Selling inherited underlying land (sokochi) — the relationship with the leaseholder, the ground rent, and the routes to sell

In short: sokochi is the freehold of land that carries a leasehold. Inheriting it needs no consent from the leaseholder (Civil Code Article 896 — universal succession). The buyers are mainly the leaseholder or a third party (including firms that buy underlying land); if the leaseholder buys, the leasehold relationship ends. Price turns on the level of ground rent, the remaining term and the leasehold ratio, and is not uniform. Before selling, complete the inheritance registration of the land — not the building — first.

You are going through a deceased parent's land and realise "this is our land, yet someone else's house stands on it." Ground rent comes in, but you cannot use it freely — that is sokochi, underlying land. It is one of the situations people find hardest to handle in an inheritance. This article is for a landowner who has inherited land let on a leasehold and is thinking of selling or tidying it up, and sets out the buyers, how to think about price, and the order of work — from the Civil Code, the Land and Building Lease Act, the Basic Property Valuation Bulletin and the National Tax Agency's materials. The final check on price and tax is made with a tax accountant and our own valuation.

What is underlying land (sokochi), and how does it differ from a leasehold?

Sokochi is "the freehold of land carrying a leasehold"; the leasehold is "the right to borrow and use that land." They are two sides of the same land.

Where a plot has a land lease, its value splits into the landowner's sokochi and the leaseholder's leasehold. The landowner holds the freehold, but because the leaseholder owns a building and uses the land, the owner cannot freely use it or demand it back. What the owner receives is ground rent.

	Underlying land (owner's side)	Leasehold (leaseholder's side)
Substance	Freehold of land carrying a leasehold	Right to borrow the land, own a building and use it
What is received	Ground rent	Use of the land
Constraint	Cannot use freely; hard to demand return	Ground-rent payment; contract terms
On inheritance	No consent needed (Civil Code Art. 896)	No consent needed (Civil Code Art. 896)

Inheritance itself needs no consent from the other party, on either the owner's or the leaseholder's side. Article 896 of the 民法 (Civil Code, Act No. 89 of 1896) provides that "an heir succeeds, from the time of commencement of inheritance, to all rights and obligations attached to the property of the decedent." Inheritance is universal succession by operation of law, not a transfer by the parties' intention. The consent question from the leaseholder's side is set out in You inherited a house on leased land.

Who can inherited underlying land be sold to?

Mainly the leaseholder, a third party (including firms that buy underlying land), and an exchange with the leaseholder.

Because underlying land carries the constraint of the leasehold, buyers are fewer and the price tends to be lower than for vacant land. Even so, there are these structures.

Route	Outline	Point to note
Sell to the leaseholder	If the leaseholder buys, it becomes full freehold	Whether the leaseholder has funds and the will
Sell to a third party / buying firm	Sell the underlying land as-is to a third party	Valued as a ground-rent income asset; price tends to be lower
Sell leasehold and underlying land together	Owner and leaseholder cooperate and sell as full freehold to a third party	Requires both sides' agreement and a price split
Exchange (leasehold for underlying land)	Divide one plot so owner and leaseholder each get freehold	Requires subdivision, survey and tax review

The leaseholder is often the leading candidate to buy, but it turns on their funds and will. Sell to the leaseholder, to a third party, both together, or exchange — which is better turns on the level of ground rent, the remaining term and the relationship with the leaseholder, and we set out the general options and issues. Where underlying land is inherited jointly, all co-owners must agree to a sale — the same structure as in Inheriting a share of a private road.

How are the price of underlying land, the ground rent and renewal fees decided?

There is no uniform standard. The tax valuation and the actual sale price must be thought of separately.

The tax valuation of underlying land (leased land) follows the Basic Property Valuation Bulletin. The value of a leasehold is the value of the land in its self-use state multiplied by the leasehold ratio (Bulletin item 27); underlying land — leased land — is then valued by deducting that leasehold value from it (Bulletin item 25). The leasehold ratio is set by region in the road-value maps and valuation-multiplier tables.

