I inherited land my parent had lent for free (a 'loan for use') — where do I start to sell it?

In short: when you inherit land your parent had lent for free to a relative or acquaintance, first grasp the difference between a "loan for use (gratuitous)" and a "lease (for rent)." A loan for use is not protected by the Land and Building Lease Act and ends in principle on the borrower's death (Civil Code Article 597(3)). Conversely, the lender's (parent's) death does not end the loan for use — the heirs succeed to the lender's position (Civil Code Article 896). The feasibility of a sale, valuation and finding a buyer are handled by our company (Yotsuba Real Estate Co., Ltd.) as information; negotiation and litigation over vacating go to a lawyer, the inheritance registration to a judicial scrivener, and capital gains / valuation to a tax accountant. These are independent business entities, and you engage each directly.

Your parent let a relative or acquaintance use land for free, you inherited it, and the borrower is still using it — here, whether you can "sell it" or "have it vacated" is a dilemma because a gratuitous loan for use differs from a lease for rent in its very legal nature. This article is for heirs who inherited land under a loan for use: before you weigh selling against vacating, what to confirm and who to consult, set out from the Civil Code. The way of selling and valuation are handled by us as information; legal judgment rests with qualified professionals.

Where do a loan for use and a lease differ decisively when selling after inheritance?

The biggest difference is how far the borrower is protected by law. A lease that lends for rent (a leasehold) is strongly protected by the Land and Building Lease Act and is hard to end on the lender's convenience alone, whereas a loan for use that lends for free is outside that Act and is a relationship that ends more easily on the lender's side.

Point	Loan for use (gratuitous)	Lease (for rent / leasehold)
Consideration	None (bearing roughly the property-tax equivalent is often still treated as a loan for use)	Rent exists
Basis	Civil Code Arts. 593–600	Civil Code + Land and Building Lease Act
Land and Building Lease Act protection	Does not apply	Applies (just cause, statutory renewal, etc.)
Borrower's death	Ends in principle (Civil Code Art. 597(3))	Succeeds to the heirs
Perfection against third parties	Hard to assert against third parties	Can be asserted via building registration, etc.

"Having lent it for free all along" does not create protection as strong as a lease. Selling the underlying land of a leasehold that has consideration (protected by the Land and Building Lease Act) is set out at selling inherited underlying land and when the inherited home sat on leased land. A gratuitous loan for use differs from these in legal nature, so even the "same lent land" has a different exit. Inherited real estate in general is at inheritance and real estate.

What happens to the loan for use when the lender (parent) dies, and what when the borrower dies?

A loan for use rests on the personal trust between lender and borrower, yet the treatment reverses depending on which party dies.

• Death of the lender (parent): the loan for use does not end. The lender's position is succeeded, by general succession on inheritance (Civil Code Article 896), to the heirs, who become the new lender. In other words, the heir acquires the land in a state where the loan for use between the parent and the borrower carries on.
• Death of the borrower: the loan for use ends in principle (Civil Code Article 597(3)). As a rule the borrower's position is not succeeded to their heirs.

However, Civil Code Article 597(3) is a default rule, and the treatment may change exceptionally where the parties agreed a special clause to "continue it even if the borrower dies," or where continuation is recognised from the purpose of the contract, such as owning a building. There are also court cases where a demand to vacate on the ground of the borrower's death was held an abuse of right in relation to the interest of residence. Which ground of termination applies varies with the contract terms and circumstances, so confirm the individual case with a lawyer.

When selling the land while the borrower keeps using it, how do you explain it to the buyer and how is it reflected in the price?

You can sell the land itself while the borrower keeps using it. But the buyer buys "land used by a borrower under a loan for use," so it cannot be used freely as is, which affects the price and the pool of buyers.

Point	Content
Explanation	Convey accurately to the buyer, as an important-matters explanation, the existence of the loan for use, the borrower, the purpose, and the prospect of a ground of termination
Perfection	A loan for use is hard to assert against third parties, but whether the buyer can achieve vacating depends on the circumstances
Price	Because the borrower is using it, the price tends to fall below land usable freely as a vacant lot
Buyer pool	Tends to be limited to buyers who can take on the effort and uncertainty of vacating

You cannot sell while hiding that "there is a person using it." After explaining the loan-for-use situation accurately, you compare selling after vacating with selling on the premise the borrower keeps using it. We can present the valuation and comparison of ways to sell; the legal assessment of whether a prospect of vacating stands is handled by a lawyer.

