An Explanation of Important Matters

After your purchase application was accepted by a seller, you will proceed to sign a housing contract. Before signing a contract, however, Japanese law requires the registered real estate agent to review all important contractual matters and property details with you.

This system, known as Explanation of Important Matters (重要事項説明書: juyoziko setsumeisho),” is designed to protect the buyer from misunderstandings as well as problems that may arise after the purchase transaction is complete.

Let’s take a look at more details of Explanation of Important Matters and what you should know beforehand!

What does Explanation of Important Matters include?

Explanation of Important Matters includes: an overview of the property, legal rights and limits, management of the property, limitation of its use, and other important detailed information about a property. Because many technical terms are used in Explanation of Important Matters, it can be difficult to understand them at first glace. For those who are reviewing it with an agent and not sure about what is in it, here is a brief summary of Explanation of Important Matters. By knowing its contents, you will know what to look for.

*This document below is specifically for an apartment property. Although the layout of the document varies depending on the property type (i.e. residual land, house, or apartment) most of the items described in the document possess similar formats of contents.

A.  取引形態 (Transaction type)

• 売買 (selling and buying)
• 交換 (exchange)
•  媒介 (intermediate)
• 代理 (represent, on behalf of)
• 売主 (seller)

B. 宅地建物取引業者 (Real estate agent)

1. 免許証番号 (license number)
2. 免許年月日 (license date)
3. 主たる事務所の所在地 (address of the main office)
4. 電話番号、商号または名称、代表者氏名 (phone number, agent name, representative name) 

Tips: Please make sure if the agent is licensed or not. If not, the agent is not qualified to perform this transaction business process.

C.  区分所有物 (Condominium property)

Property information such as address and property size are typically described in this section regardless of form based on property type.

D.  対象となる宅地または建物に直接関係する事項 (Items directly related to the property)

The information about the owner of the property as well as ownership rights and other realted rights attached to the property is described in this section. 

Tip: If there is a form of collateral attached to the ownership rights, you should make sure how these rights affect you.

E.  都市計画法、建築基準法以外の法令に基づく制限 (Limits based on Building Standard Act and City Planning Act)

I. 都市計画 (City Planning Act)

1. 区域区分 (area division)
2. 市街化調整区域 (urbanization promotion area)
3. 都市計画施設 (city planning facilities)
4. 市街地開発事業 (city development project)

II. 建築基準法 (Building Standard Act)

1. 用途地域  (use district)
2. 地域・地区・街区名 (region/district/block name)
3. 建ぺい率 (building area ratio)
4. 容積率 (floor area ratio)
5. 壁面線の制限 (limit of wall surface line)
6. 外壁後退 (setback of wall)
7. 敷地面積の最低限度 (minimum size of lot area)
8. 建物の高さの制限 (limitation on building height)
9. 日影による中高層 の建築物の制限 (limitation on shade for middle and high rise buildings)
10. 地方公共団体の条例等による制限 (restrictions by ordinance)
11. 私道の変更または 廃止の制限 (alternation or discontinuance of private road)

F.  私道に関する負担等に関する事項 (Items related to burden for private road)

A private road is similar to the strip of cement in your front lawn leading to your house that distinguishes your private property from the public sidewalk. In Japan, houses can be aligned together along a smaller, narrower cement road privately shared and owned by the residents who utilize it to get to their houses. Moreover, a private road with a width of four meters or less typically has a dead end by the last two houses facing each other If the property lay within a private road, you need to know which part is the private road is owned by who, including your portion. 

G.  飲用水・電気・ガスの供給施設および排水施設の整備状況 (Maintenance status of drainage facility and supply system of water, gas and electricity)

Tip: Utilities (water, gas and electricity) are essentials for your life. It is important to know whether a property possesses with these utilities and whether or not there are any additional costs that you must cover.

H.  当該宅地建物が造成宅地防災区域内か否か (whether property location is in a zone of potential disaster)

Tip: If the property is located in a hazardous zone, you need to build retaining wlls to prevent sliding or erosion caused by potential construction diasters.  

