From signing the contract to handling deposits and paperwork—here’s what you need to know.
Before You Sign: The Explanation of Important Matters
Once your offer is accepted, the process quickly moves into the formal, legally binding stage. Before signing the Real Estate Sale and Purchase Agreement (不動産売買契約書), the seller’s agent is legally required to present and explain the Explanation of Important Matters (重要事項説明書 / juuyou jikou setsumeisho).
This document covers zoning, land rights, ownership, utility connections, risk zone status (e.g. landslide, flood, tsunami), building code compliance, and any known defects. The explanation must be delivered by a licensed agent, either in person or via live video call. Take this time seriously: ask questions, request clarification, and don’t feel pressured to sign immediately. It is a good idea to get the document ahead of time and go through it with your own agent to make sure you understand it fully before the official explanation.
Signing the Contract
Once you’ve received and signed the Explanation of Important Matters, you’ll move on to signing the sale contract. At this point, you’ll pay a tetsukekin (手付金)—usually 5% to 10% of the purchase price. This deposit is credited toward the total price but also serves a legal function: it binds the contract.
If you back out for personal reasons, you forfeit the deposit. If the seller cancels, they typically must return double the deposit (the original amount plus the same again). To protect yourself if you are applying for a loan, ensure the contract includes a loan contingency clause (ローン特約), which allows you to cancel and recover your deposit if your mortgage is rejected.
Can You Cancel the Contract?
Once the contract is signed and the tetsukekin paid, cancellation is limited and can be costly. Here are the main scenarios:
- Loan Contingency (ローン特約): Allows cancellation without penalty if your mortgage is rejected—provided this clause is included.
- Tetsukekin Cancellation (手付解除): Standard in most contracts. Buyers can cancel by forfeiting their deposit; sellers must refund double if they cancel. Often this period is limited to two weeks following signing of the contract or until handover of the property - whichever is shortest.
- Cooling-Off Period: In certain cases (e.g. contract signed off-site with a professional seller), buyers may have an 8-day right to cancel without penalty.
Don’t assume you can cancel freely— make sure to check before signing.
After You Sign: Next Steps
After signing:
- The Real Estate Agent:: Coordinates between buyer, seller, and lender.
- The Judicial Scrivener (司法書士): Verifies title, prepares transfer documents, registers ownership, and coordinates with banks for mortgage registration.
Key tasks after signing include finalizing mortgage approval, preparing for settlement (paying the balance and transferring ownership), and arranging practical matters like insurance, moving services, and utilities. In rural or akiya purchases, buyers may also schedule inspections or tag furniture/appliances they wish to keep.
Summary Cost Checklist at Contract Signing
- Tetsukekin (手付金): 5–10% of purchase price.
- Agent Commission (Part 1): ~50% of full commission (up to 3% + ¥60,000 + tax)(for some agents this is paid only at closing.
- Stamp Duty (収入印紙代): ¥5,000–¥60,000 depending on contract value - can be avoided by using digital contracts
Payments are usually by bank transfer. Always confirm details with your agent and keep official receipts.
Quick Q&A
- What is the first step in making an offer?
- Submitting a purchase offer certificate(kaitsuke-shomeisho).
- What is the tetsukekin?
- A deposit that binds the contract. It counts toward the price but may be forfeited if you cancel without a valid reason.
- Can you cancel after signing?
- Yes—through loan contingency, tetsukekin cancellation, or in rare cases, the cooling-off period.