Buying a House: What to Check in the Important Points Explanation

What to Check in the Important Points Explanation

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.

Point 1: What is an important points explanation?

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.

Point 2: The important points to check

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.

The flow of explanation of important points

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

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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?

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

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The conclusion of the sales contract

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Point 3: What is a notice?

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.