I.  当該宅地建物が土砂災害警戒区域内か否か(Whether the property is located in landslide warning zone)

当該宅地建物が津波災害警戒区域内か否か 

(Whether the property is located in tsunami warning zone)

These are highlighted designated areas prone to be affected in time of disasters such as landslide or tsunami. 

Tips: You would need to know whether the property is located in a disaster-prone warning zone becaues there are some restrictions on construction or development in these zones.

J.  石綿（アスベスト）使用調査の内容 (Items regarding to the survey result of asbestos)

Due to its fire resistance, durability, low cost and good composition for a heat insulator, asbestos was widely used in construction materials in Japan. However, it caused health risks to people who inhale the mineral’s thin fibers. Since 1975, the use of asbestos was completely banned. If the property was built before 1975, you should check out the survey report result if there is asbestos used.

K.  耐震診断の内容 (Items related to seismic diagnosis)

After experiencing the big earthquake in Miyagi Prefecture in 1978, the Building Standard Act was revised and the New Anti-seismic design code was implemented in 1981. If the property was built before 1981, you can refer to the diagnosis to see if the property was deemed an earthquake resistant building or not.

L.  住宅性能評価を受けた新築住宅である場合 (A new house with a housing performance evaluation)

The agent will explain whether or not an evaluation was conducted in the past. Because this evaluation is conducted based on the legal process, it serves as a good reference to know the property’s quality.

M. 契約の解除に関する事項 (Items related to termination of contract)

(1) 手付解除 (cancellation by forfeit of earnest money)

(2) 引渡し完了前の滅失・毀損による解除 (termination by loss and damage of property before trasferring)

(3) 契約違反による解除   (Termination of contract due to violation of contract)

(4) 融資利用の特約による解除 (termination by special contract regarding mortgage)

(5) 譲渡承諾の特約による解除 (termination by special contract regarding transfer agreement)

(6) 反社会的勢力の排除に関する特約に基づく解除 (termination by special contract regarding anti-social force)

Tip: This item includes very important content about when you can and by what means the contract can be terminated. By having early knowledge of possible termination causes, you can avoid problems and conflicts.

N.  損害賠償額の予定または違約金に関する事項 (Items related to penalty fee and compensation fee for damage)

This is a fee that you have to pay when you or seller violate the contract. In general, a penalty fee is within 20% of a property price, especially when the seller is real estate agent.

O.  金銭の貸借のあっせん (Mortgage)

When the real estate agent intermediary provides mortgage service to you, they will explain who the lender is, what the interest rate will be and payment method options. They will also explain what happens if you are ineligible for a loan. In most cases, the contract will be terminated in accordance with the description in part M (4).

P.  瑕疵担保責任の履行に関する措置の概要(Summary regarding warranty against defects)

Warranty against defects means that the seller has a responsibility to repair and cover the cost of defects if the property is defective. [Japanese law states that the seller is obligated to gain insurance in case of the inability to pay] Law obligates the seller to purchase insurance in case of the seller’s inability to pay because the repair cost is too expensive.

Q.  割賦販売に係る事項 (Items related to installment sale)

If the property is sold as with installment payments, the agent will explain you how to pay and how much to pay before and after the seller transfers a property. It’s imporatant to understand the payment methods and conditions since it’s easy to get confused and lead to some problems.

R.   瑕疵の責任 (Responsibility for defect)

This section explains what kind of defects are the seller’s responsibility as well as the buyer’s responsibility. The seller takes a responsibility for the hidden defects, such as ceiling leak, termite and broken supply pipe. 

Some of what is written in the Explanation of Important Matters are difficult to understand even for the local Japanese buyers. If there is something that you did not understand when reviewing these terms with an agent, it is important to ask the agent for further explanation and clarification in order to avoid misunderstandings.

Tip: These are very important things to know before you sign a contract because they will affect your ability to determine how you can use your land later on. For instance, if a property is located in an urbanization promotion area, there is a limitation on the construction that can be done. Be attentive to information in the Building Standards Act section: you should look at the details carefully since there are development restrictions prescribed in accordance with which of the twelve land use zones and other districts the property lay within.

If you have any questions or would like to arrange a viewing, please feel free to contact us!

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• An overview of explanation of important matters (Part 2)
• What to Do If You Find a Defect in Your Property
• How to Avoid Buying a Defective Residence