In our previous article, Making an Offer on a Property in Japan, we discussed how buyers submit a purchase application and negotiate the price and other conditions with the seller.
Once both parties have agreed on the main terms, the next step is to review and sign the purchase agreement, followed by payment of the deposit.
Although we often refer to this simply as the “purchase agreement,” the documentation typically consists of four separate documents.
1. What Documents Are Included?
A typical property purchase in Japan involves four main documents:
① Explanation of Important Matters (重要事項説明書)
This document describes important facts about the property, including legal restrictions and other matters buyers should understand before purchasing. Examples include zoning, road access, building restrictions, and known incidents or other matters requiring disclosure.
② Purchase and Sale Agreement (売買契約書)
This sets out the contractual obligations between the buyer and seller, including the purchase price, payment terms, settlement deadline, cancellation conditions, and any agreed obligations such as repairs or cleaning before handover.
③ Property Condition Report (物件状況報告書)
This is the seller’s disclosure of the property’s condition, based on what they know. It may cover water leaks, encroachments onto neighbouring properties, previous repairs, and disputes with neighbours.
④ Equipment List (設備表)
This identifies equipment included with the property, such as dishwashers, bathroom dryers, and air conditioners, along with any known defects or malfunctions.
Together, these documents explain what you are purchasing, what the seller knows about it, and what each party has agreed to do.
2. Standard Templates and Special Provisions
In Japan, real estate agents commonly use standard contract templates provided by their industry associations. Most residential purchase agreements therefore follow a relatively small number of standard formats. Since many disclosure and documentation requirements are prescribed by law, the differences between templates are often more about wording and structure than fundamentally different contractual arrangements.
However, the most important differences between transactions are often found in the special provisions (特約).
These additional clauses reflect the particular property and the conditions requested by the buyer or seller. For example, if you want the seller to complete repairs, remove furniture, or arrange professional cleaning before settlement, these obligations should be clearly written into the agreement. Payment arrangements and cancellation conditions may also require specific provisions.
Equally important, the seller may include special provisions that you did not specifically negotiate or expect. We therefore recommend reviewing these carefully rather than assuming that everything in a standard-looking agreement is standard.
Once the drafts are prepared, the agents review and revise them until both parties agree on the wording. Sometimes this takes only one exchange, while in more complicated transactions, we have gone through five rounds of revisions before reaching the final version.
3. Who Explains the Documents?
We have covered some of the legal and property-related issues buyers should consider in our previous articles, What to Check Before Buying Property in Japan and Making an Offer on a Property in Japan. Here, we want to focus on how those matters are explained during the contract process.
In Japan, a real estate salesperson does not necessarily need to hold a real estate transaction specialist qualification (宅地建物取引士, commonly called Tak-kenshi). However, a licensed brokerage is generally required to have at least one designated full-time qualified specialist for every five employees engaged in real estate activities at each office.
The formal Explanation of Important Matters must be conducted by a qualified real estate transaction specialist, who is required to present their official identification before the explanation.
In some transactions, a qualified specialist explains the documents in Japanese while an English-speaking salesperson interprets. This is not necessarily problematic, but buyers should be careful about relying entirely on verbal interpretation.
We have heard of a case in which a restriction prohibiting short-term rentals was reportedly interpreted as allowing them. While we cannot verify the circumstances, it illustrates how a misleading explanation could have serious consequences.
From our experience, qualified specialists often take a more conservative approach to explaining restrictions and risks, while salespeople focused on completing a transaction can sometimes be more optimistic. This is not true of every agent, but it is worth keeping in mind.
Where possible, we recommend having the documents explained directly in English by a qualified real estate transaction specialist. If an interpreter is involved, ask for important explanations, particularly those concerning restrictions, defects, or special provisions, to be confirmed in writing.
4. How Is the Agreement Signed?
Once the final drafts are agreed upon, the contract date and signing arrangements can be confirmed.
There are three common ways to sign a purchase agreement in Japan.
① In-Person Signing
The buyer, seller, and their respective agents meet in person. After the required explanation, the documents are signed and stamped as applicable, and the buyer pays the deposit. Once the funds are received, the seller issues a receipt.
② Circulated Signing (持ち回り契約)
The parties sign separately, typically with the seller signing first. The original documents are passed through the agents to the buyer, who signs and arranges payment of the deposit. Each party then receives an executed copy, and the buyer receives a receipt for the deposit.
③ Electronic Signing
The parties sign electronically, usually in a predetermined order. The buyer arranges payment of the deposit in coordination with the signing process, and the seller issues a receipt once the funds are received.
At Jin’s Homes, we frequently use electronic signing, and we have seen it become increasingly common among agents handling international transactions. It simplifies the process for overseas buyers by eliminating the need to travel to Japan or exchange original paper documents by international courier.
Regardless of the signing method, the deposit must be ready for payment at the agreed time. For overseas buyers, this often means arranging the funds well in advance, as international transfers may take several days or longer.
Once the agreement has been signed and the deposit paid, the purchase becomes contractually binding, subject to the terms and cancellation provisions of the agreement.
At this point, the buyer can proceed with the formal mortgage application, if financing is required, or begin arranging the remaining purchase funds.
In our next article, we will discuss ID Verification, including the documents overseas buyers may need to prepare before settlement.
