What Is the Explanation of Important Matters When Buying a Property?

The Explanation of Important Matters (重要事項説明書, jūyō jikō setsumeisho), sometimes called the Important Matters Explanation Document, is a legal disclosure document. Real estate agents use it in sales and lease transactions across Japan. 

This document is legally required. Under Article 35 of the Real Estate Brokerage Act, a certified real estate transaction agent must give you this document. The agent must also explain its contents aloud before you sign the contract.

The document exists to protect you. It makes sure you, as the buyer, fully understand the property and the transaction terms before you commit.

What Does It Cover?

The document covers four main areas. Here is what each one includes.

1. Real Estate Company Information

The document must name the seller's real estate company or individual seller. It must also list the agent's own credentials.

Required information includes:

• License number

• License date

• Business location

• Business name

• Name of representative

• Information on the real estate agent explaining the document (name, registration number, address, and phone number of the office)

The real estate agent must show you their real estate agent certificate. Ask to see it before the explanation begins.

2. Details About the Property

This section covers the property itself. It lists the address, size, ownership rights, legal restrictions, and infrastructure.

It also covers disaster warning designations and building performance inspections. Read this section closely, since it affects how you can use the property.

Land Information

• Location and lot number

• Classification of land category

• Acreage

• Types of rights

• Percentage of land rights (Ownership ratio)

• Remarks etc.

Building Information

• Location

• Structure

• Housing type

• Total floor area

• Details of the area if the building has private areas 

When explaining the contents of the Explanation of Important Matters, details about the land need to be confirmed by using maps.

If necessary, the building details should be checked with the blueprint of the building to ensure that there are no errors.

Registration

Matters related to registration are transcribed from the rights section of the registration certificate (登記簿謄本 - Toukibo-Tohon).

Legal Restrictions

This section lists legal limits on how you can use the property. It answers questions like: Can you rebuild if the building burns down? Can you expand the building later?

The main restrictions are as follows:

City Planning Act

• Area classification

• Development and construction activities in urbanization control areas

• Urban planning roads, etc.

Building Standards Act

• Zone classification

• Building-to-land ratio

• Floor-area ratio

• Height restrictions

• Area and road restrictions

• Restrictions on sunlight and shade, etc.

Infrastructure Development Status

The document includes the following information about infrastructure related to daily life (electricity, gas, drinking water, and sewerage):

• Installer

• Administrator

• Piping installation status

• Piping maintenance status

• Whether there are plans to install piping or not

• If maintenance is planned, the planned implementation date and cost

• Remarks etc.

Disaster Hazard Zones

A disaster warning area is a zone with a known risk, such as flooding or landslides. This section tells you if your property sits inside one.

Check the property's location on the official hazard map yourself. Don't rely on the document alone.

Building Performance Evaluation and Investigation

The document includes information on the status and results of evaluation and investigation such as building condition inspections, housing performance evaluations, and earthquake resistance diagnosis.

Building Condition Inspection

• Implementation status

• Summary of inspection results

• Asbestos usage, etc.

Housing Performance Evaluation

• Whether the property is eligible for evaluation or not

• Housing performance evaluation report

• Housing performance indication, etc.

Earthquake Resistance Diagnosis

• Implementation status

• The earthquake resistance standard applied (whether new standard or old standard)

• Contents of earthquake resistance diagnosis

• Name of the institution that carried out the seismic assessment, etc.

For buildings other than new construction, you will need to indicate whether a building condition inspection has been conducted within the past year or not, and a summary of the inspection results.

3. Transaction Terms

This section covers the money and timing of the deal. It lists the price, payment method, delivery date, and cancellation terms.

It also covers your deposit and any penalties for breaking the contract. Read this section before you agree to anything.

Transaction Fees

This section includes the various transaction fees agreed upon between the buyer and seller.

• Purchase price

• Deposit

• Settlement fees (fixed property tax, repair reserve fund, management fee, etc.)

