Since a real estate sales contract is a major transaction involving high-value assets, a written contract is generally prepared and exchanged. The Real Estate Brokerage Act also obliges real estate companies (real estate agents) to deliver a document describing the contents of the contract without delay after the contract is concluded, with the real estate agent's name and seal affixed.

The revised part of the Real Estate Brokerage Act of the Digital Improvement Act took effect on May 18, 2022, making the seal of a real estate transaction agent unnecessary when a paper document is delivered upon conclusion of this contract, and also making it possible to provide the document digitally.

This section describes the main points that should be confirmed in a sales contract. There are, of course, other points that should be confirmed, so if you have any questions, be sure to check with your real estate agent until there is no uncertain points left.

Point 1: What to check in a sales contract

The following is a list of common items in a sales contract and points to be checked. However, keep in mind that the details of the contract and the points to be checked will vary depending on the individual contract.

Check for any errors in the description of the property to be purchased. Generally, the property is indicated in the contract based on the registration record (registry). It is a prerequisite of the sales contract that the property to be sold or purchased is clearly defined.

Confirm the amount of the sales price, deposit, etc. and the date of payment. Note that failure to pay by the due date may constitute a breach of contract. Also, carefully check the handling of the deposit. Confirm what kind of deposit (cancellation deposit, deed of promise, or penalty deposit) it is and whether the amount is appropriate (approximately what percentage of the purchase price it is). If the deposit is a cancellation deposit, check how long it is possible to cancel the contract. ​If there are any concerns about the seller's credibility, the buyer should proceed with caution when paying a large deposit or other such payment.

The area of land may differ from the area indicated in the registration record (registry) to the actual area. Therefore, the seller often measures the actual area of the land before delivery. If, as a result of the actual measurement, the area of the registration record (registry) differs from the area actually measured, the sales price may be settled according to the difference in area. (It is also possible to only take the actual measurement and not to settle the price.) Generally, the settlement of the sales price is made using the unit price per square meter based on the original sales price and the original sales area (the area on the registration record (registry)).

Confirm the timing of transfer of ownership and delivery. Check if there are any problems based on the schedule for moving, etc. While the transfer of ownership and delivery take place in exchange for payment of the price, in practice, real estate transactions are often completed when the documents necessary for the registration of transfer of ownership and the keys are handed over to the buyer at the place of payment.

In the case of an existing house, it is necessary to clarify the transfer of facilities such as interior lighting and air conditioning, as well as garden trees and garden stones on the premises. Troubles surrounding the taking over of such auxiliary facilities and equipment are surprisingly common, so it is necessary to fully discuss with the seller what will be taken over and what will be removed prior to signing the contract.

​It is also important to confirm in advance the condition of the equipment to be taken over, including whether it is in disrepair. When signing a contract, it is common to check each item of equipment one by one using a list of ancillary equipment, etc. (The list used confirm the conditions of the ancillary equipment is called a "notice" or "property condition report.)

(6) Discharge of Burdens
Confirm that the property to be purchased will be acquired with full title. For example, the property with any rights that would prevent the full exercise of ownership, such as mortgages or leasehold rights, will be delivered with the seller's responsibility to remove such rights. Note that if the property is delivered without such rights being removed, it may not be available for use as planned after purchase.

​In the sale of investment properties, it is often the case that the property is occupied by tenants, in which case only the lease agreement with the tenants will be taken over by the buyer. In this case, it is necessary to clarify the rights to be taken over and the rights not to be taken over.

(7) Settlement of taxes and public dues, etc.
In a real estate sales contract, it is common for the seller and buyer to settle taxes and public dues such as fixed property tax and city planning tax. In addition, other expenses such as management fees may also be settled. Settlements are often made on a pro-rata basis based on the date of delivery. Settlement fees such as these are also required separately from the sales price, so it is important to confirm the details.

(8) Cancellation by forfeit
Since the contract may be cancelled due to some unforeseen circumstances, the parties concerned should confirm what kind of arrangements are in place for cancellation by forfeit. Of course, by agreement between the parties, it is possible to make a contract that does not allow for the release of a deposit, or to limit the period during which the deposit can be released.
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The amount of the deposit is generally set within the range of up to 20% of the purchase price. If the deposit is small, the burden is small when you cancel the contract, but the risk of cancellation by the other party is high. On the other hand, if the deposit is large, the risk of cancellation by the other party is low, although the burden is greater when you terminate the contract. Be sure to check the amount of the cancellation deposit as well.

(9) Loss or damage to the property prior to delivery (burden of risk)
This is an arrangement in the event that the property to be purchased is lost or damaged after the conclusion of the sales contract for reasons for which neither the seller nor the buyer is responsible, such as the total destruction of the building due to a natural disaster.

​In a real estate transaction, the seller generally restores the property before handing it over. However, if the restoration of the property will cost an excessive amount of money, or if the buyer cannot achieve the purpose of the contract because the property has been lost or damaged (for example, it cannot be restored to a livable condition), the contract can be terminated unconditionally. This is an arrangement in case of emergency, so be sure to check it carefully.

(10) Cancellation for breach of contract except for nonconformity
This is an arrangement for canceling a contract due to breach of contract (i.e., breach of promise, which is legally called "default"). If either the seller or the buyer is in default, the other party can cancel the contract. If the contract is cancelled due to a breach of contract, the party who breached the contract generally pays a penalty. In many cases, the penalty, etc. is generally set within the range of up to 20% of the sales price. Although a sales contract is not concluded on the assumption that the contract will be violated, there are contingencies, so be sure to check the contract carefully in advance.

