Osaka Security Deposit Rules: Shikibiki System

Legal Framework for Security Deposits in Osaka

Managing rental properties in Osaka requires navigating a unique regional custom known as the Hoshokin/Shikibiki system. Under the Japanese Civil Code (Act No. 89 of 1896, effective July 16, 1898), which was significantly amended on April 1, 2020 to formally codify security deposit (shikikin) return obligations, Osaka's traditional "fixed-deduction" model is a contractual term subject to the Civil Code's reasonableness standards and the Act on Land and Building Leases (effective August 1, 1992).

1. Shikikin vs. Shikibiki (Kansai Custom)

In Tokyo, deposits are typically fully refundable minus damages. In Osaka, the structure is historically different:

• Hoshokin (Guarantee Deposit): A larger upfront sum (often 3–6 months' rent).
• Shikibiki (Deduction): Traditionally a non-refundable portion of the Hoshokin. However, under the 2020 Civil Code amendments (Article 622-2), landlords are legally obligated to return the security deposit (minus valid deductions) upon the termination of the lease and the return of the property. This makes traditional "non-refundable" clauses legally precarious if they are not clearly defined as separate fees (like reikin or key money) rather than part of a security deposit.
• Status: While courts have historically upheld reasonable deductions based on free contract principles, there is no fixed statutory or Supreme Court-mandated "safe harbor" limit (such as 2-3.5 times rent). Shikibiki clauses must be clearly drafted as separate fees and deemed reasonable to remain enforceable under the revised Civil Code.

2. The 2020 Civil Code Amendment: Tenant Protections

Despite the local custom, all contracts signed after April 1, 2020, must comply with new national standards for restoration:

• Normal Wear and Tear: Under Article 621, the landlord is responsible for "normal wear and tear" (e.g., wallpaper fading from sunlight, furniture marks on carpet).
• Tenant Negligence: The tenant is only liable for damage caused by willful intent or negligence (e.g., cigarette burns, pet scratches, mold from lack of ventilation).
• Deduction Limits: If a contract uses the Shikibiki system, the landlord generally cannot charge additional cleaning fees unless they are explicitly itemized as separate from the Shikibiki amount in the written agreement.

3. Tokyo-style Shift in the Osaka Market

Modern developments in Osaka are increasingly moving toward the Tokyo-style Shikikin/Reikin system to attract international and corporate tenants who prefer transparency. Landlords should clearly state in the Important Matters Explanation (Juyo Jiko Setsumei) which system is being used to avoid disputes at the end of the tenancy.

Osaka Compliance Snapshot

Professional Advice: The Documentation Burden

In Osaka, the burden of proof for any deductions beyond the fixed Shikibiki amount rests entirely on the landlord. Legal disputes regarding deposit returns are primarily adjudicated in the Osaka Summary Court for claims up to ¥1.4 million, or the Osaka District Court for larger disputes. To protect your investment, always perform a high-resolution photographic move-in inspection. This is critical for rebutting tenant claims that damages were "pre-existing" or "normal wear."

How Landager Helps

Landager's "Kansai Module" allows you to configure your properties using either the Shikikin/Reikin or the Hoshokin/Shikibiki model. Our system automatically calculates the deductions according to your specific contract terms and generates a clear settlement statement for the tenant, ensuring your deductions are clearly itemized.

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