Home buyers and sellers: Building inspection guidelines introduced this month

From April 1st, 2018, licensed real estate agencies must include a clause in agency agreements with buyers and sellers that make note of home inspections. The added clause will indicate (1) whether the real estate company has an affiliated home inspection agent that they have a referral program with, and (2) if a home inspection has been carried out within the past 12 months and the main details of those inspection results.

If an inspection has been carried out, the contract of sale will have a clause whereby the seller and buyer both confirm the results of the inspection. An outline of the results will also be included in the Explanation of Important Matters documentation which is read to the buyer before contract documents are signed.

It is important to note that there is no obligation or requirement for a seller to carry out a home inspection, although it is hoped that the revision will make more consumers aware of building inspections. A seller might choose to carry out an inspection when listing their home for sale to provide some comfort to potential buyers.

However, buyers need to understand that a home inspection is not a thorough process. If the home is occupied by the seller, the inspector may not be able to see behind heavy furniture or access all rooms. Inspections are based on what the inspector can visibly see without doing anything invasive. Floorboards, wall panels and ceilings cannot be removed, which limits how much of the structure’s status can be assessed. Rather than an inspection report, it should be considered more of a condition report.

The inspection criteria does not cover water supply and drainage pipes and plumbing equipment, although this can be added if specifically requested.  For an apartment, the inspection will only cover the interior of the apartment itself, with any inspections of the common area requiring permission from the owner’s association.

The real estate company is not responsible for the contents of the report. The responsibility lies with the home inspection company. The inspection company is not obligated to provide any assurance or warranty that the home is free from any defects. If there are any hidden defects in a property, the seller may be responsible for a short-period of time as indicated in the contract of sale.

We strongly advise our clients to be cautious when relying on these inspection reports as they are not thorough and may overlook or miss some defects. A property that passed a home inspection is not guaranteed to be free from defects.

Foreign buyers should be aware that the overwhelming majority of these approved home inspectors do not provide services in English. The application process and inspection reports are all conducted in Japanese.

As a buyer, you will need the seller’s permission to conduct a home inspection, and you are responsible for arranging it and paying the inspection fees. If there are several interested buyers, the seller is likely to choose the buyer that does not require a building inspection. Inspections and reports can take several weeks to arrange. In the meantime, the seller may choose to sell the property to another buyer who is not interested in a home inspection. The home inspection must be done prior to signing the contract of sale.

Home Inspection Costs

Costs vary depending on the inspection company, and the type and size of the the property. For a detached house with a floor area of 150 sqm, a home inspection may cost around 45,000 Yen + tax.