Buying a property in Japan (for non-Japanese residents)

I. Use a buyer's agent

A buyer's agent is responsible for representing the buyer's interest in a real estate transaction. Usually, buyer's agent is compensated by the buyer at the time you purchase a property. Commission is calculated when the purchase price more than ¥4mil. as follows:
(Purchase price × 3%) + \60,000 = Brokerage commission (consumption tax not included)

II. Pre-qualify for a loan

To apply for the mortgage loan,

• The applicant must be aged 20 or above but 70 or younger. (Loan must be paid off at age 80)
• Annual income ¥4mil. or more. (income below ¥4mil. needs to have Japanese co-signer)
• The applicant will reside in the property purchased.
• Not a lease hold land

Most banks requests Permanent Resident, but some are not. The documents you must provide (for both mortgage and title registration).

1. Alien Registration Card
2. Original copy of the Proof Document of Alien Registration (Certificate of foreign registration)
3. Personal seal (Hanko)
4. Certificate of Seal Impression
5. Driver's license or National Health Insurance
6. Certificate of tax deducted form (from your employer)

Etc.

III. Offer (Letter of intent)

If you meet the property just what you have been looking for, offer made in writing are always best. But you should be aware that Letter of Intent in Japan is not legally binding on either the buyer or the seller. It is just a little bit better than a verbal offer to the seller. Even though a seller may be negotiating with one buyer, this doesn't preclude him from entertaining offers (Letter of Intent) from other buyers. Until the purchase contract is accepted by both the buyers and the sellers, the property is open for everyone. The agent doesn’t have a duty to filter out offers. All offers need to be transmitted to the seller promptly.

IV. Juyoujikou-Setsumeisho (Important Instruction for the property)

This document is almost same as The Property Disclosure Statement or Seller's Real Property Disclosure Statement. The seller is responsible for telling potential buyers about the condition of the property. This document are drafted and explained by your agent or seller's agent before you strike a deal. Typically this document specifies the following:

• Description of the property
• Purchase price and deposit
• Registry book
• Zoning
• Water, electricity and Gas
• Condominium
  Bylaw
  Maintenance fee and management fee
  Management
  Record of maintenance
• Mortgage
• Etc

V. Sales contract

Sales contract includes these terms:

• Name of the seller and buyer
• Description of the property
• Purchase price
• Deposit amount (deposits are in between 5% to 10% of the purchase price)
• Closing date (date of title transfer. We do not have Escrow system in Japan)
• Free and clear title transfer
• Force majeure
• Seller's limited warranty
• Deposit forfeiture clause
• Breach of contract, cancellation and penalty (penalty limit = 20% of the purchase price)
• Mortgage finance contingency clause (it can run as long as 30 days)
• Revenue stamp duty
• Jurisdiction (in case of lawsuit)

VI. Title transfer (Title closing)

Title closing is a point in time during a real estate transaction when all of the business of transferring ownership of a piece of property is finished and title to the property is conveyed by the grantor to the grantee. Title transfer will be conducted by buyer or mortgage bank appointed solicitor (judicial scrivener) to check all the necessary documents such as:

 

Seller---	Deed Registered seal Certificate of Seal Impression
Buyer---	Original copy of the Proof Document of Alien Registration (Certificate on Registered Matters) Registered seal
Fees and expenses (approx. 6% to 10% of the purchase price) including:
	Title registration fee and solicitor fee Revenue stamp Commission for the agent Prorations (allocation of certain expenses between the buyer and the seller such as property tax) Mortgage fee for the bank (the lender must give the borrower a good-faith estimate of all settlement costs)

 

After checking all the documents carefully by solicitor and the title is free and clear, buyer pays the balance of purchase price and expenses. You will receive clear and marketable title to the property.

Please feel free to call us about procedure of real estate transactions. We are always happy to help you.