JAPAN Law and Practice Contributed by: Satoru Hasumoto, Takahiro Sato and Fuyuki Uchitsu, Mori Hamada & Matsumoto
Registration of Title to Real Estate Japan has a real estate registration ( toki ) system where title to and certain other interests (such as mortgages) on real estate are registered. In prac - tice, parties to a real estate transaction usually rely on the real estate registration because it is generally the best indication of the true owner of or holder of interest on a real property. Registration of a Title Transfer A transfer must be registered pursuant to the real estate registration system in order for it to be perfected. If a transfer of real property is not reg - istered, the buyer cannot assert its title against a third party. Applications for registration of title transfer can be completed online, but the use of registered seals to execute the documents required for reg - istration is still the prevalent practice. In Japan, the COVID-19 pandemic caused no major delays or other disruptions in real estate registration procedures. Title Insurance Title insurance is not commonly used in the Jap - anese real estate market. 2.4 Real Estate Due Diligence A real estate due diligence process usually involves some or all of the following elements. • Document review: documents to be reviewed include publicly available materials such as a certified copy of the real estate regis - tration, as well as the contracts that have been entered into in respect of the subject property. An “explanation sheet of important matters” ( juyo jiko setsumei sho ) prepared by a broker or the seller is usually one of the major documents that should be reviewed, as it is supposed to provide an orderly over -
• own exclusive private units in the building; and • own and use common areas (such as the entrance hall to the building) jointly with other unit owners and to use the underlying land in the form of co-ownership, leasehold interests or superficies. In addition, many real estate properties are held under trust arrangements, meaning the inves - tor will acquire a trust beneficial interest (TBI) in respect of the entrusted real property. Under a trust arrangement, the real property is owned by the trustee (usually, a licensed trust bank in Japan) as part of the assets of the trust and the investor becomes a beneficiary of the trust by acquiring the TBI. 2.2 Laws Applicable to Transfer of Title The Civil Code generally governs the transfer of title. Other laws may also be relevant, depend - ing on the ownership structure. For example, the Law on Unit Ownership of Buildings specifies certain rules for the transfer of unit ownership. Specific restrictions may apply to specific types of real estate. One such restriction is the require - ment under the Agricultural Land Law that the acquisition of agricultural land is subject to gov - ernmental permission. 2.3 Effecting Lawful and Proper Transfer of Title How to Effect a Title Transfer A transfer of title to real estate is effected pursu - ant to an agreement between the seller and the buyer. Most sale and purchase agreements pro - vide that the transfer of title takes effect upon the full payment of the purchase price by the buyer.
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