When you seek vacating, may a real estate agent negotiate straight away (who do you ask)?

No. Negotiating with the borrower to vacate is a legal affair in which the interests conflict with the counterparty. Only a lawyer may, for reward, represent and negotiate another's legal affairs; a real estate agent or administrative scrivener cannot carry out the negotiation or demand to vacate on behalf of the party.

Stage	Content	Who
Confirming the nature of the loan for use / ground of termination	Legal assessment of contract terms and circumstances	Lawyer
Negotiation to vacate, content-certified mail, litigation	Legal affairs involving conflict with the borrower	Lawyer
Sale after vacating (or on the premise the borrower uses it)	Valuation, finding a buyer, brokerage, sale contract	Licensed real estate agent (us)

The domain of "talks break down and it becomes a dispute" is the lawyer's from the outset. We assist where a prospect of vacating stands, or with a sale on the premise the borrower keeps using it. The negotiation and litigation to vacate themselves — consult a lawyer directly.

Why can't you sell before completing the inheritance registration?

To sell, the registry must have settled whose name the land is in. While it stays in the parent's name, the transfer of ownership to the buyer cannot be registered, so the inheritance registration (transfer of name from parent to heirs) must be done first.

Article 76-2 of the Real Property Registration Act requires an heir who acquires real estate by inheritance to apply for the inheritance registration within three years of the day they learn that inheritance has commenced for them and that they have acquired the ownership (effective 1 April 2024). Neglecting it without justifiable grounds may attract a non-penal fine.

• While the name stays the parent's, the transfer to the buyer cannot be registered and the sale is not completed
• If the estate-division agreement is settled, the inheritance registration is done on its terms
• The inheritance registration and transfer-of-ownership registration are the work of a judicial scrivener

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The mandate applies whether or not you sell. Once you decide to sell land under a loan for use, doing the inheritance registration first is the premise. Inheritance registration goes to a judicial scrivener; preparation of the estate-division agreement, to an administrative scrivener.

Sale, registration, tax and negotiation — who do you ask, safely (separate engagement)?

Inheriting and disposing of land under a loan for use involves several professionals. Dividing the roles:

What to do	Who
Way of selling, valuation, finding a buyer, brokerage, sale contract	Licensed real estate agent (Yotsuba Real Estate Co., Ltd.)
Preparation of the estate-division agreement	Administrative scrivener (Yotsuba Administrative Scrivener Office)
Negotiation and litigation to vacate with the borrower	Lawyer
Inheritance registration, transfer-of-ownership registration	Judicial scrivener
Capital-gains tax, acquisition cost, valuation	Tax accountant

For the capital gain (the sale amount less acquisition cost and transfer expenses), where the acquisition cost is unknown or the actual acquisition cost is below 5% of the sale amount, 5% of the sale amount may be taken as the estimated acquisition cost (National Tax Agency tax answer No. 3258). How to treat the acquisition cost of inherited land is set out in No. 3270. The specific tax calculation and filing are handled by a tax accountant.

These are independent business entities. You engage each directly. We neither pay nor accept referral fees or introduction commissions. Negotiation and litigation to vacate go to a lawyer, registration to a judicial scrivener, and tax to a tax accountant — each engaged by you directly.

Who should you consult?

The way of selling land under a loan for use, valuation, finding a buyer, brokerage and the sale contract are handled by Yotsuba Real Estate Co., Ltd. (licensed real estate agent, Tokyo Governor (1) No. 113304). Preparation of documents such as the estate-division agreement is handled by Yotsuba Administrative Scrivener Office. Negotiation and litigation to vacate with the borrower go to a lawyer; the inheritance registration and transfer-of-ownership registration, to a judicial scrivener; capital-gains tax, acquisition cost and valuation, to a tax accountant.

These are independent business entities. You engage each directly. We neither pay nor accept referral fees or introduction commissions. A dispute over vacating goes to a lawyer, registration to a judicial scrivener, tax to a tax accountant, and employment and social insurance to a certified social insurance labour consultant (Yotsuba Certified Social Insurance Labour Consultant Office) — each engaged by you directly. Consultation is free of charge.

