Japanese property system – Real property transaction

Japanese business start-up consultant

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.

I hope the information is useful.

I will update every Monday.

For more information
Japanese business start-up consultant
Shihoshoshi Lawyer
(Judicial Scrivener)
Akiko HORI

How to Buy a property in Japan

Japanese property system – Tax

Japanese business start-up consultant

The below is the Taxes to sort out during the conveyancing process in Japan.

1. Stamp Duty (印紙税)

Stamps shall be obtained at a post office.
For this transaction, the duty is 100,000 Japanese Yen for a Sales and Purchase Agreement of over 100 million Japanese Yen and less than 500 million Japanese Yen in principle but when the date of agreement is before 31 March 2022, the stamp duty is 60,000 Japanese Yen.

Regarding a contract, in the Civil Code, no written agreement is necessary but under the Real Estate Brokerage Act, Article 37(1), an estate agent must issue a document concerning a property sale.

2. VAT (Consumption tax) (消費税)

Land itself is tax-free but a building is taxable, so that VAT is required when acquiring a building.
VAT is 10% as of 2020.
In addition, VAT will be applied on brokerage fee for an estate agent on the amount of the fee base.

3. Registration and license tax (登録免許税)

The tax applies when registering rights of land and a building at the Legal Affairs Bureau.
The tax amount is calculated by multiplying the assessed value of the fixed assets by the tax rate 2% for a building and 1.5% for land.
“The assessed value of the fixed assets” is not the same of the market value. It is determined by a local council on the Standard Valuation Code of the fixed assets basis by the Ministry of Internal Affairs and Communications. This assessment is renewed once every three years.
The valued price is stated on a certificate of evaluation for fixed asset tax.

4. A pro rata payment for Fixed assets tax and City planning tax (固定資産税・都市計画税の精算金)

A taxpayer for Fixed assets tax and City planning tax is the person that is the owner or the real property as of 1st January, so that the taxpayer doesn’t change even though a real property is transferred after 1st January. It is common for a seller and a buyer to agree to prorate Fixed assets tax and City planning tax per diem based on the delivery date for real property transaction.

5. Acquisition tax (不動産取得税)

In principle, the tax amount is calculated by multiplying the assessed value of the fixed assets by the tax rate 4%.
However, the tax rate applied to the acquisition of residential land and a building is at 3% because of the special measures as of 2020.
A payment notice is issued after a few months of the delivery date.

I hope the information is useful.

I will update every Monday.

For more information
Japanese business start-up consultant
Shihoshoshi Lawyer
(Judicial Scrivener)
Akiko HORI

How to Buy a property in Japan

Japanese property system – Seal (Inkan or Hanko)

Japanese business start-up consultant

Japanese people use Seal (Inkan or Hanko) instead of signature.

In Japan, generally, people have Seal(s) and perform stamping a document on a daily basis, such as collecting a parcel, opening a bank account, showing that a document is officially approved and so on.

However, there is no law about Seal itself.
The system is operated by council ordinances and regulations. There are no uniform standards for a stamp.
In Japanese, Seal is called different words, such as Inkan(印鑑), In (印), Hanko (判子), Insho (印章).

Types of a stamp

1. Mitomein (認め印)
Most Japanese people own a Mitomein Just for convenience.
Also a Japanese legal entity generally possesses it for a daily business transaction.

2. Ginkoin (銀行印)
The stamp is used to open a bank account for an individual and a company.

3. Jitsuin(実印)
The stamp is the official stamp for an individual and a company and is registered at the local council where an individual person resides and at the Legal Affairs Bureau as a company to legally authenticate company documents.
After the registration is done, a certificate is issued.

I hope the information is useful.

I will update every Monday.

For more information
Japanese business start-up consultant
Shihoshoshi Lawyer
(Judicial Scrivener)
Akiko HORI

How to Buy a property in Japan

Japanese property system

Japanese business start-up consultant

The buyer should prepare the documents below.

1. A certificate of a corporate registry certificate
2. A certificate of Buyer’s corporate seal impression

1. A certificate of a corporate registry certificate
(Rirekijikouzenbu Shomeisho 履歴事項全部証明書(謄本) in Japanese)

Time for preparation: Less than 1 day.
Cost: 600 Japanese Yen (At the desk of the bureau)
480 Japanese Yen (Online + at the desk of the Legal Affairs Bureau)
500 Japanese Yen (Online + Post)

When requesting a registry certificate, online is possible but to request it online, installing special software is necessary, so that many people go to the Legal Affairs Bureau to obtain it.

Since 2008, a corporate registry certificate can be received at any registry office nationwide because of a registration information exchange system.

When submitting an application form for a real property registration, if the applicant is a corporation, there is no need to attach the corporate registry certificate (3 month before the registration application), subject to providing the description of the corporate registration number on the application form since 2 November 2015.

