In Japan, it is common and legally permitted for one estate agent to represent both a purchaser and a seller in the conveyancing process. It is called ‘Dual agency’.The whole responsibility of explaining the disclosure statement, such as Seller’s Property Information Form for the property is placed on an estate agent. Real Estate Brokerage Act regulates this.
1. Letter of Intent (LOI) （不動産購入申込書）
A letter of intent is prepared by a buyer to begin negotiations with a seller in real property transaction.
The document generally states the intentions, purchase price and the property details but payment terms and a date for an agreement is decided after consultation from the estate agent in charge. This procedure does not legally bind the buyer to buy the real estate.
2. Sale and Purchase Agreement and Property Information Form （売買契約書及び重要事項説明書）
A Sale and Purchase Agreement is a legally binding contract that is a valid agreement between the buyer and the seller of the real property.
Property Information Form is for the seller to give the detailed information about the real property, such as registered rights, the name of the owner, restrictions based on the law, regulation and so on.
The buyer generally delivers earnest money to the seller at the time of the agreement. The buyer may cancel the agreement by forfeiting his/her earnest money or the seller may cancel it by reimbursing twice its amount, until either party commences performance of the agreement. When the transaction is finalised, the earnest money is put toward the sales price.
3. The legal transfer of the real property (Conveyancing) （決済）
On the day of settlement, the buyer pays the remaining sum and other expenses, and then receives the keys and documents that come with the real property.
The Shihoshoshi lawyer takes a Registration Form to a Legal Affairs Bureau.
In Japan, property transaction will take effect only to the extent of the parties’ intention, which means property registration follows the principle of contract registration. The buyer needs to register his/her right in order to assert such a right to a third party but the registration is not indefeasible as it can be altered or cancelled, unlike registration systems in some countries, such as the Torrens system. However, in practice, there are few cases in which the registered rights are invalid and safety of transactions is impaired.
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