Buying a House: Items to be Confirmed in the Mediation Contract

Items to be Confirmed in the Mediation Contract

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.

Matters to be confirmed in the mediation contract (standard terms and conditions)

(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.​