Property Buying Guide Image - Property Transfer & Closing

Property Buying Guide – Property Transfer & Closing

The Final Steps

Drafts of the contract of sale and other relevant documents are provided to both Buyer and Seller prior to the contract date and the realtors involved will answer questions or work out any issues that need resolving. Two major dates are decided in the contract of sale, 1) the contract date and 2) the settlement date. The contract date is when the contract is signed and the deposit (earnest money) is paid. The settlement date is when the balance of the purchase price is paid leading to the registration of the property with the Buyer as the new Owner.

On the contract date the Buyer and the Seller assemble usually at a bank handling the sale. The Buyer’s real estate office broker will read and explain the full “Explanation of Important Points” to the Buyer. This can take at least an hour, as the many facts about the property are confirmed with the Buyer (the buildable ratios, any setbacks, etc.) After the explanation the Buyer will give the deposit money in the form of a cashier’s cheque to the Seller and the bank will confirm the deposit in the Seller’s account.

For the transfer of the property to begin the buyer on the settlement date will pay the remaining sum to the seller from the loan amount received from the bank (assuming a bank loan/mortgage has been sought).

The title is now transferred from the Seller to the Buyer and it is now that fees and taxes are paid to register the title and close the deal. The payment of the fees is usually in cash and is handled by the Judicial Scrivener (shiho shoshi) handling the deal. The Judicial Scrivener is usually chosen by the bank handling the financing.

The fees and taxes are summarised as follows:

  • Real Estate Acquisition Tax: 3% payable within 3-6 months to the local tax office;
  • Registration Tax: Between 0.4% and 2%;
  • Stamp Duty: JP¥ 200 for contracts less than JP¥ 1 million and rising to JP¥ 200,000 for contracts over JP¥ 1 billion;
  • Judicial Scrivener Fees: Typically 0.1% of the property value, though varies according to a rather complicated formula concerning the size of the property, building age, etc. All judicial scrivener fees are regulated by the government, so there should be no fee difference between one and another.
  • Real Estate Agent fees: 3% of the property sale price + JP¥63,000.

The final step is the purchaser will receive the keys and documents relating to the property, from kitchen appliance instruction manuals to condominium management rules, as appropriate.

The process has now closed and the buyer is now the legal owner of the property.

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