(11) Exclusion of Anti-Social Forces
In order to "exclude antisocial forces" from real estate transactions, standard model clauses for exclusion of antisocial forces have been introduced. Confirm that the sales contract includes clauses assuring that "neither the seller nor the buyer is a crime syndicate or other anti-social force" and "the property will not be used as an office or other base of activities of anti-social forces. If any of these are violated, the contract can be terminated.

(12) Loan provisions
If the buyer is unable to obtain a mortgage loan despite the fact that he/she is not at fault, the buyer will not be able to pay the purchase price and will ultimately be in breach of the contract. Since the buyer should avoid such a situation, it is common for the buyer to attach a loan provision to the purchase agreement when purchasing a house with a mortgage loan. The buyer can unconditionally cancel the sales contract in the event that the mortgage loan review is unsuccessful.

However, this provision does not apply if the buyer is unable to obtain a loan due to the buyer's fault, for example, if the buyer fails to follow the necessary procedures for loan approval. Even if a loan provision is in place, it is important to fully consider the financial plan before signing the contract and to have a good prospect of obtaining a loan. ​Please note that in some cases, additional optional construction works or specification changes in newly built condominiums may not be covered by the loan provision.

(13) Liability for nonconformity to the contract
If there is a defect in the property sold or purchased, the buyer can make certain claims against the seller. The seller's liability in this case was previously referred to as "defect liability. However, due to an amendment to the Civil Code, the name has been changed to "liability for nonconformity to the contract" as of April 1, 2020, and its contents have also changed significantly.

The seller is obligated under the sales contract to deliver the property that conforms to the terms of the contract with respect to the type, quality, and quantity of the property. If the seller fails to fulfill this obligation and delivers the property, he or she is liable for nonconformity to the contract. In such a case, according to the provisions of the Civil Code, the buyer can demand repair of the property, reduction of the price, or compensation for damages, and can cancel the contract if the non-conformity is not minor. However, this provision of the Civil Code is a general rule when the parties have not made any agreement, and the parties may make other arrangements.

​In actual contracts, special provisions are usually made regarding the extent to which the seller is liable for nonconformity and the period for which the seller is liable. Therefore, as a buyer, you should carefully check the contents of the contract regarding the extent to which the seller is liable and the period of time for which he/she can make a claim.

If a building condition survey has been conducted and a summary of the results is explained as an important matter before a contract is signed, the summary of the survey results will be included as "matters confirmed by both parties regarding the condition of the main structural members of the building, etc." (If a building condition survey has not been conducted, it will be indicated as "none.")

When a real estate company is the seller, the Real Estate Brokerage Act sets restrictions on sales contracts. If applicable, please check the contents of the contract and make sure in advance that the contract does not violate any restrictions before signing the sales contract.

After receiving an explanation of important matters and being satisfied with the contents of the contract and the property, it is time to conclude the sales contract.

In principle, the buyer and seller will meet to read out the sales contract and make a final confirmation of the contents of the contract. The contract is then signed and sealed, and the deposit, etc. is paid. The deposit, etc. may be prepared in cash, by wire transfer to a designated account, or by deposit check.
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If a real estate company acts as an intermediary, a brokerage fee is often paid at the time of contracting. If there is oversight in the contract procedures, a sales contract cannot be concluded, which will cause inconvenience to the seller and other parties involved,  so be sure to be well prepared before signing the contract.

​In real estate transactions, the Law for Prevention of Transfer of Criminal Proceeds requires the seller or the real estate company acting as an intermediary to present identification documents and to declare the seller's occupation and the purpose of the transaction.

There are three types of deposits: (1) earnest money deposit, (2) cancellation deposit, and (3) penalty deposit.

(1) Earnest money deposit
A deposit given and received for the purpose of evidencing the conclusion of a contract.
(2) Cancellation deposit
A cancellation deposit is a deposit that allows

• the buyer to cancel the sales contract by waiving (not demanding the return of) the deposit he/she has paid, and 
• the seller to cancel the sales contract by returning to the buyer twice the amount of the deposit that has been received.

(3) Penalty deposit
A deposit that, in the event of a breach of contract by either party, will be forfeited or doubled as "punishment" for the breach of contract, in addition to compensation for damages.

The termination of a contract by means of a cancellation deposit is generally referred to as "release of deposit." For example, if circumstances have changed significantly since the contract was concluded, it is possible to cancel the contract by waiving or doubling back the deposit. However, the contract can be canceled with release of deposit only until the other party begins to fulfill the contract. In other words, if the other party has already performed the promises stipulated in the contract, the deposit cannot be cancelled.

​However, in releasing a deposit, there are often troubles over "whether the other party has started to fulfill the contract or not. In addition, since both the seller and the buyer have the right to terminate the contract during the period when release of deposit is possible, it remains uncertain whether the contract will be fulfilled or not.

Therefore, the period that allows cancellation by release of deposit may be limited to "within ● days from the date of the contract" or "until ●●● year".

* A deposit is presumed to be a cancelation deposit if not otherwise specified.

After receiving an explanation of important points and both the buyer and seller agree on the terms of the contract, a sales contract is concluded. Once a contract is concluded, it cannot be easily cancelled. Therefore, it is important to fully confirm its contents beforehand. Keep in mind that although the real estate company provides an explanation, the contract is ultimately concluded on self-responsibility.

The content of the contract between the seller and the buyer is unrestricted as long as it does not violate laws and regulations, offend public order and morals, or otherwise cause problems. Conversely, the principle is that the contract should be concluded at one's own risk. There are certain laws and regulations in place to ensure that consumers are not unilaterally disadvantaged by contracts, but they do not cover everything. It is important that you confirm the contents of the contract and conclude the contract at your own risk.