However before submitting an application, it is common for a seller and buyer to confirm the official existence of a corporate entity, so that parties generally obtain each certificate.

2. A certificate of Buyer’s corporate seal impression
(Inkan Shomeisho (法人)印鑑証明書 in Japanese)

Time for preparation: Less than 1 day.
Cost: 450 Japanese Yen (At the desk of the bureau)
390 Japanese Yen (Online + at the desk of the Legal Affairs Bureau)
410 Japanese Yen (Online + Post)

When a buyer buys a real property in cash, there is no need to obtain this.

I hope the information is useful.

The below is my thought.
At present, the global economy is suffering from a financial crisis due to coronavirus.
The number of infected people and deaths in Japan is relatively low.
The UK seems to be taking a strategy to delay the onset of the peak of the disease until the summer months (BBC News).

Considering this situation, I am always thinking that I want to deal with a situation in a way that I make sense for my decision as far as possible even if the future results are not as expected.
Because after making a decision, all I can do is to wait for the future results regardless the decision that I previously do is recognised right or not.
No one knows what the future holds.

I will update every Monday.

For more information
Japanese business start-up consultant
Shihoshoshi Lawyer
(Judicial Scrivener)
Akiko HORI

How to Buy a property in Japan

Japanese property system

The seller should prepare the documents below.

1. A certificate of seal impression
2. A certificate of evaluation for fixed asset tax
3. Information for registration identification

Regarding other documents, such as the cadastral map, parcel area survey drawing and so on, relate to the real property, the estate agent in charge should prepare and check.
In Japan, an estate agent prepares many conveyancing documents.

1. A certificate of seal impression
(Inkan Shomeisho 印鑑証明書 in Japanese)

Time for preparation: Less than 1 day.
Cost: 300 Japanese Yen (At the desk of the local council).
Place to go: The local council where the sellers register their residential addresses.

2. A certificate of evaluation for fixed asset tax
(Koteisisan Hyoka Shomeisho 固定資産評価証明書 in Japanese).

Time for preparation: Less than 1 day.
Cost: 400 Japanese Yen per one land and one building
(It might differ from a council.).
Place to go: The local tax office which charges on the real property.

3. Information for registration identification
(Touki Shikibetsu Jyoho 登記識別情報 in Japanese)

It is a Title Deed which proves a person is a legal holder of a registered right. Under the current system, it is a 12-digit PIN code but before March, 2005, it was issued with stamp from a legal Affairs Bureau and it is still valid. It is a piece of paper but a lawyer normally files it with other relevant documents.

Most nations follow one of two main legal systems and Japan based its Civil Code. The information recorded on a title is legally assumed to be correct and is the best evidence of ownership. The Japanese treatment of land and buildings differs from that of most Western countries, where a building and the land it occupies form one estate. The Japanese law of property treats the land and any building on it as separate estates, subject to separate systems of registration.

I hope the information is useful.
I will update every Monday.

For more information
Japanese business start-up consultant
Shihoshoshi Lawyer
(Judicial Scrivener)
Akiko HORI

Japanese property system

The below is a case study for conveyancing process in Japan.

For example, I am supporting my client, a limited liability company, to purchase property in Tokyo.
This includes a transfer of the property.

1. People involved
The buyer is a limited liability company that is registered at the Legal Affair Bureau in Japan, but whose representative is non-Japanese and resides in Tokyo.
The sellers are individuals who jointly owned the property.

2. Target property
The property consists of land and a three-storey building. The land area is 382.12 square meters (4,113.10 square feet) and the building has a total area of 477.70 square meters (5,141.92 square feet).
The value of the whole property is JPY 140,000,000 (roughly equivalent to GBP 1,000,000).
The property has no mortgages attached to it.
The seller has owned the property for the past 7 years.

How is this transaction dealt with?
I will update every Monday.

For more information
Japanese business start-up consultant
Shihoshoshi Lawyer
(Judicial Scrivener)
Akiko HORI

Doing business in TOKYO

Japan is a country that Secure, Safe Clean and Punctual, which are essential doing business.  In addition, Japan has a rich nature because of the humidity and people appreciate the nature and worship every nature.

In this year (2020), the Tokyo Olympics and Paralympics will be held.
Those living in Japan, those planning to do business and those visiting Japan from abroad are most welcome to take this advantage.

Tokyo Metropolitan Government promotes the “Global Financial City: Tokyo” Vision
National Strategic Special Zone

1. Entrepreneurship/Employment
Tokyo One-Stop Business Establishment Center
Tokyo Employment Consultation Center

2. Urban Revitalization
Development of international business centres
The building of a large underground bus terminal in front of Tokyo Station
The building of new stations near Toranomon and Shinagawa stations

3. Tourism
Relaxation of the Inns and Hotels Act
For more information
Japanese business start-up consultant
Shihoshoshi Lawyer
(Judicial Scrivener)
Akiko HORI

Legal Advice for Business in Japan