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 x 3.15%) + ¥63,000 =
Commission (including tax)
II. Pre-qualify for a loan
To apply for the mortgage loan,
- The applicant must be aged 20 or above but 65 or younger.
- 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)
- Alien Registration Card
- Original copy of the Proof Document of Alien Registration (Certificate of foreign registration)
- Personal seal (Hanko)
- Certificate of Seal Impression
- Driver's license or National Health Insurance
- 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.
IV.
Juyoujikou-Setsumeisho
(no English translation)
This document is almost same as The Property Disclosure Statement or Seller's Real Property Disclosure Statement. 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.
Purchase contract
Purchase 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 (closing)
Title transfer will be conducted by buyer or mortgage bank appointed solicitor to check all the necessary documents such as:
Seller---
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Deed
Registered seal
Certificate of Seal Impression |
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Buyer---
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Original copy of the Proof Document of Alien Registration (Certificate on Registered Matters)
Registered seal
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Fees and expenses (approx. 6% to 10% of the purchase price) including:
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Title registration fee and solicitor fee
Revenue stamp
Commission for the agent
Prorations
Mortgage fee for the bank |
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.
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