​Matters not stipulated in the contract are to be determined upon consultation in accordance with the Civil Code and other related laws and regulations. Therefore, if important contract terms are unclear, it may lead to problems after the contract is signed.

When a real estate company is the seller, the Real Estate Brokerage Act provides certain restrictions so that a disadvantageous contract will not be concluded for the buyer. This protects the buyer who concludes a contract directly with the real estate company, which is the expert in real estate transactions.

Since there are differences in the ability to access information and negotiate between business entities and consumers, the Consumer Contract Act establishes specific contract rules for contracts between business entities and consumers (referred to as "consumer contracts") with the aim of protecting consumers, and also affects real estate purchase and sale contracts. For example, the Act provides that a contract can be rescinded if the consumer has misunderstood the contract, and that clauses that are disadvantageous to the consumer (such as clauses that exempt the business entity from liability for contractual nonconformity, etc.) become invalid.

​Although a consumer under the Consumer Contract Act refers to an individual who concludes the contract for business purposes is not covered by the protection of the Consumer Contract Act. The Consumer Contract Act applies to contracts concluded by individuals for purposes other than business. It is important to understand that it also applies to real estate sales contracts.

In a real estate sales contract, it is common for the buyer to pay a "deposit" to the seller at the time the contract is concluded.

There are three types of deposits:
(1) Deed deposit
(2) Cancellation deposit
(3) Penalty deposit

Generally, in a real estate sales contract, the deposit is given and received as the "cancellation deposit" described in (2). The Civil Code also states that in the absence of any special provisions regarding the nature of the deposit, it is presumed to be a cancellation deposit.

A "cancellation deposit" is a deposit that allows the buyer to cancel the sales contract by waiving (not requesting the return of) the deposit already paid, and the seller to return to the buyer twice the amount of the deposit already received. However, a contract can be canceled by the deposit only until the other party executes the contract. In other words, if the other party has already fulfilled the promises stipulated in the contract, the contract cannot be cancelled by the deposit.

​​Especially when conducting large transactions such as real estate sales, a contract is an important promise based on the relationship of trust between the seller and buyer. Therefore, once a contract is concluded, it generally cannot be easily canceled for the convenience of one party. The main types of contract cancellations are as follows.

*The above table is a general guideline, and the procedures for cancellation differ for each individual contract.

Defects in properties, such as leaks or corrosion caused by termites, have been referred to as "defects," and the seller's liability for such defects has been called "liability for defects. However, due to the revision of the Civil Code enforced on April 1, 2020, not only the name but also the content of this liability has been drastically changed. 

​The revised Civil Code is based on the premise that the seller is obligated to deliver a property that conforms to the terms of the contract with respect to "type, quality, and quantity" of the subject matter of the sale, and that if the seller delivers a property that does not conform to the terms of the contract with respect to those items, the seller is liable for default. For example, if the seller delivers a building that has leaks or corrosion caused by termites, the seller is in default of his/her obligation to deliver an object that conforms to the terms of the contract with respect to quality.

When the subject matter of the contract is nonconforming as described above, the buyer can demand the repair of the nonconformity, and when the seller does not do so even after the repair is demanded, or when the repair itself is impossible, the buyer can demand a reduction of the purchase price. In addition, under the general principle of default, a claim for compensation for damages can be made, and the contract can be terminated. However, compensation for damages cannot be claimed if the seller is not responsible in any way. Cancellation is also not allowed when the nonconformity is minor.

Under the Civil Code, the buyer must notify the seller of the nonconformity within one year of becoming aware of it, because it is considered unreasonable for the seller to be liable for the nonconformity for a long period of time, and because it is appropriate to settle such disputes arising from the sale as early as possible.

This provision of the Civil Code is an optional provision, meaning that it can be changed or modified at will, so another provision can be made by a special agreement between the parties. Especially in the case of an existing house (used house), it is difficult or impossible to determine whether a certain defect or other event constitutes a non-conformity to the contract due to age-related deterioration, natural wear and tear, etc. ​Therefore, in general transactions, the scope of the seller's liability is limited or the period of liability is shortened. In some cases, there is also a provision that the seller is not liable at all. Even in such cases, the seller is not exempt from liability if he/she knew of the nonconformity and failed to inform the buyer, but otherwise, the seller is exempt from liability as per the special provision.

With regard to liability for nonconformance with contract in cases where a real estate agency or a real estate company is the seller and the buyer is not, under the Real Estate Brokerage Act, a provision to the effect that the seller is liable for nonconformance with contract is valid only if the seller is notified within two years of the date of delivery. However, other than that notice period, provisions that are less favorable to the buyer than those of the Civil Code, such as "only repair claims" or "the contract can be terminated if the seller approves" other than during such notice period, is invalid.

All corporations are "business entities" under the Consumer Contract Act, including those that are not real estate companies. In a contract in which a business entity acts as the seller and sells to a consumer, a contract provision stating that the business entity is not liable for nonconformance is considered invalid under the same Act.

 In the case of a newly built house, the real estate company that is the seller must assume liability for defects (*) for 10 years for the main structural parts, etc. (foundation, pillars, roof, exterior walls, etc.) of the house. ​In order to avoid a situation where the seller cannot fulfill its liability for defects due to bankruptcy, etc., the seller is obligated to sign an insurance policy or deposit a security deposit at the time of delivery to the buyer. The seller is required to explain to the buyer which measure, insurance or deposit, will be applied at the time of the important points explanation and the sales contract, so make sure to check the details carefully.
*The Housing Quality Promotion Act uses the term "liability for defects," but the revised Civil Code uses the term "liability for nonconformity of contract as to type and quality.

