When you buy a condo in Japan, you have to pay two monthly management fees for as long as you live there. The first is a normal maintenance fee for things like cleaning in and around the common areas and keeping the elevators running properly, ranging anywhere from ¥15,000 to ¥40,000 a month. The second is a “repair” fee, for when more extensive maintenance work, such as painting and remodeling, of common areas are required–normally, ¥6,000 to ¥20,000 a month. Usually, the developer of the condominium selects a building management company at the time of construction, which means the eventual buyers have no say in who looks after these payments and orders up the work. It’s not like a coop in the US. After all the homeowners move in they form an association and appoint one of their members as the representative to deal with the management company. The potential for abuse is ripe, as shown by a recent news item.

Last week the media reported that one Tokyo building management company was being investigated for embezzling repair funds from some of the condos it manages. Apparently, the company would propose repairs and maintenance and submit the invoice to the homeowners representative for approval. Most of the time there is no discussion about these repairs. The representative just applies his or her stamp to the invoice. Afterwards, the management company would alter the invoices, adding several zeroes. In one case they altered an invoice for ¥1,788 to make it ¥9,001,788. Then they would deduct that amount from the repair account.

The land ministry said that they know of at least 127 such cases since 2003. The total amount embezzled was about ¥1.2 billion. The ministry told condo homeowners associations to be more diligent in its dealings with management companies, but one of the pitfalls of condo living is that there isn’t really much solidarity among the people who live in the same building. The continuing atomization of society means that even condo dwellers have little contact with their neighbors and thus the kind of power that a true cooperative can wield is missing. Management companies that embezzle count on this dynamic: the homeowners don’t keep track of the repair fund as a body and so it’s easy to take advantage of the situation.

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