Category	Inheritance-tax valuation (Basic Property Valuation Bulletin)
Leasehold	Self-use land value × leasehold ratio (item 27)
Underlying land (leased land)	Self-use land value − (self-use land value × leasehold ratio) (item 25)

However, this tax valuation and the price at which it actually sells do not match. The market price of underlying land moves with the level of ground rent, the remaining term, the prospect of consent to renewal or assignment, and the leaseholder's attributes. On ground rent, Article 11, paragraph 1 of the 借地借家法 (Act on Land and Building Leases, Act No. 90 of 1991) provides that where the rent becomes unreasonable through changes in taxes and public dues, movements in land price, or comparison with the rent of similar neighbouring land, either party may demand an increase or decrease of the rent going forward. There is no uniform, primary-source figure for consent fees or renewal fees, so no amounts are given here. On comparing net proceeds, see Buy-out versus brokerage — how much does the net differ?. Inheritance-tax valuation and capital-gains calculation are for a tax accountant.

Before selling, how far are inheritance registration and a survey needed?

Complete the inheritance registration of the land first. If the boundaries are unclear, consider a survey too.

A sale presupposes that the seller is the registered owner. Underlying land is "land," so what is needed is the inheritance registration of the land, not the building (the building belongs to the leaseholder). Inheritance registration is also an obligation. Article 76-2, paragraph 1 of the 不動産登記法 (Real Property Registration Act, Act No. 123 of 2004) requires a person who acquires ownership by inheritance to apply for registration of the transfer within three years from the day on which the person becomes aware of the commencement of the inheritance and of the acquisition of that ownership (the obligation came into force on 1 April 2024). The application itself is the work of a judicial scrivener.

Document / task	Where from / who	Why
Certificate of registered matters and cadastral map for the land	Legal Affairs Bureau	Registered owner, extent, parcel number
Land lease agreement	Home, safe deposit box, leaseholder	Ground rent, term, renewal, assignment clauses
Records of ground rent received	Bank book, receipts	Current rent and any arrears
Inheritance registration of the land	Judicial scrivener	Make the seller the registered owner (three-year obligation)
Boundary confirmation, survey, subdivision	Land and house surveyor	For unclear boundaries or subdivision in an exchange

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A missing contract is common. Even then, the ground-rent record and the registration often give you a thread to follow. Where boundaries are unclear, or one plot is divided in an exchange, a survey and subdivision by a land and house surveyor are needed. The interaction of the obligation with a sale is set out in Can the family home be sold before inheritance registration?. The overall picture of inherited property is at Consultation on inherited real estate.

Who should you consult about tax and disputes with the leaseholder?

The roles are divided. Underlying land touches many specialists, so arranging them at the outset avoids confusion.

Task	Who
Investigation, how to think about price, brokerage and the sale contract	四葉不動産株式会社 (licensed real estate agent)
Estate division agreement and documents for public authorities	Administrative scrivener
Inheritance registration of the land	Judicial scrivener
Inheritance-tax valuation of underlying land / leasehold and capital-gains filing	Licensed tax accountant
Boundary confirmation, survey, subdivision	Land and house surveyor
Disputes with the leaseholder; interpretation of the lease; rent-adjustment litigation	Attorney

Investigation of the underlying land, how to think about price, structuring terms with a buyer or the leaseholder, brokerage and the sale contract are handled by 四葉不動産株式会社 (licensed real estate agent, Tokyo Governor (1) No. 113304). Preparation of documents concerning rights and obligations, and documents for public authorities — an estate division agreement, for instance — is handled by 四葉行政書士事務所. These two are independent business entities, engaged separately and directly by you. We neither pay nor accept referral fees or introduction commissions. Inheritance registration of the land is for a judicial scrivener; inheritance-tax valuation and capital-gains filing for a tax accountant; survey and subdivision for a land and house surveyor; disputes with the leaseholder and rent-adjustment litigation for an attorney — each engaged by you directly. Consultation is free of charge.

Frequently asked questions

Q. If I tell the leaseholder I have inherited the underlying land, will I be charged anything?
A. Inheritance is universal succession under Civil Code Article 896; a change of owner needs no consent from the leaseholder, and there is no statutory basis for a consent fee. Even so, on the owner's side it is standard practice to notify the leaseholder in writing that the name has changed, because the payee of the ground rent and the counterparty for renewal change. A specific clause in the contract would change the picture, so check it.