Before signing a contract, an "important points explanation" is always given. Important points regarding the property to be purchased and the terms and conditions of the transaction are explained. It is important to understand the details before making a final decision on whether or not to purchase the property.

The Real Estate Brokerage Act stipulates that a real estate company must provide an important points explanation regarding the property to be purchased to the prospective buyer before concluding a sales contract. An explanation of important points must be given orally by a licensed real estate agent after he/she has signed and sealed a written document describing the contents and given the document to the client.

It is possible that you may decide not to purchase the property after receiving the explanation of important points, so it is important to receive the explanation of important points at an earlier stage. After receiving an explanation, you will want to take sufficient time to consider the matter and resolve any questions before signing the contract. For this reason, it is advisable to confirm in advance with the real estate agency the schedule for the important points explanation and the sales contract. There tends to be little time to consider the situation in the final stage of negotiations related to buying and selling. Make sure to set aside enough time in the schedule so that you can make a final decision after careful consideration.

Online (IT) Explanation of Important Points 
An explanation of important points is required to be provided orally by delivering a document signed and sealed by a licensed real estate agent. However, when certain requirements are met, a non-personal explanation using "IT" (computers and other terminals) such as videoconferencing is now considered the same as a face-to-face explanations of important points. In order to implement an IT explanation, the following four requirements must be met.

1. Conduct in an IT environment that allows two-way communication (between the real estate transaction agent and the customer).
2. Send (to the customer) a copy of the important points explanation in advance.
3. Before the explanation of important points begins, the licensed real estate agent confirms that the consumer is ready to receive the explanation, including in an IT environment.
4. Confirm that the customer can see the real estate agent's license on the screen.

The revised part of the Real Estate Brokerage Act of the Digital Improvement Law went into effect on May 18, 2022, making the seal of a licensed real estate agent unnecessary when he/she delivers the important points explanation in paper form, and also making it possible to provide the document by electromagnetic means (electronic document delivery) instead of a paper document.

The important points explanation may seem difficult because it contains some technical details, but you will be able to understand it if you have it explained to you one by one in detail. In addition, it will be easier to understand if you grasp the overall picture of the important points explanation and then check the key points.

​The following is an explanation of eight items that you should particularly check in the important points explanation.

A licensed real estate agent will sign and seal the document, provide the document, and give an oral explanation.

1. Basic confirmation before receiving an explanation
A licensed real estate agent provides a written document and a verbal explanation.
2. Basic property checks

• Has the property been identified?
• Are the rights (mortgages, etc.) organized?

3. Legal restrictions

• Are there any restrictions on the use of the land?
• Will the building be built as planned?
• Will there be any expenses incurred?

4. Infrastructure maintenance

• Is the water supply and other infrastructure in place?
• Are there any special requirements such as private roads, etc.?

5. Other laws and regulations, etc.

• Are there any other restrictions on the use of the property?
• Are there any other costs incurred?

6. Condominiums

• What are the rights?
• What are the rules for building use, repair and management?

7. Terms and conditions

• Is the contract appropriate?

8. Other

• ​Is there a money loan arrangement?
• ​Are there any other items to be checked?

prospective buyer
"I have confirmed and understood what has been explained to me."

In the transaction of an used house, the past history and hidden defects of the house may become an issue, but there is a limit to what a real estate company can understand about all of these matters that are originally known only to the seller or owner. Therefore, many real estate companies ask the seller to submit a written notice (a written confirmation of incidental facilities and property conditions), conduct a property investigation based on it, and reflect it in the explanation of important points.

Guidelines Concerning Notification of Death of a Person by a Real Estate Agent
When a real estate agent is aware of a person's death and believes that it will have an important influence on the decision to conclude a contract for a real estate transaction, it is necessary to notify the customer of this fact. However, each person has his or her own view of death, and the degree to which it affects his or her judgment of the contract differs. Therefore, in October 2021, the Ministry of Land, Infrastructure, Transport and Tourism (MLIT) compiled the "Guidelines for Notification of Death of a Person by a Real Estate Agent."

It provide guidelines on the extent to which real estate agents should investigate the death of a person and the extent to which they should notify the prospective buyer of the death of a person. The guidelines state that real estate agents should investigate the death of a person by asking the seller to include it in the "notice" and that they are not required to investigate the death of a person by asking around the neighborhood or researching on the Internet.

Regarding notification in sales transactions, the law states that notification is not required for "natural death or unforeseen death in daily life (natural death such as senility, death from illness due to chronic disease, or accidental death such as a fall or aspiration)." However, even in such cases, notification is required if the property has been left unattended for a long period of time, and if special cleaning such as deodorization and disinfection or major renovation has been performed. In the case of an incident occurring in a neighboring dwelling unit of the subject property or in a common area that is not normally used, no notification is required. However, it is necessary to give notice in cases where the death of a person is an incident or has a significant social impact, or when it is considered to have an important influence on the decision to conclude a contract.

Once you have decided on the property you want to buy, before making an offer to purchase, double-check that the property meets your requirements and that there are no problems before making an offer to purchase.
Proceed with the transaction carefully, referring to the following points when making an offer to purchase.

