Documents required when selling a property
Selling a property can be time-consuming and sometimes full of unexpected obstacles. What are the key factors that contribute to a smooth selling process by helping you to win over potential buyers and close the deal quickly? No doubt that it is important to set a fair and competitive selling price for your property and put it on the market at the right time. It can also be crucial to get an experienced broker who can negotiate the sale for you. Aside from those factors, being able to get all required documents ready for the sale can help make sure the process goes smoothly, without any delays or glitches in the deal. Now, let’s take a look at what documents are required when selling a property in Japan.
■ Types of documents to be prepared
Registration identification information / registered title certificate
Purpose: To confirm the registered ownership, ownership transfer (after sale)
These documents serve as proof of legal ownership of property that includes physical details and all ownership information of the property such as the ownership change history, or whether it is sole or joint ownership, etc. Generally speaking, the real estate agent (≒judicial scrivener) starts the ownership registration at the time of purchase and the document should be available to the buyer within a month after the transfer of the property. In case the seller cannot provide it right away, real estate agents or buyers can still acquire the information from the government as the ownership information is open to the public although it certainly takes time and costs. Also, the owner will not lose his ownership by losing these documents, but buyers or real estate agents might not have great confidence in the seller if he/she cannot provide the ownership proof as prompt as it should be. Thus, it is in your interest to be able to make it available to buyers as soon as it is requested.
Previous sales contract・Explanation of important points
Purpose: To understand contract terms and detailed information on the property
This is the signed sales contract between the previous seller and current owner (current seller) of the property that serves a proof of purchase concluded legally, and this is why it is necessary to show to the next buyer.
The document of「Explanation of important points」contains various information such as building regulations in the area where the property is located, disaster risk associated, infrastructure information, important notes, and all other relevant information. They should be made available before sale activities kick off.
Although estate agents will also go to check and confirm with related ministries and management companies regarding the property matters, the confirmation process can be completed so much faster if the seller can provide all relevant documents promptly.
Property tax notification and property tax evaluation certificate
Purpose: Calculation of property tax, ownership transfer registration
The annual property tax is levied on real estate owners as of January 1. Since the property tax is paid in arrears, the buyer must refund the seller a prorated amount calculated based on the timing of property acquisition. Therefore, it is required for the calculation of property tax settlement and ownership transfer registration. In case the seller (owner) has not kept them on hand, there are also other ways to look it up. However, the transaction would surely go smoother if the seller can provide them accordingly.
Receipts of expenses incurred to acquire a property
Capital gains tax is imposed on gains (e.g. selling price is higher than the buying price) earned from selling a property. Apart from real estate brokerage, we also support most of our clients with real estate tax payment service. When selling a property, the miscellaneous costs incurred (e.g. brokerage fees, travel expenses to Japan, hotel accommodation charges and property remodeling costs, etc.) can be deducted from the income earned and all receipts need to be submitted.
Term of use (condominiums), information relating to residents’ association, and others
＿＿＿＿＿＿＿＿ Property sales other than condominium＿＿＿＿＿＿＿＿
Site Plan (applicable to detached houses only)/elevation drawings/plot plan/land survey drawing/property boundary agreement
Purpose: Confirmation of actual conditions, confirmation of conformity with the Building Standards Act, and others etc.
These documents show clearly the physical and architectural details of the property (land & building), and they are required for selling a detached house in Japan. In particular, they contain information about the land which the house is built on, the boundary between any roads and the land, height difference, piping, any garages, and also gardens and even plants or foliage in some cases, etc.
Both the plot plan and elevation drawings illustrate precisely the dimensions and details of property and how it is built, e.g. whether or not it is built in compliance with the Building Standard Law. Needless to say, listing out an accurate measurement of the property for sale is crucial when selling a house. Thus, it is advised to have all this ready beforehand.
Certificate of building permit, inspection certificate
Purpose: To confirm if the property complies with the Building Standards Act
These certificates serve as proof to ensure your property complies with the Building Standards Law, thus they are extremely important and cannot be reissued. Also, they must be passed onto the next owner when the property is transferred from the seller regardless of new or old real estate. The asset value of the property varies greatly with the content stated in them. If it is lost, sales activities might have to stop unless another replacement document is obtained from the relevant government office.
As described above, a large number of real estate documentation should be ready before you begin to sell. And yet, these are only general documents, other additional documents may also be required depends on real estate types or selling period, etc. If you are considering selling your property, or you may sell in the future, advance preparation is key to ensure a smooth sale process and also increase your chance of success. If you consider buying a property, do not forget to keep all-important real estate documents in a safe place after you receive them from your seller. These documents are all required when you wish to sell it in the future.