Contract Termination

This section includes conditions and methods of contract termination and the arrangements that will be made in the case of termination.

Deposits

This section states the deposit preservation measures.

4. Other Clauses

This section covers what happens if something goes wrong. It includes loan terms, seller liability, and contract-breaking conditions.

Loan

This section in the Explanation of Important Matters includes information about the loan such as whether or not the real estate company will mediate mortgages, and the deadline for obtaining loan approval.

• Name of the financial institution

• Loan amount

• Interest rate

• Loan period

• Repayment method

• Guarantee fee

• Administrative fee

Liability for Non-Compliance with Contract

This section lists matters related to the seller’s responsibility in cases where the facts stated in the contract are false.

• Defects and imperfections that the seller must notify in advance

• Seller’s responsibility

• Measures to be taken in the case of non-compliance with the contract

• Guarantees and insurance contracts, etc.

Condominium Ownership

If the property is a condominium, the important matters on the Condominium Ownership Act must be explained. Note: this is different from the 重要事項調査報告書 (jūyō jikō chōsa hōkokusho), a separate document covering the building's management details.

• Types of rights

• Details of management regulations and usage rules for common areas

• Contents of management regulations and usage rules for exclusive use areas

• Contents of management regulations and usage details regarding exclusive use rights

• Monthly repair reserve fund amount, overdue amount, and total amount

• Monthly management fee and overdue amount

• Expenses other than repair reserve funds and management fees

• Information on the management contractor and management form

• Records of repair work implementation

• Repair work plan

Other Special Provisions

This section summarizes important information that the seller should communicate to the buyer in addition to those mentioned above.

• Whether or not there are cemeteries, crematoriums, landfills, sewage plants, or factories that manufacture hazardous materials, etc.

• Whether or not there are separate costs to be paid

• Information about neighborhood associations, homeowner associations, and city associations

• Precautions regarding the surrounding environment, etc.

Checklist for The Explanation of Important Matters

Read the entire document carefully. These specific points deserve extra attention. 

• Check for existing mortgages or provisional registrations on the Real Estate Register

• Confirm the property is free from encumbrances before the transaction

• Check information such as the property’s location, size, and ownership rights against public records or registries

• Check restrictions on expansion or renovation, zoning regulations, building-to-land ratio, floor area ratio, and any other legal constraints to ensure the property can be used as desired

• Check the status of utilities such as electricity, gas, water, sewage, along with their supply methods, and whether any additional costs are required

• Review monthly fees, plans for major renovations, parking rights, and restrictions on common areas

• Confirm conditions for canceling the purchase agreement without penalties (e.g., if a loan is denied)

• Understand the terms for earnest money and its refund conditions

• Identify latent defects, warranties, or broken items

• Investigate past incidents or potential hazards

• Check for planned construction in the area that could impact property use

• Review prior uses of the land for potential contamination risks

• In the case of an apartment building, check the apartment building management regulations and usage details

• Check if the property is designated within landslide warning areas, flood-prone areas, or other disaster-risk zones

• Verify any additional information that may influence the purchase decision

Frequently asked questions

Is the Explanation of Important Matters legally required?

Yes. Article 35 of the Real Estate Brokerage Act requires it. A certified real estate transaction agent must give you the document and explain it out loud before you sign a contract.

What is 重説 (jūsetsu)?

重説 is the common short form of 重要事項説明書. Real estate agents and buyers both use this abbreviation in everyday conversation.

Is this the same as the 重要事項調査報告書 (jūyō jikō chōsa hōkokusho)? 

No, these are two different documents. The Explanation of Important Matters covers a specific property transaction, while the 重要事項調査報告書 covers a condominium building's management details.

Can a foreign buyer request an English translation?

Some agents provide an English summary, but this is not required by law. Ask your agent directly, or bring a translator to the explanation meeting.

In closing

The Explanation of Important Matters protects you as a buyer. Review it carefully, and ask your real estate agent about anything you don't understand.

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