Once you find a property you like, discuss terms and conditions in detail. Do not hesitate to ask the real estate company for information you would like to know about the property, and also thoroughly check the property and confirm any points of concern during the site visit. While consulting with the real estate company, make your desired purchase conditions specific. Once the basic conditions have been established, present the conditions to the seller and make an offer to purchase.

At this stage, basic conditions such as the desired purchase price and desired delivery date are often presented first. However, if there are other prerequisites for the purchase in addition to the basic conditions, they may be presented.  In the case of a used property, you may also request for repairs to the property.

The negotiation process after submitting an offer to purchase differs between new properties for sale and used properties. 

Generally, applications to purchase a new property for sale are made at the local sales office. When offering to purchase a property, you are often required to pay what is known as an "application deposit" (approximately 50,000-100,000 yen).

The application deposit is paid to show that the intention to purchase is genuine (i.e., that it is not a "pretense"), and when the contract is executed, it is applied to the deposit and the purchase price of the property.

However, the legal nature of the application deposit is not always clear, and there are many troubles surrounding its return. Therefore, if you are asked to pay the application deposit, be sure to confirm the handling of the application deposit and receive a certificate of deposit, etc. that states the purpose of the money transfer (that the money was transferred as the application deposit), the amount, and the date of payment.

After paying the application deposit and submitting an application to purchase, you will proceed with the specific procedures up to the purchase, such as confirming property information and contract terms in more detail.​

In the case of used properties, the application for purchase (presentation of basic conditions) is often made in the form of a document called a "certificate of purchase" or similar document, which is given to the seller through the real estate agency.

A certificate of purchase is a document signed and sealed stating the basic terms of purchase, such as the desired purchase price, payment terms, and desired delivery date, and is a request for the start of preferential individual negotiation, based on the specific purchase desire, "I want to buy this property under these terms and conditions. Note that in the case of used properties, payment of an application deposit, etc., is generally not required.

Subsequently, if the seller, based on the conditions presented by the prospective purchaser, determines that a contract is viable, formal individual negotiations will begin. Since the seller narrows down the negotiating parties to some extent at this stage, it is important to proceed with subsequent negotiations in good faith. In individual negotiations, differences in terms and conditions between the two parties are adjusted, and more specific terms and conditions are determined.

It is possible that after an application for purchase (presentation of basic terms and conditions), the buyer may wish to withdraw the application due to disagreement on various terms and conditions after specific negotiations have been conducted. In such a case, it is generally possible to withdraw the application as long as a purchase agreement has not been concluded. In addition, an application deposit, if paid, will be refunded.

​However, you should keep in mind that the seller, especially of a pre-owned property, has begun individual negotiations based on a certain degree of likelihood that a contract will be concluded. ​Be very careful when withdrawing your application, because if you are found to be dishonest, you may have a problem with the seller.

Point 1: ​Know how interest rates work and their characteristics.

The lower the interest rate, the lower the interest expense and the lower the total repayment amount. For example, if you borrow 10 million yen and make equal monthly repayments of principal and interest over 35 years, the difference in total repayments will be approximately 2.25 million yen if the interest rate is 3% or 2%.

​Note that, in general, the interest rate on a mortgage loan is applied at the time of loan origination, not at the time of loan application. This means that there is a risk that the interest rate at the time of actual borrowing may be higher than the interest rate confirmed when you applied for the mortgage loan. In particular, when purchasing a newly built property for sale before it is completed, it is advisable to make a financial plan with sufficient time to consider the risk of interest rate increases since the loan will be executed after the property is completed.

There are two main types of principal and interest repayment methods:
(1) equal repayment of principal and interest (a method in which the total amount of principal and interest to be repaid each time is set to be constant) and 
(2) equal repayment of principal (a method in which the amount of principal to be repaid each time is set to be constant).

​Equal repayment of principal and interest makes it easier to make a household budget schedule because the monthly repayment amount is fixed, but the pace of principal repayment is slower than with equal repayment of principal and interest, and if the loan term is the same, the total payment amount will be higher with equal repayment of principal and interest.

On the other hand, equal repayment of principal has the advantage of allowing the borrower to repay the principal amount faster, but the initial monthly repayment amount is higher. However, if the borrower is willing to make principal repayments quickly even if the initial repayment burden is heavier, it is advantageous to choose the equal principal repayment option.

Since many financial institutions only offer mortgages with equal repayment of principal and interest, it is advisable to check the mortgage products of each financial institution as early as possible when considering borrowing.

Point 2:  Three main types of mortgage products

There are various product types, depending on how the interest rate is set relative to the principal. The three main types as follows.

The fully fixed interest rate type is a product in which the interest rate is fixed for the entire loan period. Generally, if interest rates are expected to rise during the fixed interest rate period, the initial applicable interest rate will be higher than the variable interest rate type, etc. However, even if interest rates fluctuate during the borrowing period, the amount of mortgage loan repayment will not change from the initially set amount.

Floating-rate loans have interest rates that are reviewed semiannually, and the repayment amount is reviewed every five years based on interest rate movements. However, even if the repayment amount rises as interest rates fluctuate, it is capped at 1.25 times the existing repayment amount. In the event of a rise in interest rates, the initial applicable interest rate is generally lower than that of the fully fixed-rate type, but the borrower bears the risk of subsequent interest rate rises.

In the fixed-term option type, the interest rate is fixed for a certain period, such as 3 years or 5 years, and at the end of that period, the interest rate is set again (fixed term or variable interest rate) and the repayment amount is reviewed according to that interest rate. The choice of the fixed period varies from financial institution to financial institution. If the interest rate after the fixed period ends has risen significantly, the repayment amount may increase significantly because there is no upper limit to the amount of increase in the repayment amount as there is with the variable interest rate type.

