Japan Commercial Security deposits: Hosho-kin Rules
Understanding commercial security deposits in Japan, often called Hosho-kin, and how they differ from residential Shikikin.
Legal Disclaimer
This content is for general informational and educational purposes only. It does not constitute legal advice and should not be relied upon as such. Laws change frequently — always verify current regulations and consult a licensed attorney in your jurisdiction for advice specific to your situation. Landager is a property management platform, not a law firm.Information last verified: May 2026.
Japanese commercial security deposits operate under the principle of contractual freedom (Civil Code, Act No. 89 of 1896, effective 16 July 1898), allowing for terms that deviate from residential norms. Unlike residential leases where specific guidelines offer tenant protections against restoration costs, commercial B2B transactions permit substantial "Hosho-kin" (guarantee money) and "Shikikin" (security deposits) often ranging from 6-12 months of rent. These agreements frequently include "Shokyaku" (amortization) clauses, which are enforceable contractual provisions (Civil Code Art. 91) allowing landlords to retain a fixed portion of the deposit regardless of the unit's physical condition upon vacancy.
Substantive Legal Guidance in Japan
The Civil Code (specifically Article 622-2) provides the primary framework for security deposits, defining them as money delivered to secure obligations. In commercial contexts, the "Original State" (Gensho Kaifuku) obligation typically requires the tenant to return the space to a "Bare Shell" (BGS) state; this is a matter of contractual agreement rather than a statutory mandate. While the Act on Land and Building Leases protects the tenant's right to occupy, it does not regulate or cap the amount of security deposit or guarantee money. Furthermore, the distinction between Shikikin (security for debt) and Hoshokin (broader guarantee) is critical, as their treatment depends on the contract's specific wording and the Article 35 explanations provided by the licensed broker (Takken) under the Building Lots and Buildings Transaction Business Act.
Compliance Strategy for Japan Property Managers
Property managers must ensure that "Shokyaku" and restoration terms are explicitly detailed in the lease to ensure enforceability. The 2020 Civil Code amendments clarified that a landlord must return the security deposit after the lease is terminated and the property is vacated, deducting only verified debts and restoration costs as agreed. Landager’s tools facilitate this by tracking the specific "Amortization" schedules and providing a centralized ledger for BGS restoration estimates. In the event of tenant insolvency, deposits are generally treated as unsecured claims under the Bankruptcy Act unless specifically structured through a trust. Proper management of the Article 35 'Important Matters Explanation' ensures pre-contractual compliance; however, the primary legal basis for deposit disputes remains the lease contract and documented evidence of debts or restoration costs.
Japan Commercial Deposit Process in national
Vacate Premises
Business removes all inventory and returns all keys to the landlord or asset manager.
Hosho-kin Audit
A detailed restoration survey is conducted to determine the Shikikin or Hoshokin refund.
Settlement Offer
Landlord provides an itemized list of deductions for fit-out restoration.
Final Remittance
The remaining security deposit balance is transferred to the business account.
How Landager Helps
Landager tracks lease terms, deposit amortization tracking, and commercial ledger management - making it easy to stay compliant with Japan regulations.
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