Real estate documents, such as sales contracts and the Explanation of Important Matters, will be permitted to be signed and delivered digitally in Japan starting May 18, 2022. Seals (hanko), will also no longer be required to execute real estate documents.
This will be an important change for the Japanese real estate industry, which has lagged behind other industries in Japan in streamlining paperwork. The move is also expected to accelerate the digitization of real estate transactions and to make it easier and less expensive to buy, sell, and rent property online.
The start date to allow digital documents was recently announced by the Ministry of Land in the much-awaited follow up to the promulgation of a series of laws on May 19, 2021 to promote a digital society in Japan. The digital reform laws included 48 amendments related to real estate laws.
One of the most important is the abolition of the requirement to use a seal (hanko) to execute real estate documents. A “signature” will still be required for documents but this can be in the form of an e-signature.
Image credit: iStock/ RichLeggThe other key change is that real estate transaction documents will be permitted to be delivered digitally. These include, for example, sales and purchase agreements, condominium management contracts, real estate-specific joint venture contracts, appraisal reports, and architect design documents.
The Explanation of Important Matters will also be allowed to be signed and delivered digitally. This is one of the most important documents related to renting an apartment or purchasing a property in Japan and contains all of the material information a renter or buyer would want to know to be able to make an informed decision about leasing or buying a property.
Real estate agents will be able to deliver these types of documents to people by email, digital download, or USB memory, etc.
Online contract signing and electronic delivery of documents is expected to have a major impact on the Japanese real estate industry, as more companies go digital.
It is expected that many companies will choose to have fewer office visits and face-to-face transactions. It will also open up more opportunities for transactions with people buying real estate from overseas or being able to rent an apartment before they enter the country. Also, since seals will no longer be required, there is an anticipation of significant cost reductions from not having to pay stamp duties. Companies will also be able to more efficiently manage a greater number of contracts, since they will be in digital form, rather than hard copy.
However, not all companies will immediately want or be able to switch to digital transactions and companies will be required to have the consent of the other party in order to deliver documents digitally.
Sources:
- Ministry of Land, Press release, April 27, 2022 (PDF in Japanese)
- Japan: Diet Passes Three New Laws to Promote a “Digital Society” (English)
Lead photo: iStock 1183405981