To prevent trouble concerning a brokerage fee, it is important to take note of the legal regulations for brokerage fees and the precautions to be taken when concluding a mediation contract.

According to the Real Estate Brokerage Act, there is a maximum amount of brokerage fees that a real estate company can receive. Therefore, if a real estate company receives a brokerage fee that exceeds the maximum amount, it is in violation of the law. While the maximum amount that is stipulated by law, it does not mean that the maximum amount can automatically be charged.

In the brokerage of a real estate transaction, the real estate company's right to charge a brokerage fee occurs when a sales contract is concluded. (It is generally called "a transaction completion fee.") Therefore, it is not necessary to pay a real estate company a mediating fee until a sales contract is concluded.

When a sales contract is concluded, the right to claim a brokerage fee arises from the real estate company. For example, it is not illegal if the full amount of the brokerage fee is paid to the real estate company at the time the sales contract is concluded. However, since in real estate transactions there are many cases in which delivery has not been completed at the time of contract conclusion, it is generally common to pay 50% of a mediating fee at the time of contract conclusion, and to pay the remaining 50% at the time of completion of delivery.

Expenses incurred by a real estate company in ordinary brokerage work cannot be charged to the client. For example, the costs related to advertising expenses and site visits for prospective buyers that are generally conducted are included in the brokerage fee that is incurred when a sales contract is concluded. Exceptionally, "actual expenses" such as advertising expenses incurred based on the client's special request are allowed to be charged. For example, a real estate company can claim the cost of advertising that was specially implemented at the client's request, travel expenses for negotiations with a prospective purchaser in a remote area that were conducted at the client's request, etc., separately from the brokerage fee.
However, it should be noted that the exceptions are limited to cases where all of the following conditions are met:
(1) the cost was incurred based on the client's request,
(2) the cost is not incurred in the ordinary brokerage business, and
(3) the cost is an actual cost. 

Maximum brokerage fees
The maximum amount of a brokerage fee to be paid to a real estate company is set for each monetary category of the sales price as follows.

The maximum amount of a brokerage fee for land with a sales price of 10 million yen
→ The sales price is broken down and calculated as follows.

a) The portion up to 2 million yen
2,000,000 yen  x  5% = 100,000 yen
b) The portion exceeding 2 million yen up to 4 million yen
2,000,000 yen x 4% = 80,000 yen
c) The portion exceeding 4 million yen up to 10 million yen
6,000,000 yen x 3% = 180,000 yen

a + b + c = 360,000 yen
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*The amount obtained by adding the consumption tax to this amount is the maximum amount of the brokerage fee.

• For properties exceeding 4 million yen, the following formula can be used to calculate the brokerage fee:

          →　sales price x 3 % + 60,000 yen + consumption tax

In the case of an inexpensive sale or purchase of a vacant house, etc., where the cost of on-site inspections, etc. is higher than usual, the brokerage fee that can be received from the seller of the vacant house or the person exchanging the house is limited to the total of the above maximum amount and the cost of on-site inspections, etc. (however, the maximum is 180,000 yen plus consumption tax). The brokerage fee must be agreed upon between the two parties in advance.

*Real estate companies to watch out for
Be wary of real estate companies that engage in the following inappropriate discussions regarding brokerage fees. If you have any doubts, you should clarify them until you are satisfied. If you receive an insincere explanation, there is room to reconsider your request to that real estate company.

• Offering commission terms that exceed the maximum amount.
• Explaining the maximum amount as if it were a flat fee set by law.
• Automatically charging advertising fees, etc. that are incurred in addition to the brokerage fee.

The "standard mediation contract clauses" (hereinafter referred to as "Standard clauses") cover the basic matters to be stipulated in a mediation contract, and prevent a mediation contract disadvantageous to the consumer from being concluded. 

​The following is an outline of the standard conditions of contract and matters to be confirmed.
If there are any conditions that are not included in the Standard Terms and Conditions, make them as clear as possible by adding them. The Ministry of Land, Infrastructure, Transport and Tourism also recommends that matters that are not disadvantageous to the client be added to the Standard Terms and Conditions in a more specific manner.

(1) Whether the contract is based on standard terms and conditions or not
The Ministry of Land, Infrastructure, Transport and Tourism instructs a real estate company to conclude a mediation contract based on standard terms and conditions. Since whether or not it is a contract based on standard terms and conditions is indicated in a mediation contract, confirm it. If it is a contract not based on standard terms and conditions, ask the reason why standard terms and conditions are not used.

(2) Types of mediation contracts
It is stated in the contract whether it is a full-time mediation contract, under-exclusive-contract exclusive duty mediation contract, or general mediation contract. Moreover, in the case of a general mediation contract, whether it is an explicit type or a non-explicit type is described. Check whether it is the contract which you hope for.

(3) Display of the subject property
The property subject to brokerage or the desired conditions of purchase are indicated, check for any errors.

(4) Obligations and duties of a real estate company
The basic duties to be provided by the real estate company are specified. It is possible to describe the details of the duties in greater detail. After confirming the duties of the real estate company and the contents of its business, if there are any matters to be added, coordinate with the real estate company.

(5) Effective period and renewal
The effective period of a mediation contract is described. A full-time mediation contract and exclusive-contract full-time mediation contract have the legal regulation that an effective period must not exceed three months. Although there is no legal regulation concerning an effective period in a general mediation contract, it is assumed to be decided within the range not exceeding three months in standard terms and conditions. Set the validity period in consideration of the expected purchase schedule, etc. (It is also possible to make a contract for a period shorter than three months.)
The mediation contract will be renewed by an offer from the client at the expiration of the effective period. Please decide the effective period after renewal within the range not exceeding three months. A mediation contract is renewed only by the client's request, and is not automatically renewed. Please carefully determine whether or not to renew by the client's own judgment.

