Sale transactions might finally be approved for video conferencing

On October 12, the Nikkei Shimbun reported that the Ministry of Land, Infrastructure, Transport and Tourism (MLIT) is considering making it legal to conduct part of the real estate sale transaction over video conferencing. Currently, the due diligence report, outlining all of the important details pertaining to the property, must be read aloud in person in front of the buyer before the purchase agreement is signed.

An official decision is expected by the end of the year (which usually means the fiscal year-end of March 31).

For offshore buyers, we can imagine this would be highly welcomed. Usually the purchase process for overseas clients requires them to make up to two trips to Japan, once to inspect properties and again to sign the paperwork, or making one long visit for several weeks at the minimum in order to allow for inspection and document preparation. 

This due diligence reporting obligation was introduced in a revision to the Real Estate Brokerage Act in 1967. The somewhat-ceremonial process involves sitting in the realtor’s boardroom for a couple of hours while the Japanese licensed real estate agent reads through the report in Japanese in front of the buyer. The purpose of this reading is to give the buyer all the important facts of the property before they have signed anything and to allow them to ask any questions or raise any concerns they have. The contract of sale is only signed after the due diligence reading, so if anything comes up that the buyer was not aware of they can back out of the purchase without incurring any penalty. We make sure to provide our buyers with both Japanese originals and English translations of this report in advance so that they have time to go through the materials beforehand.

In late 2017, rental transactions were approved for video conferencing. The MLIT started a limited trial for sale transactions in October 2019.

Source: The Nikkei Shimbun, October 12, 2020.

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