The Japanese media is reporting that monthly fees for condo owners have increased significantly in recent years. We’ve often talked on this blog about these monthly charges, namely building management fees and repair fees, and how in many cases the repair fees were initially set low by developers so as to make them more attractive to buyers. Since these fees go into a fund that will be used down the road for large-scale repairs, often they are insufficient to the task, and when the repairs are finally undertaken there is not enough in the reserve fund and owner-residents have to cough up more money. In a sense, the recent increases in repair fees is a reaction to this reality, since more and more condos are reaching an age when large-scale rapairs are required.

Consequently, the reserve funds for long-term repairs can be quite fat, depending on the size of the building and the number of residents, and with construction companies that specialize in residential buildings losing business because of the decline in population they are eyeing these funds as they expand into renovation. A recent article in the Asahi Shimbun reported on a strange trend that seems to be related. Apparently, non-residents are impersonating residents in order to get into homeowners association meetings so that they can vote on approving plans for repairs, usually earlier than needed. It’s believed these imposters are working for construction companies who want the work.

Asahi cites several cases in the Tokyo metropolitan area. In May, two employees of construction contractors were arrested for “trespassing” after pretending to be residents of a condominium in Kanagawa Prefecture. Since 2024, the two men had attended the condo owners’ association meetings a total of four times using names of real resident-owners. One of the building managers was alerted to the possible imposture and checked one of the names with the real owner, who eventually confessed that he had allowed one of the men to use his family name in exchange for some kind of “reward.” 

The same thing happened at a condo in Chiba Prefecture. A man who did not live in the building attended 10 owners association meetings since July of last year by pretending to be the son of a resident-owner. Another resident who knew the owner in question felt that the “son” looked nothing like the resident and reported their suspicions to police. 

A woman from a different condo who talked to Asahi said that in March of 2024 she received a flyer in her mailbox soliciting “interviewees” for a survey who would be compensated for their participation. She answered the ad and learned that the inquiring company was an Osaka-based marketing firm that was doing undercover work. They needed identities of real people so that they could patronize restaurants and other service providers to check their service. The woman thought it would be her doing the undercover work and thus could get some free meals, but when she met the martketing company liaison in person she found out the real purpose. The liaison said the  service investigation was a ruse, and that their real mission was to check condo management associations to make sure they weren’t wasting or otherwise misusing funds. The liaison asked the woman if he could use her husband’s name to attend meetings. In exchange she would be compensated on a monthly basis. She accepted the offer.

Later, a different man contacted her saying he would impersonate her husband’s brother, and thus needed personal information in order to make the imposture more convincing. He even asked her for a duplicate key so that he could enter the building freely. She did as she was asked. 

Eventually, someone from building management found out and visited the woman. When she tried to contact the marketing company she got no reply and eventually confessed everything to management and later the police, who arrested one of the imposters in early June.

Another article in the Asashi reported on how The Fair Trade Commission has found that some larger contractors have formed cartels to fix prices for large-scale repair and renovation work. Owners associations, of course, usually put out bids in order to find the cheapest contractor, but the cartel system means that the prices are already determined. Since March, the FTC has investigated 30 companies they suspect of price-fixing.

Owners associations have two methods of choosing contractors for repair work. They either choose two companies, meaning one for planning and another for execution, or choose one company to do both. With the first method the hired consultant studies what work needs to be done and then they find a contractor and instruct them on how to carry out the work. Then they monitor the work. The advantage of this method over the other one is obvious: the repair contractor is supervised by a third party in the interests of the homeowners. However, the FTC has found that there is often collusion between consultants and contractors, which would be a violation of antitrust laws. 

The imposter scheme is closely related, since the non-resident mole’s job is to sway the owners’ association in various ways that could benefit their client, which are usually contractors. For instance, they can call for repairs at an early date. Typically, large-scale repairs are carried out every 25-30 years, but contractors are now trying to persuade associations to carry them out every 15-20 years. Also, of course, the imposter will try to get the association to hire a certain contractor or a consultant who has ties to the contractor. 

If all this sounds difficult to pull off, it would be if owners associations weren’t so weak to begin with. As we’ve reported in the past here, not many owners want to participate in regular meetings and so it’s often the outside building management companies who make decisions since they tend to be voting members of these associations. Under such circumstances aggressive non-resident agents can be persuasive, especially if there is more than one. In any event, these outside building management companies may have connections of their own since many were given their job by the original developer of a property and were never replaced by the owners association. In the end, there are many ways to game the long-term repair system.