(6) Brokerage value
The desired purchase price, etc., which was finally determined based on the desired purchase price of the prospective buyer and the advice of the real estate company, is stated. Since this is an important agreement that affects negotiations up to purchase, be sure to check it thoroughly.

(7) Brokerage fee (compensation)
The amount of a mediating fee to be paid to a real estate company and the time of payment are described. Since there are many troubles concerning a mediating fee, discuss with a real estate company thoroughly before concluding a mediation contract. In addition, since there are laws and regulations concerning the maximum amount of a mediating fee that a real estate company can receive, please understand the outline before discussing with a real estate company.

(8) Obligations of the client
In the standard terms and conditions, the obligations of a client is also defined in order for the client and the real estate company to proceed with the transaction in good faith with each other. If there is a breach of duty by the client, the real estate company can claim expenses, etc. to the client based on a mediation contract, up to the amount equivalent to a brokerage fee.

●　Obligation when a general mediation contract (explicit type) is concluded
​If you request mediation to another real estate company concurrently during the term of validity of a mediation contract, you are obligated to notify the real estate company to that effect.
●　Obligations common to a general mediation contract (non-explicit type) and (explicit type)

• When a sales contract is concluded, you must notify all real estate companies to which you requested mediation to that effect. This is to avoid other real estate companies continuing their brokerage business without knowing the fact that a contract has been concluded.
• It is prohibited to conclude a sales contract (this is called "direct dealing") with the seller of the housing referred to by a real estate company during the effective period of a mediation contract for two years after the termination of the mediation contract, without working through that real estate company. This prevents "insincere" dealings such as intentionally terminating a mediation contract and then contracting with the seller who was introduced by a real estate company in order to avoid the payment of a mediation fee to the real estate company.
  

(9) Cancellation of a mediation contract
A mediation contract can be canceled in the following cases.

●　Cases in which either a client or a real estate company can cancel the contract
When one of a client or a real estate company does not perform the duties defined in a mediation contract, and when the other party does not perform the duties in spite of having set a reasonable period of time to perform them, a mediation contract can be canceled by the other party. ​(In other words, if there is a "breach of contract" with regard to a mediation contract, it can be terminated within a certain period of time if the other party does not perform even if you demand that he or she fulfill the obligation).
​●　Cases in which a client can cancel the contract

• When a real estate company does not execute the business set forth in a mediation contract in good faith
• When a real estate company intentionally or by gross negligence does not tell a fact or tells a falsehood about important matters concerning a mediation contract
• When a real estate company commits a dishonest or extremely unfair act with regard to the Real Estate Brokerage Act (including cases where there has been misconduct in the brokerage business of another client)

(10) Exclusion of Anti-Social Forces
For the purpose of "exclusion of antisocial forces" from real estate transactions, standard model clauses for exclusion of antisocial forces have been introduced. Confirm that clauses such as "the person who request mediation and the real estate company/agent are not members of anti-social forces such as organized crime groups" are included in the clause of a mediation contract with a real estate company. If the other party acts contrary to these, the contract can be canceled.

(11) Mediation of persons who conduct building condition inspections
Under the Standard Terms and Conditions, a building condition investigation (investigation to grasp whether or not events such as cracks, rainwater leaks, etc., have occurred in a building) is implemented at the time of an existing house transaction, so that a purchasing decision and negotiation can be made after fully understanding accurate information concerning the state of the housing that is the subject of the transaction.  The client's intention will be confirmed by indicating the possible mediation of the person who carries out a building condition investigation and specifying the presence or absence of mediation in the mediation contract document.​

A mediation contract is concluded when formally requesting a real estate company to mediate a sale and purchase.　A mediation contract is an important document to clarify the service contents of mediation that you hope for and its consideration, such as a commission. It is necessary to conclude a mediation contract after conveying one's intention to a real estate company firmly so that there will be no regret.

A mediation contract is a contract between a client and a real estate company concerning mediation of the sale and exchange of a housing site and a building. A mediation contract can prevent troubles related to agency work by clarifying the contents of the work (what kind of service is received) and a mediation fee, etc. that a prospective buyer requests of a real estate company in a contract. Therefore, the real estate company which received a mediation request is legally obligated (Article 34-2 of the Real Estate Brokerage Act) to prepare and deliver to the client a document describing certain matters to clarify the contractual relationship of a mediation contract.

The revised part of the Real Estate Brokerage Act of the Digital Improvement Act came into effect on May 18, 2022, and the document at the time of this mediation contract conclusion can be provided by electromagnetic means (electronic document delivery) in place of a paper document.

Since the conclusion of a mediation contract is an important step that serves as a gateway to subsequent mediation work, it is necessary to properly understand the contents.

There are three kinds of mediation contracts: "exclusive-contract full-time mediation," "full-time mediation," and "general mediation." In exclusive-contract full-time mediation and full-time mediation, only one company can provide brokerage services, but in general mediation, two or more real estate companies can provide brokerage services. However, when requesting mediation of purchase, it is usual to conclude general mediation. (Exclusive-contract full-time mediation and full-time mediation contracts are not often concluded.) In addition, since there are an explicit type and a non-explicit type in a general mediation contract, based on the following explanation, choose the contract which suits you.

