Juyo Jiko Setsumeisho and the Purchase Contract: What Foreign Buyers Must Check Before Signing in Japan

TL;DR: Two documents decide your exposure in a Japanese property purchase, and they come in a fixed order. First the Important Matters statement (juyo jiko setsumeisho) — the mandatory pre-contract disclosure a licensed real estate agent must explain to you, covering everything from zoning and flood risk to building violations and the condominium’s reserve fund. Then the purchase contract (baibai keiyakusho) — the binding agreement, signed with a deposit, that fixes what happens if anything goes wrong before settlement. Most foreign buyers treat the first as a formality and the second as a signature page. Between the two you can still renegotiate, add conditions or walk away at no cost; after you stamp the contract, most of that leverage is gone.

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	Important Matters statement	Purchase contract
Japanese name	juyo jiko setsumeisho (重要事項説明書)	baibai keiyakusho (売買契約書)
When	After your offer is accepted, before any contract	After the disclosure, typically a few weeks before settlement
Who	A licensed agent must explain it, item by item	Signed and stamped by buyer and seller
Binding?	No — you can walk away without penalty	Yes — your deposit (tetsukekin) is at risk
Language	Japanese; no legal requirement for English	Japanese text governs, whatever any English summary says

Where these sit in the overall timeline (offer, contract, settlement): how to buy property in Japan, step by step.

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Part 1: The Important Matters statement

Juyo jiko setsumeisho (重要事項説明書, the Important Matters statement) is Japan’s mandatory pre-contract property disclosure. By law a licensed real estate agent must deliver it and walk you through it in person before you sign a purchase contract. It covers zoning, flood and landslide risk, building violations, easements, infrastructure and — critically for condominiums — the management association’s finances and repair reserve fund. It is the most important document in a Japanese purchase that buyers treat as a formality. Every item exists because something once went wrong for a buyer.

Why it’s legally mandatory, and how the session works

The requirement comes from Article 35 of Japan’s Real Estate Brokerage Act. The licensed agent (takken-shi) who explains it is named on the document with their licence number, must show their licence card, and must explain it before any sales contract is signed. It is not a document you review alongside the contract; it comes first. You have the right to ask for it days in advance — take that option. There’s no legal minimum gap between receiving it and signing, but standard practice gives you at least a day.

Expect roughly 40–60 items across 15–20 categories depending on property type (land, building, or condominium). The agent walks through each one verbally; a typical session runs 30–60 minutes, longer for a complex property. The disclosure is only as useful as your ability to understand it.

The sections that matter most for foreign buyers

Zoning and land use. Japan has 13 zoning categories, which determine what can be built on or near the property — noise, density and future development nearby. Low-rise residential is the most restrictive; commercial and industrial zones are looser. This section also gives the building coverage ratio and floor area ratio, which cap how much of a lot can be built on and how tall, and so affect renovation potential and resale value.

Seismic and disaster hazard zones. Since 2020, agents must explain whether the property sits in a flood risk zone, landslide zone or other designated hazard area, with reference to the municipal hazard map. The legal minimum is stating the designation. What agents often don’t volunteer: the actual risk level within the zone, the municipality’s evacuation plan, and whether flood insurance is available. Ask to see the hazard map — it’s public and takes 30 seconds to pull up.

Existing encumbrances and rights. Mortgages, liens, easements or competing claims. The seller’s mortgage should be discharged at settlement, but it must be listed here first. Easements are common where access roads or utility lines are shared, and they transfer with the property; if the only vehicle access crosses a neighbour’s land and that easement isn’t documented, you have a serious problem.

Building compliance. Whether the building had proper permits and conformed to the code in force when it was built, and whether additions or renovations were permitted. Unpermitted additions are common on older single-family homes. If the current footprint exceeds what the permit allows, you cannot legally rebuild to the same footprint after demolition or major damage.

Condominium sections. For condominiums the statement covers:

• Current monthly management fee and repair reserve contribution
• The reserve fund balance, and whether a special assessment has been levied or is planned
• The management company and the building’s management contract terms
• Reconstruction resolution history (whether a vote to rebuild has ever been raised)
• Use restrictions in the management rules — including any restriction on short-term rental use, if you’re thinking about minpaku

The reserve fund line deserves the most attention. The classic miss is an elevator or facade replacement fund that is essentially empty — say a ¥30M shortfall spread across 80 units, about ¥375,000 per unit (illustrative figures, computed) — sitting in the statement as a line item the buyer didn’t understand and the agent didn’t flag, until the assessment arrives after move-in. Ask for the most recent long-term repair plan, and treat a thin reserve as a price-negotiation point rather than a footnote. What these charges typically run in Tokyo: kanrihi and shuzen tsumitatekin.

