Japanese legal, taxation and banking systems are so different from what the overseas residents are accustomed to, that sometimes property investors may get puzzled trying to figure out what does this all mean and why is it so important. If you are investing in property, you will have to go through the Real Estate Registration process, which is a bit complicated. So, how does it work?
Same as the Tax Law, the Property Ownership Law in Japan sees no differences between the Japanese nationals and foreign citizenship holders. The fee amount, property registration process and your rights and duties as a real estate owner won't differ.
According to the Law, any property no matter if it's a building or land, has to be registered at the Legal Affairs Bureau. This record system is referred to as "touki" (登記). Each record features data on the property owner, location, size and some other characteristics. Note that even not being an owner of the property, one may examine the register after paying the fee. This is convenient when you are interested in purchasing some real estate but want to be sure you are provided with up-to-date information.
As in any other country, such a registration system allows the property purchase transactions run smoothly as the ownership is the vital point in real estate legal field. All of the transaction history concerning the certain property is also recorded carefully as each time the property is being sold, the new owner is obliged to pay a fee and have the ownership registered.
As a rule, the property registration takes place imediately after any transaction or information update. This includes inheritance, sale, purchase, building something on the possessed land, house remodeling or demolishing. If you are paying the mortgage, the register must be updated upon the complete mortgage pay off. If any data concerning the property owner changes, the registration entry update is necessary too.
How does the registration entry look like? Roughly speaking, the document itself has three sections. In the first section you find the data concerning the land, the lot location, area description and type of property. If you own a building, the entry will have information on its size, location, architectural structure, layout and purpose. Sometimes this section includes extra information, especially if you own a share of condominium building or a part of some property.
In the second section, the owner personal data and registration date would be added. Also you may find here the property ownership status change date and reason (purchase, inheritance, donation etc.). Moreover, this section will have any information on if the property is under seizure order or provisional disposition if there are any to be specified.
The last section features the rights other than ownership such as mortgage or superficies so that the property won't be illegally sold while the loan isn't fully paid off by the previous owner. Superficies or "above-ground rights" according to the Japanese Law enable one to erect buildings or plant trees on the other owner's property. A superficies right has more freedom than the lease right: its period may not be defined, the ownership rights have no transfer restrictions in case of the landowner’s consent, and the landowner has no upkeep obligations.
The important point here is that from April 2024 Japanese property owners are obliged to perform the registration procedure when inheriting a property. Why is it so necessary? Many Japanese properties, especially in the rural areas, lack the ownership updates for more than 100 years! This causes a lot of legal troubles as if the property owner passed away, it cannot be sold smoothly.
Same as in case of many other legal procedures in Japan, it is generally recommended to refrain from trying to apply for a property registration all by yourself. Most of the Japanese property owners hire a judicial scrivener who would do all the required research and take care of all the legal papers. As a foreign national, you may be unable to apply by yourself, so you would need a legally approved representative.
An experienced judicial scrivener would look into your particular case, investigate the past property register updates and calculate the estimate for his services. Apart from that, the new property owner would have to pay a registration tax which would be a 0.4% of the property. For instance, if you purchase a ¥ 10,000,000 worth property, your registration tax would be ¥ 40,000. Mind that purchase of a freshly constructed property, a new house construction, purchase of a property certified as a low-carbon housing or long-term superior housing are subject to tax reduction.
What documents do you have to prepare when applying for a real estate registration in Japan after a property purchase?
The owner should hand you over the existing property registration certificate as a proof of their ownership, a personal stamp registration certificate, the property value estimate certificate, and some other papers depending on each case. The buyer must present a certificate of residence (if it's a Japanese citizenship holder) and a personal stamp registration certificate.
If the seller resides at the place other than the one featured in the property registration certificate, they have to attach their up-to-date certificate of residence, too. If there is any stakeholder other than the owner, this person must present a letter of consent and a personal stamp registration certificate. For example, one of the parties is a juridical person, it would be necessary to present a general meeting of stockholders record of proceedings to confirm the purchase or selling decision and the company's stamp registration certificate. In case of registration of a share of condominium building or a part of some property, the required documents would be a building plan, a plan for each floor, a construction approval certificate, a certificate of construction completion.
With the assistance of a real estate agent who will introduce you to a skillful judicial scrivener you will have no problems with the whole real estate registration process!
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