Tenant wins lawsuit over high brokerage fees

On August 7, the Tokyo District Court ruled in favor of a tenant who had sued a major real estate brokerage after being overcharged on their rental brokerage fee.

As a general rule, rental brokerage fees are limited to 0.5 month’s rent charged to a customer. A rental agency may charge a maximum of one month’s rent, but only if the customer agrees in advance. Many agencies charge one month’s rent in any case, but not all obtain the customer’s authorization to do so.

In this court case, the customer had contacted a rental agency to lease a property. Two days later the agent contacted the customer to ask when they wanted to sign the lease agreement. The lease contract was signed 10 days later, and the customer was sent the invoice for one month’s rent as an agency fee two days after. The customer said they were not told that the standard fee is 0.5 month’s rent, and had not agreed to pay the higher fee of one month’s rent. 

According to the presiding judge, the agent and customer’s brokerage relationship was in effect from the time the agent had contacted the customer to arrange a date for the lease contract signing. And, at this time the agent had not obtained permission from the customer to charge one month’s rent. The real estate company was ordered to return a half month’s rent to the customer. 

The customer’s attorney remarked that few people are aware that the general rental fee is just 0.5 month’s rent. In many cases, agencies do not explain this to clients before entering into a brokerage relationship. This court decision may carry some significance for future tenants. 

Source: The Mainichi Shimbun, August 8, 2019.

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