Getting Property Right: 'Informal' Mortgages in the Japanese Courts
47 Pages Posted: 23 Jan 2010 Last revised: 20 Apr 2010
Date Written: August 1, 2009
In Japan's civil law property system, courts recognize a form of extra-statutory security, the jōto tanpo or title-transfer security interest, that is created by conveying legal title to the creditor, with a promise to restore it to the debtor upon repayment. Although best known today as a means to providing security in movables, jōto tanpo was originally an alternative means of mortgaging real estate, and this latter use of the interest is the subject of this Article.
The two early attractions of the jōto tanpo interest to creditors were 1) the ability to avoid inefficient procedures for the enforcement of the Code-defined security interests, and 2) the possibility of enjoying a forfeiture of the collateral upon default. In the 1960s and 1970s, courts and the legislature sought to control lender overreaching in connection with several non-Code forms of security relating to immoveable property. The jōto tanpo has survived efforts at reform, and remains as a potential strong-arm device in high-interest lending and high-pressure debt collection. The two factors that this Article identifies as inhibiting effective judicial discipline of this category of transactions today include 1) limitations in Japan's system of registered title and 2) procedural lacunae that open the possibility of enforcement arbitrage.
Keywords: Japanese, Japan, Mortgages, Mortgage, Lending, Japan, Property, Law and Development, Security, Secured Claims, Bubble, Enforcement, Civil Procedure, Legal History
JEL Classification: K11, K41, K42
Suggested Citation: Suggested Citation