Q. What will underlying land sell for? Will it sell at the inheritance-tax valuation?
A. Normally they do not match. The tax valuation deducts the leasehold value from the self-use land value under Bulletin item 25, but the market price moves with the level of ground rent, the remaining term, the prospect of consent, and the leaseholder's attributes. We read the contract and the rent record before putting a number on it, rather than starting from the valuation. Tax valuation and filing are for a tax accountant.

Q. The leaseholder will not buy the underlying land. Can I sell to a third party?
A. Yes. You can sell the underlying land as-is to a third party or to a firm that buys underlying land. But because the leasehold constraint remains, it is valued as a ground-rent income asset and the price tends to be lower than for vacant land. Selling the leasehold and underlying land together to a third party, or an exchange dividing one plot, are also possible. Which is better turns on the terms, and we set out the general options and issues.

Q. There are several heirs. Can the underlying land be sold while jointly owned?
A. Yes, provided all co-owners are sellers. That means confirming the intention of every one of them, with seals and seal registration certificates (Civil Code Arts. 898 and 899). If it cannot be settled, it becomes a matter of partition of co-owned property under Civil Code Article 256, and if talks fail, ultimately a court proceeding. A dispute at that stage is in the attorney's field. Whether to consolidate into a sole name through estate division first, or to sell while jointly owned, is decided by working back from the deadlines and the number of people.

Sources (primary)

• e-Gov "民法" (Civil Code) — Act No. 89 of 1896. Art. 896 (general effect of inheritance — universal succession); Arts. 898 and 899 (co-ownership and succession in proportion to shares in joint inheritance); Art. 256 (demand for partition of co-owned property). Act No. 45 of 2026 was promulgated on 24 June 2026; its commencement is governed by Article 1 of its Supplementary Provisions. Accessed 14 September 2026.
• e-Gov "借地借家法" (Act on Land and Building Leases) — Act No. 90 of 1991. Art. 3 (term); Art. 5 (renewal request); Art. 9 (mandatory provisions); Art. 11 (1) (right to demand adjustment of ground rent); Art. 19 (1) (permission for assignment or sublease of the land leasehold). Last amended by Act No. 53 of 2023. Accessed 13 September 2026.
• e-Gov "不動産登記法" (Real Property Registration Act) — Act No. 123 of 2004. Art. 76-2 (1), three-year deadline. Accessed 13 September 2026.
• National Tax Agency "No.4613 Valuation of leased land" and "No.4611 Valuation of leaseholds" — Basic Property Valuation Bulletin item 25 (leased land / underlying land) and item 27 (leasehold = self-use land value × leasehold ratio). Accessed 13 September 2026.
• Ministry of Justice, amendments to the Civil Code and Real Property Registration Act — inheritance registration obligation in force 1 April 2024. Accessed 13 September 2026.

No uniform, primary-source figure exists for consent fees or renewal fees, or for the split between underlying-land and leasehold value, so no amounts are given here (unverified). The market price varies with the individual property, the ground rent and the leaseholder's situation. The inheritance-tax valuation and the actual sale price do not match; tax valuation, capital-gains calculation and filing are carried out by a licensed tax accountant. Disputes over partition, rent adjustment or the interpretation of the lease may proceed through the courts, and feasibility and amounts are for the court to decide; this article makes no assessment of any individual case.

This article is general information and does not offer a legal determination. Inheritance registration of the land is carried out by a judicial scrivener, inheritance and capital-gains filings by a licensed tax accountant, survey and subdivision by a land and house surveyor, and disputes with the leaseholder by an attorney. Investigation, brokerage and sale contracts are undertaken by 四葉不動産株式会社 (licensed real estate agent); the preparation of estate division agreements and similar documents by 四葉行政書士事務所 — two 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 Certified Administrative Procedures Legal Specialist, 四葉行政書士事務所; Representative Director, 四葉不動産株式会社 (real estate business licence: Tokyo Governor (1) No. 113304). Kohinata, Bunkyo, Tokyo, about five minutes' walk from Myogadani station. For inherited underlying land, the contract, the registration and the valuation go on the same table. Full profile: author page.