What agents typically rush through

A session covering 40+ items in under an hour spends more time on legally sensitive items and less on things that feel administrative. Most often compressed:

• Management fee and reserve fund trends — the history of increases, not just current amounts
• Soil contamination designations (land purchases especially)
• Private road status — if any part of the approach road is privately owned, maintenance costs and rebuilding rights get complicated
• Asbestos survey results — for buildings constructed before 2006, the statement must say whether a survey was done and what it found
• Items with “nothing to report” — which is not the same as “this item doesn’t exist.” Ask what each section covers, not just the finding.

If an item is mentioned briefly and you don’t understand it, stop the session and ask. The agent is legally obligated to explain. This is not the moment to be polite.

What you can still challenge before signing

After receiving the statement and before signing the contract, you can:

• Request additional documents (reserve fund balance sheet, management meeting minutes, inspection reports)
• Renegotiate the price based on disclosed issues
• Add conditions to the contract addressing specific disclosures (see special conditions below)
• Walk away entirely, with no financial penalty — the disclosure deliberately precedes any binding commitment

Once the contract is signed, leverage drops sharply. Defects that were disclosed are generally not grounds for compensation later — you knew, or should have known. The disclosure transfers information, and with it, responsibility.

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Part 2: The purchase contract

Baibai keiyakusho (売買契約書, the purchase contract; short form baibai-keiyaku) is the binding agreement between buyer and seller, signed after the juyo jiko setsumeisho is delivered and typically a few weeks before settlement. It locks the price, deposit terms, settlement date, financing contingency and any special conditions you negotiated. It is written in Japanese and that text governs, regardless of any English summary you are shown. Anything not written into it — especially verbal promises from agents — is not enforceable, so get your conditions in before you stamp it.

How the contract is structured

Japanese purchase contracts aren’t standardized nationally, but most follow templates developed by the real estate trade associations, so the structure is broadly consistent:

1. Parties and property identification
2. Purchase price and payment schedule
3. Deposit terms
4. Settlement date
5. Financing contingency
6. Property condition and defect liability
7. Breach and penalty clauses
8. Special conditions

The full document can run to dozens of pages, and buyers who are emotionally committed after the price negotiation tend to treat it as the end of the process rather than the moment the terms lock in. If you can’t read Japanese, get a certified translation or a bilingual advisor to take you through each section before you sign — not after.

From the desk — The clause I see foreign buyers wave through and later regret is the financing contingency, the yuushi tokuyaku, specifically the bank name and loan amount written into it. The pattern I keep seeing is a buyer planning to borrow from one lender while the contract names another, or applying for a larger amount than the clause specifies, and a rejection that should have refunded the deposit instead becomes a fight over whether the contingency was even triggered. The contract is binding in the Japanese text regardless of any English summary, so that is the wording worth pausing the signing to fix before anyone stamps.

The deposit (tetsukekin)

Tetsukekin (手付金, the earnest-money deposit; also “tetsuke”) is the deposit you pay when signing the baibai keiyakusho, usually 5–10% of the price. It is not a refundable reservation fee. Under the Civil Code, if the buyer backs out the deposit is forfeited, and if the seller backs out they must return double. That cancellation right lasts only until the other side begins performance — a window shorter than most buyers assume. Pay it into a trust account or directly to the seller against a receipt, never into the agent’s operating account, and rely on the financing contingency to protect it if your loan is declined.

The rule sits in Article 557 of the Civil Code. “Beginning performance” is generally interpreted as the seller starting settlement preparations, so in practice the window for a deposit-based exit closes early. Check the contract for:

• The exact deposit amount and percentage
• The deadline for deposit-based cancellation — it should be stated explicitly
• The receiving account — a dedicated trust account, or direct payment to the seller with receipts

The financing contingency (yuushi tokuyaku)

The financing contingency (yuushi tokuyaku, 融資特約) lets you cancel and recover the full deposit if your mortgage is declined. Without it, a financing failure costs you the deposit. Japanese lenders don’t give full approval until after the contract is signed — they need the property details to assess it as collateral — and this clause exists to cover exactly that sequence risk (the mistakes that cost foreign buyers most).

Check:

• Whether the clause exists at all. Some agents try to remove or soften it.
• The lender(s) named. If you plan to borrow from Bank A but only Bank B is named, a rejection from Bank A may not trigger it.
• The deadline for exercising it — typically 2–4 weeks after signing.
• The loan amount and terms specified. If you apply for more than the stated amount and are approved for less, does the contingency apply?

Negotiate this wording. It is your protection. More on lenders: how foreigners get a mortgage in Japan.

Property condition and defect liability

Residential sales historically ran on “buyer beware”: sellers weren’t required to volunteer defects and as-is sales were common. The 2020 Civil Code revision replaced the old defect-warranty concept with a stricter obligation to deliver property that conforms to the condition stated in the contract. Most resale contracts now state the property’s condition and known defects explicitly. Check:

• The agreed standard for delivery (e.g., “habitable and functional as viewed on inspection date X”)
• Which known defects are listed and accepted by you
• The seller’s warranty period for hidden defects — often 3 months to 1 year for resale; 2–10 years for new construction under the Housing Quality Assurance Act
• Whether “as-is” is stated, and exactly what it excludes

An as-is clause doesn’t exempt a seller from liability for intentionally concealed defects — but you have to prove concealment, which is hard.