Frequently asked questions

Q. I inherited land my parent had lent free to a relative. My parent has died — has the loan for use ended?
A. It has not. Even when the lender (parent) dies, the loan for use does not end; the lender's position is succeeded, by general succession on inheritance (Civil Code Art. 896), to the heirs. You acquired the land in a state where the loan for use between your parent and the borrower carries on. Whether it can be ended varies with the purpose, term and circumstances of the contract, so confirm with a lawyer.

Q. Is a loan for use protected as strongly as a leasehold under a lease?
A. No. A loan for use lends for free, and the protections of the Land and Building Lease Act (just cause, statutory renewal, etc.) do not apply. It differs in legal nature from a lease for rent (a leasehold) and is a relationship that ends more easily on the lender's side. That said, there are court cases holding a demand to vacate an abuse of right in relation to the interest of residence, and the individual outcome depends on the circumstances.

Q. Can I sell the land while the borrower keeps using it?
A. You can sell it itself. But the buyer buys "land used by a borrower under a loan for use," so you must explain accurately the existence of the loan for use, the borrower, the purpose and the prospect of a ground of termination; the price tends to fall below a vacant lot, and the buyer pool is limited. Whether to sell after vacating or on the premise the borrower uses it is presented together with the valuation.

Q. Can I ask a real estate agent to tell the borrower "please leave"?
A. Because negotiation to vacate is a legal affair in which the interests conflict with the counterparty, a real estate agent or administrative scrivener cannot negotiate or demand on behalf of the party. Only a lawyer may, for reward, represent this. We assist with the sale after a prospect of vacating stands, or with a sale on the premise the borrower uses it. The negotiation and litigation themselves — consult a lawyer directly.

Sources (primary)

• e-Gov "Civil Code" — Act No. 89 of 1896. Arts. 593–600 (loan for use): Art. 593 (formation of a loan for use — gratuitous), Art. 597 (termination by expiry of term, etc.; para. 3 = termination by the borrower's death), Art. 598 (rescission by the lender / borrower), Art. 599 (the borrower's duty to remove / restore), Art. 896 (general succession on inheritance). Accessed 25 September 2026.
• NTA tax answer No. 3258 "When the acquisition cost is unknown" — where the acquisition cost is unknown, or the actual cost is below 5% of the sale proceeds, 5% may be taken as the estimated acquisition cost. Accessed 25 September 2026.
• NTA tax answer No. 3270 "Acquisition cost and time of acquisition of land/buildings acquired by inheritance or gift" — Accessed 25 September 2026.
• Ministry of Justice "Mandatory application for inheritance registration" — Real Property Registration Act Art. 76-2 (mandatory application for transfer-of-ownership registration by inheritance; within three years of learning of the acquisition; effective 1 April 2024). Accessed 25 September 2026.

The application of the grounds of termination of a loan for use (the borrower's death, achievement of the purpose, lapse of a reasonable period, rescission), the feasibility of vacating, and whether an abuse of right is made out vary with the contract terms and the individual circumstances. This article does not assess any individual case. Disputed cases and negotiations to vacate should be referred to a lawyer. Inheritance and transfer-of-ownership registration go to a judicial scrivener; the specific calculation and filing of capital-gains tax, acquisition cost and valuation, to a tax accountant.

This article is general information. It does not judge or guarantee the feasibility of any particular sale or the tax amount. Investigation and brokerage of the property, and the sale contract, are undertaken by Yotsuba Real Estate Co., Ltd. (licensed real estate agent); preparation of the estate-division agreement and other documents, by Yotsuba Administrative Scrivener Office — independent business entities, engaged separately and directly. We neither pay nor accept referral fees.

About the author

Joji Uramatsu — licensed real estate transaction specialist (Tokyo Governor registration No. 293544) and administrative scrivener (registration No. 25087022). Representative Director, Yotsuba Real Estate Co., Ltd. (licensed real estate agent, Tokyo Governor (1) No. 113304); principal, Yotsuba Administrative Scrivener Office. Kohinata, Bunkyo, Tokyo, about five minutes' walk from Myogadani station. Property and the sorting of rights and procedures (inheritance, registration, tax, disputes) are put on the same table. Full profile: author page.