Owner of foreclosed property attempts to destroy building

The Tokyo Branch of the National Tax Agency (NTA) had seized an office building due to the owner’s non-payment of taxes. Immediately prior to the public auction, the owner damaged part of the building and removed electrical wiring and the air-conditioning system and effectively rendered the building unusable. The auction was delayed for 3 months and re-listed at a lower price. According to the NTA, this is an unprecedented situation.

The empty 10 story building in Kofu City, Yamanashi Prefecture, was purchased in June, 2009, by a female operator of a nursing care company. The new owner planned to demolish the current building and develop an aged-care rental apartment complex, with a total estimated cost of 2 ~ 4 billion Yen (25.6 ~ 51.2 million USD). However, due to non-payment of taxes, the building was seized by the Tax Agency.

In March, 2011, the building was valued at 83,900,000 Yen (1.075 million USD) by the Tax Agency and was scheduled to be listed for public auction. However, the owner immediately removed equipment and destroyed part of the building. The auction was cancelled and the property was revalued at 66,100,000 Yen (847,000 USD), down 18 million Yen from its original estimate. The owner has been prohibited from entering the premises. This is the first case where a property owner has attempted to damage their property prior to public auction.

The following details were published on the National Tax Agency’s public auction page:

  • The north-east section of the 1st floor is rented to a third party. The terms of the rental agreement are unknown.
  • Damage to the ceilings and some walls
  • High-voltage electrical wiring has been removed along with air-conditioning facilities
  • Underground water level is high, so the ground is considerably weak. The seller said it was necessary to constantly run a water-removal pump in the second basement floor. However, the pump is broken and the 1st floor tenant is renting a water-pump.
  • The costs of demolishing the building exceed the land value

Auction Details:

Court Evaluation: 66,100,000 Yen
Deposit required: 6,700,000 Yen

Bidding: September 5, 2011 between 1:30~2:30PM only
Opening of bids: September, 5, 2011 from 2:35PM
Final Payment for winning bidder is due on September 12, 2011.

Property Details:

Address: 1-5 Chuo, Kofu City, Yamanashi Prefecture
Transport: Kofu Station – 11 mins
Built: 1974
Construction: 10 Stories + 2 basements, steel frame & reinforced concrete
Size: 19,403.06 sqm (208,776 sqft)
Land: 2,235.16 sqm
Kenpeiritsu (building-to-land ratio): 80%
Yosekiritsu (building volume ratio): 600%

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