Housing Inspections and Evaluations: Problems and How to Create Mechanisms to Solve Them

December 01 (Thursday) 2005

During the past few weeks, one societal problem has attracted a tremendous amount of attention: the discovery that a construction company has been making and selling low-quality apartments and defective homes. In the event of an intensity 5 or greater earthquake--a very common event in Japan--these buildings would not survive. There are three issues related to this problem. First, while the inferior quality of the buildings is a key issue, more than this, such inferior quality was used purposefully by those involved. Second, as a result, there exists no remedy for this problem to give the victims peace of mind. Third, and most important, Japan has no systematic mechanism to prevent this kind of incident from occurring again.

Regarding the first issue, it has been discovered that there are a number of construction companies that build and sell houses to average citizens that do not meet earthquake safety requirements. This discovery has revealed that are many parties involved in this problem. One such party involved is the architect who forged dozens of structural calculations documents attesting to the level of earthquake resistance of the buildings. Criticized for having these false documents made are the builder Kimura Kensetsu and the midsize condominium-seller Huser Management Ltd. These companies built numerous buildings, including condominiums, houses, and hotels, and sold them at dubiously low prices. The way that these companies were able to sell buildings so cheaply was by reducing the amount of reinforcing steel (i.e. number and thickness of support beams) and other purposeful cost-cutting methods. Structural calculations documents list the quality of the overall structure, but these companies encouraged the Aneha Architect Design Office to overlook the falsified certificates when it carried out its inspections.

At the same time, with the passage of the Revised Building Standards Law in 1998, the following year saw the establishment of the Designated Evaluation Body (a third-party institution), and as of now there are over 108 bodies recognized. One such body is E-Homes, which, despite being aware of the inferior quality of the houses, did not declare them in violation, and remained silent regarding the problem for many years. Thus, from the point of view of the average consumer, it was possible to acquire a house that was both absurdly cheap and spacious. In actuality, however, consumers were faced with a two-fold swindle: not only was their home insufficiently stable in the event of an earthquake, but they were also misled by falsified safety reports and the inspection company's silence. In other words, these companies committed purposeful criminal acts with intent to deceive consumers.

Second, such buildings that would collapse in the event of an intensity 5 or greater earthquake are extremely dangerous, and local governments with jurisdiction over the buildings have begun issuing orders for condemnation and displacement advisories for residents. The consumers have no choice but to leave their homes while still bearing the burden of the loans they took out to buy them. In response to this, the aforementioned companies have tried various measures, such as tricking consumers by offering reparations while slyly avoiding the actual burden, or by trying the bankruptcy route in order to escape liability. In other words, the guilty companies are doing everything they can to avoid reimbursing the consumers.

Third, building owners such as Huser ignored national standards and built poor quality homes, profiting by cutting corners on safety. Japan has no system for severely reprimanding such behavior. If an accident occurred, criminal responsibility and civil liability indemnity would follow. In cases where such criminal responsibility would be declared negligent, the penalties would not be very heavy. At the Ministry of Labor, Infrastructure and Transport's November 29 hearing by the Lower House Committee, the parties involved admitted to cost cutting, but demonstrating that these dangerous acts were conducted with willful intent is difficult. Thus, it is very likely that criminal responsibility will be light. Compared to the amount of profits they raked in through duplicitous means, then, the payment will be exceedingly small. If they declare bankruptcy, the reimbursement liability will be zero.

For these reasons, it is becoming possible for those who conduct criminal behavior to take advantage and profit from the system. A mechanism where a crime leads to fatal liability--thus making the act of committing a crime itself uneconomical--does not exist in Japan. Due to the exposure of the above points, this case is attracting an extreme amount of social interest. Furthermore, it also has demonstrated that the current system has a great many defects, including the willfulness of crimes, the absence of remedies for consumers, and a lack of mechanisms to prevent this kind of incident from happening again. This crime is one that is directly connected to individuals' everyday lives, and as there are a great number of parties connected with this incident, the current scandal has only chipped the tip of the iceberg. As an almost symbolic event, this incident hits close to home. Therefore, a great sense of unease has risen amongst the general public.

How can such a problem be solved? The most important thing is to create a system guaranteeing that criminal behavior that threatens the lives of citizens does not pay. One reason for the diffusion of the housing inspection system in the U.S. is that, in the case of residents living in buildings not evaluated by a government-approved organization, and who suffer damages from accidents and other problems as a result, it is common practice that lawsuits will result in the company at fault shouldering fatal indemnities. Therefore, there is a very high social penalty for not upholding the law. In comparison, the level of legal and social sanctions is low in Japan, and thus lawless behavior flourishes.

Though I do not believe that America's overly litigious society is always a good thing, I feel that it is vital for Japan to devise a system that metes out economically prohibitive and grave penalties to behavior that threatens the public's livelihood. At the same time, Japan must also convert the housing inspection system in full measure into a compulsory one, adequately cultivate personnel who are involved with residence inspections, and waste not one minute in improving the nations' infrastructure.