This contract allows you to request multiple real estate companies to act as intermediaries at the same time. You can also sign a contract with the other party you have found yourself (such as when negotiating directly with a relative or acquaintance) without having to go through a real estate company. However, you will ultimately decide through which real estate company to proceed with the transaction. Generally, it is common to proceed with a deal with the real estate company that introduced the most promising housing.

There are "an explicit type" and "a non-explicit type" in a general mediation contract.
​In the case of an explicit type, it is necessary to notify the real estate companies that you have requested mediation of which other real estate companies you have commissioned mediation to, even though the contract permits simultaneous requests to other real estate companies. On the other hand, in the case of a non-explicit type, it is not necessary to notify the real estate company of whether you have made concurrent requests to other real estate companies or what kind of companies you have been working with.

When a mediation contract is concluded, while the contents of the contract become clear, various contractual obligations arise for the client, so please be sure to keep in mind the points to be kept in mind.

(1) Clearly convey the desired conditions
It is important to reiterate to the real estate company the desired conditions, such as the time of purchase and the desired purchase price, based on circumstances such as the time when moving is possible and the financial plan necessary for purchase. Of course, there are cases in which purchase may be difficult under the desired conditions, so after sufficient discussion with the real estate company, final conditions should be determined.

Before concluding a mediation contract, it is also important to reconfirm the contents of the mediation work presented by the real estate company. ​Failure to make this confirmation may result in a situation where you do not receive the services you thought you were entitled to.

After clarifying the details of the brokerage business, confirm the brokerage fee. Make sure you understand the laws and regulations regarding brokerage commissions, etc., and discuss them with the real estate company.

As for a mediation contract, the Minister of Land, Infrastructure, Transport and Tourism publicly announces "Standard mediation contract terms and conditions" (hereinafter referred to as "Standard terms and conditions") for the purpose of standardization of mediation contracts and consumer protection. Since a mediation contract is generally concluded by the standard terms and conditions regarding mediation for a residence, etc., it is important to correctly understand the contents and matters to be confirmed.

In addition, the real estate company will indicate whether or not the real estate company can arrange for the person who conducts the building condition survey (inspection) (limited to those conducted by an architect who has completed the training course specified by the Minister of Land, Infrastructure, Transport and Tourism), and will specify whether or not such arrangement can be made in the mediation contract document.

When purchasing a home, it is important to gather information on properties. In addition to gathering information on individual properties on your own using the Internet or information magazines, it is also effective to ask a real estate agent who has a lot of information on properties and the local area to help you find a property.

When looking for a brokered property, have the real estate company that acts as an intermediary between the seller and the buyer, called a brokerage firm, look for the property. The real estate company provides information on properties that meet the conditions of the prospective buyer, and then supports the entire real estate transaction, including on-site visits, negotiations with the seller on terms and conditions, property explanations (explanation of important matters), contract procedures, and delivery procedures (on-site attendance, settlement of payment and expenses, etc.). Advice can also be sought on specialized areas such as law and taxes.
​
It is difficult for non-expert parties to directly negotiate a contract with the seller, but by having a real estate company, a professional in real estate transactions, act as an intermediary, negotiations can be expected to proceed smoothly. If there are any uncertainties, it is advisable to consult with a real estate company.
Brokerage fees are charged for such support services for the entire real estate transaction.

(1) Provide property information
Search and introduce properties close to what you desire from REINS-registered properties, its own information, other companies' information, etc.

(2) Provide on-site tours
​Provide on-site tours of selected properties

(3) ​Negotiate terms and conditions with the seller
​Coordinate and negotiate with the seller regarding the purchase price and other terms and conditions

(4) Explanation of important matters
Provide a legally obligated explanation of important matters regarding the property, contract details, etc. (This explanation will prevent potential problems in the future.)

(5) Assist with mortgage loan procedures and execution of the purchase agreement
Assist with the mortgage loan process.
Assist in the preparation and conclusion of the purchase agreement.

(6) Delivery of property
​Assist with verification and handover procedures by being present at the site.

Point 2: ​Check the differences in services offered by different real estate companies.​

*This checklist is a reference for reviewing brokerage services and selecting a real estate company. Ultimately, please use your own discretion  in selecting the real estate you request.

Real estate companies can search for property information from the extensive information database of "REINS*" operated by the designated distribution system, including information that other real estate companies have received requests to sell. They can also provide information on properties for sale by their own clients and through cooperation with other real estate companies.

​Just because a real estate company introduces you to a property does not mean that you must purchase it. It is also possible to stop the property search in the middle of the process or request other real estate companies to search for properties at the same time. First, gather a wide range of information from real estate companies.

*REINS: The name of the computer network system (Real Estate Information Network System) operated by the designated distribution system.

Communicating the exact conditions of your desired home to the real estate company is often the fastest way to purchase a desired home. When asking the real estate company to search for a housing, you should tell the real estate company the "area," "type of housing," "budget," and "move-in period.

​For the "area," it will be easier for the real estate company to find a property if you narrow down your search to the train line and nearest station. The type of property" includes whether it is a single-family home or a used condominium. For "Budget," set an upper limit and tell whether it is a "housing budget" or a "total budget for purchasing a house.

Once you have communicated your desired conditions, ask the real estate company for advice on whether the conditions are reasonable, and narrow down your preferences to more specific conditions. If you are unable to find a property that meets your conditions, consider expanding the range of properties by changing the desired conditions that are lower in priority.
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If your initial preferences are not clear, you may want to clarify them by looking at property information. In this case, organize the conditions of the properties you like and communicate them to the real estate company while clarifying your desired conditions.