theremoval is determined after considering
the construction, uses and other conditions of the building, the necessary
expenses shall be calculated and compensated.
Typical methods to remove buildings are"rebuilding method", "towing method" and"conversion method".

②Compensation for removalof structures

removalShall be compensatedWith regard to structures such as the doorof a gate, a fence, a lumber room, concrete-covered ground or steps and others,
necessary expenses for the removal shallbe calculated and compensated.

③Compensation for Standing Trees
Calculation methods of standing trees vary
to the use or kinds of the trees. For some
sort of garden trees, the necessary
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 andothers.

12transplantation●●● Other Expenses caused by Removal ● ● ●①Removal of Movable Property
Movable properties involved in theremoval of building (furniture andhousehold eﬀects, goods, materials
and others) shall be compensatedwith the necessary expenses forpacking, transport and others.

moving②Miscellaneous Expenses on Moving
For expenses supposed to be paid for the removal of buildings and others, "expenses
to look for new place", "necessary expenses for legal procedures such as notiﬁcation
for removal of house", "expenses to give notice to acquaintances the move" and others shall be compensated.

At thereal estate agent

I will look for it

i
et
re d
G ar
c

ng

I am looking
for the land

I havechangedthe address

I understandnoticeforremovalAt the residents'
section of
the town oﬃce

13

●●

● Compensation for Tenants ● ● ●If it is extremely diﬃcult for the tenants
to continue leasing building from thecurrent lessor due to the removal of thebuilding, ordinarily necessary expenses
to rent the same level of building as tenants have lived in shall be compensated.
(for instance, removal expenses of movable properties, miscellaneous expenses
on moving, premium and others)●●

Removal expenses ofmovable properties;
Miscellaneous expenses
on moving;
Premium and others.

compenfor les sationsees● Compensation to People running Business ● ● ●If there is reason to believe that a business is required to suspend its operation temporarily due to the removal of
the store, the following losses shall becalculated and compensated.
･ loss of earnings during the periodrequiring the suspension (loss of income
for self-employment)・necessary expenses incurred by business assets during the period requiring
suspension, including taxes and publiccharges on business properties.
・suspension allowance for the employees during the period requiring suspension

grocery

grocerys
for inesion
compensat f busosuspension

e

notic

(4) 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 and local consumption tax put on compensation due to the removal, the removing person shall be compensated with taxable compensation multiplied by the sum equivalent to the rate of the consumption taxes.
For a judicial person in business, the compensation shall be appropriately dealt withafter the conﬁrmation of the state of its accounting concerning consumption taxes.

146 Negotiations for Land Acquisition
Project initiator explains the transaction price of land and compensation
for the removal of buildings and otherstructures to the land owner andinterested parties such as leaseholder individually.

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

CONTR

CT

interested parties individually.

land ownerleaseholder or holder of realty

CO

NT

RA

ACT

15

8 Payment of Compensation and Delivery of the Land
After the conclusion of contracts, the interested parties shall be asked to ﬁlenecessary papers mentioned in the contract and the project initiator takes
responsibility to register the transfer of the ownership.

①In the event the contracts for land without articles (a vacant lot)
After registering the transfer of ownership and delivering of the land, compensation
shall be paid in a lump.

②In 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.
(a) Payment in advance
After the conclusion of contract, the project initiator shall pay a certain amountfrom the compensation according to the regulation 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 has completed by the owner, project initiator conﬁrms the completion of removal (performance inspection) and thedelivery of land, then the remainder shall be paid.

③Other notable points(a) Means of payment for compensation

Compensation shall be paid through transfer to the bank account.
(b) Deletion of mortgage and other rights

In the event mortgage or other rights are settled on the land or the building, theowner shall be asked to delete these rights before conclusion of the contracts.
That is, the owner must deliver the land as a vacant lot.

delivery of the land

Present housing estate

16

state of vacant lot

Ⅱ Tax imposed onCompensation(1) Preferential treatments concerning taxationfor owners in cooperation with public project
The owner delivered the land for public project preferential treatments under theSpecial Taxation Measures Law shall be entitled as follows. However, (a) below is limited to the case that the contract has closed within six months after the project initiator oﬀered the purchase.
(a) The owner is entitled to apply "a special deduction of 50 millions yen".

(b) In the event the owner acquires property as the substitute of delivered estate, theowner shall be entitled to be applied to "preference treatments of taxation for
acquisition of substitutive property".
* The compensation paid for the settlement of SUOS that exceeds one forth of the previous
prices of land shall be taxed as "capital gain". In the event the owner shall be entitled to resort to"a special deduction of 50 millions yen" or "preference treatment of taxation for acquisition ofsubstitutive property".

A special deduction of 50 millions yen

Contract

Tax Oﬃce

Specialtreatment

Payment ofcompensation

Declaration:
Tax Payment
Project
initiator

Tax
Oﬃce

certiﬁcateof purchaseandothers17

(2) Procedure resorting to preferential treatments
To be entitled to preferential treatments, thecompensated owner has to submit to thecompetent tax oﬃce of the place of tax payment a declaration of ﬁnal income tax returndescribed the will to apply to the special
treatments attached with "certiﬁcate of oﬀer
to purchase and others" and "certiﬁcate ofpurchase and others".

(3) Preference treatment for the oﬀeror of substitutive land
A land owner who oﬀers the substitutive land for the acquired land for the project
shall be also entitled to preferential 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 oﬀeror of substitutive land shall be entitled to a special deduction of 15
millions yen to the maximum.
To be entitled to the preference, the project initiator must negotiate on the treatment
with the tax oﬃcer in advance.

Special deduction of 15 millions yen

Delivery of land for
Public project

Project
initiator

Payment of price for
substitutive land

Tripartite
contract
at one time

Owner ofland acquiredfor publicproject

Owner ofsubstitutive
landTransfer of substitutive land

Please contact the competent tax oﬃce directly for details of the procedures andcontents of taxation as well as the further speciﬁc information as for whether thecompensation is applied to special treatments of tax or not.

18

Th e Ja p a n Organization for Land
Acquisition and Compensation is anincorporated foundation, which wassettled with the approval of the
Minister of Construction (the Ministerof Land, Infrastructure and Transport
at present) in 1989. Purposes of theOrganization is to cooperate in landacquisition or land use by the public
enterprises undertaking public proj ects like road construction, embankment, etc., through to research, study
and calculate on compensation inorder to compensate appropriately
and fairly.

Published by
Japan Organization for Land Acquisition and Compensation
4-3-3 Kojimachi, Chiyoda-Ku, Tokyo 102-0083, JapanTEL 03-3239-9678

Printed by LEGAL INFORMATION SERVICE AND PUBLISHING CO., LTD.