Breach and penalty clauses

If either party fails to perform — doesn’t show up to settlement, refuses to transfer, can’t produce clear title — the contract sets the remedies:

• Delay penalty: if settlement slips past the agreed date through one party’s fault, a daily penalty applies, often around 14% per year on the unpaid amount. On a ¥50M–¥100M purchase that is not symbolic.
• Specific performance: a party can ask the court to compel performance, in addition to claiming damages.
• Cancellation and compensation: if a breach defeats the purpose of the contract, the other side can cancel and claim damages beyond the deposit mechanism.

Check what counts as a breach, the cure period before remedies apply, and any liability caps — caps in seller-prepared contracts often favour the seller.

Special conditions

The special conditions section records everything negotiated outside the standard terms, and it is arguably the most important section for buyers with specific concerns. This is where findings from the Important Matters statement get turned into enforceable terms. Common additions for foreign buyers:

• Inspection condition: “Settlement conditional on an inspection report finding no structural defects or water damage exceeding [specified threshold]”
• Cleaning or repair obligations: “Seller to professionally clean the property and repair the damaged floor panel in the tatami room before settlement”
• Key and document delivery checklist: what the seller must hand over, itemized, to prevent disputes at the table
• Vacant possession: if the property is tenanted, the date by which it must be vacant
• Foreign-buyer conditions: translation or explanation requirements, and timelines adjusted for international fund transfers

If it’s not in the contract, it’s not enforceable. Verbal agreements with agents don’t bind sellers.

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Where this goes wrong

• Disclosure and contract delivered together and signed the same day. Legally permissible; practically terrible. You haven’t had time to process the disclosures before committing.
• No translation. Agents aren’t required to provide English versions. Hire a bilingual advisor for the session, or get the key sections translated before the meeting.
• No long-term repair plan requested. That document is the difference between knowing your building is financially healthy and buying into an upcoming ¥500,000 special assessment.
• Disaster risk dismissed because the neighbourhood “looks fine.” Visual impressions are not hazard maps; attractive, quiet streets can sit in designated flood-risk areas.
• Negotiated special conditions missing from the signed contract. “Don’t worry, it’s understood” is not a clause. Nothing outside the written contract is enforceable.
• A financing contingency that is vague about the bank or loan amount, giving the seller grounds to dispute whether it was triggered.
• As-is clauses used to hide known defects. Concealment isn’t legal, but the burden of proving it is on you.
• Deposit paid into the agent’s operating account. Agent trust accounts provide some protection; confirm deposit handling before signing.
• Settlement date too tight for an international wire. A 30-day settlement is common, but confirm your bank’s transfer and compliance times first — a one-day delay can trigger the delay penalty. Realistic timings: the week-by-week buying roadmap.

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FAQ

Q: Are the disclosure and the contract available in English? A: Not as legal documents. There’s no requirement for an English disclosure, and the binding contract is the Japanese text. Some agencies serving international clients provide bilingual summaries or parallel translations, but these are informational: if you sign the Japanese document, you’re bound by the Japanese text. For a reliable understanding, use a certified translator or a bilingual licensed agent.

Q: Can I add conditions to the contract after it’s been prepared? A: Yes — before signing. Once both parties have signed, amendments require a separate written addendum signed by both sides. Get your requests in before the signing date.

Q: What if something the seller knew about is missing from the disclosure? A: If a material defect was knowingly concealed, you may have grounds for rescission or damages under Civil Code provisions on fraud or bad-faith non-disclosure. This requires legal action and is fact-specific.

Q: What if the property doesn’t match what was described? A: The seller’s obligation to deliver property that conforms to the contract is your starting point. If the contract clearly described the condition and the delivered property doesn’t match, you have a claim. Document discrepancies as early as possible — ideally with photos before or at settlement.

Q: Do new construction properties have the same disclosure requirements? A: Yes, though some sections differ — building compliance focuses on the construction permit rather than an existing structure — and new-build disclosures must also cover the developer’s completion guarantee and warranty terms.

Q: Is the licensed agent who explains the disclosure the person representing me? A: Not necessarily. In dual-agency transactions the same licensed agent may explain the disclosure to both parties. If you want independent representation, you need a buyer’s agent working exclusively for you — confirm that explicitly.

Q: Does the contract need to be notarized? A: For most residential transactions, no. The contract becomes binding when both parties sign and stamp it. Some specific transaction types, such as court-ordered sales, require notarization.

Q: Can I use a power of attorney if I can’t attend the signing? A: Yes. A designated representative can sign on your behalf. If the power of attorney is executed outside Japan it may need to be apostilled. Confirm requirements with your agent and the judicial scrivener well in advance; the apostille alone can take weeks.