Japan Property Purchase Contract: Offer, Disclosure, Deposit

This article is part of the Zagdim wiki series on Japanese property and its “transaction process” group. It answers one question: when you buy a home in Japan, what steps lie between making an offer and signing the sales contract? The full purchase sequence is covered in the main article, “How Does Buying a Home in Japan Work? From Viewing and Offer to Explanation of Important Matters and Title Registration”.

When you buy a home in Japan, the road from offer to signed contract has three steps. Each step has its own document, and each affects whether you can still withdraw:

• Offer: You submit a purchase application (申込み) through the agent, stating the price you intend to pay. The document submitted is generally called a letter of intent to purchase (買付証明書).
• Before signing: You attend the explanation of important matters (重要事項説明). Before the contract is signed, the agent or business operator must explain the property and the terms of the deal to you in writing.
• Signing: You sign the sales contract (売買契約) and pay earnest money (手付金), the sum handed to the seller at signing.

How much earnest money you pay, whether you can change your mind after signing, and whether there is a cooling-off period all depend on who the seller is. Buying from an ordinary owner and buying from a real estate business itself follow different rules. The whole sequence from viewing to registration is in the main article, “How Does Buying a Home in Japan Work? From Viewing and Offer to Explanation of Important Matters and Title Registration”.

Why Is the Stretch From Offer to Contract the Easiest Place to Get Stuck?

This stretch involves two Japanese-language documents and possibly two payments: an application deposit (申込金) when you make the offer, and earnest money at signing. Whether you can get the money back differs at each step.

What confuses people more is that the rules change with the seller’s identity. Claims such as “earnest money is capped at 20%” and “you can withdraw within 8 days of signing” hold only when a business operator is itself the seller. When you buy a used home from an ordinary owner, neither applies.

The Short Answer: Can You Still Withdraw at Each Step?

• After the offer: A letter of intent to purchase is generally not treated as a contract, and under industry interpretation the application deposit is refunded. However, if negotiations have gone so far that the other side has reason to believe the deal will close, backing out only then may make you liable for damages.
• After the explanation of important matters, before signing: No contract exists yet. If something in the disclosure document is unclear, or differs from what you were told verbally, raise it now.
• After signing and paying earnest money: Before the other side begins performing the contract, you can cancel by forfeiting the earnest money. When buying from an ordinary owner, the contract may set a separate earnest-money cancellation deadline (手付解除期日), after which you can no longer cancel this way.
• Changing your mind later still: The contract’s cancellation and penalty clauses apply. If the loan is refused, the outcome depends on whether the contract has a loan clause.
• Buying from a business operator itself: Earnest money cannot exceed 20% of the price, and any term restricting your right to cancel by forfeiting it is void. When the conditions are met, there is also an 8-day cooling-off period.

Do the Documents and Money at the Offer Stage Count?

A letter of intent to purchase is not a contract, but making an offer is not entirely free of responsibility.

• There is no statutory form for the letter: The law currently sets no format or legal effect for it. According to industry explanation, the document states the property, the price and your intention to buy, and it is generally accepted that submitting only a letter of intent does not form a sales contract.
• Backing out too late can mean damages: If negotiations have progressed so far that the other side has reason to believe the deal will close, backing out at that point may be found to be “fault in concluding a contract” and you may be liable for damages.
• The application deposit is refunded: If you paid an application deposit with your offer, under industry interpretation it is treated as money held on deposit (預り金, money a business holds temporarily) and is returned even if you cancel for your own reasons. The law also forbids agents and similar businesses from refusing to return a deposit already received when you withdraw your application.
• Check before you pay: These rules bind the business operator. Before paying, ask whom the money goes to and how the receipt describes it.

Which Items in the Explanation of Important Matters Should You Read Before Signing?

First confirm who the seller is, then look at the items that bear on how you pay and how you can exit.

The explanation is given by a licensed real estate transaction specialist (宅地建物取引士, the professional on the agent’s or operator’s side who gives the explanation), who must show the specialist’s card while doing so. The law only requires it to be completed before the sales contract is formed, and does not say how many days ahead. If you need time to read, ask the agent to provide the document first. This procedure applies when you buy through an agent or from a business operator. A direct sale between two individuals with no business involved is not covered.

• Who the seller is: Whether an ordinary owner or a real estate transaction business (宅地建物取引業者, a business that buys, sells or brokers real estate) itself. The seller named in the document decides which earnest-money rules apply.
• Payments other than the price: The amount and purpose.
• Cancellation, penalty or damages provisions: What it costs to back out after signing is found under these items.
• Safeguards for earnest money and similar payments: When a business operator is itself the seller and takes earnest money or similar payments, the measures taken are explained here.
• Loans: When the agent arranges a loan, the loan terms and how a failed loan is handled.
• If the property does not match the contract: Whether insurance or other security measures are in place. A new home sold by a business operator must have defect insurance or a deposit with a legal affairs bureau, and this item explains which was used.

The document also records matters about the property itself, such as registered rights, legal restrictions, a condominium’s management fee and repair reserve fund, and whether a used home has had a building condition inspection. The law lists only the minimum items, and other matters may need to be explained depending on the case. How to read these items is covered in the related article “Due Diligence Before Buying Japanese Property: Title, Management Fees, Repairs and Tenancy”.

Can You Receive the Documents Electronically or Hear the Explanation Online From Overseas?

Yes, but both require your consent, and you can choose either one alone.

• Electronic disclosure document: The business must first tell you which electronic method will be used, then obtain your consent in writing or electronically. The electronic version must still carry the specialist’s name. If you later change your mind, you only need to state in writing or similar that you do not want the electronic version, and the business can no longer provide it electronically.
• Online explanation: The Ministry of Land, Infrastructure, Transport and Tourism’s operating rules require four conditions to be met together before an online explanation of important matters (ITを活用した重要事項説明) counts as equivalent to a face-to-face one:
  1. Both sides can see the documents clearly and hear the audio, and can talk in real time.
  2. The disclosure document and attachments, carrying the specialist’s name, are handed to you in advance, and may be provided electronically.
  3. Before starting, the specialist confirms that you can read the documents while listening and that video and audio are working normally.
  4. The specialist shows the specialist’s card and confirms that you can see it on screen.

If video or audio fails during the explanation, it must be stopped immediately.

• Choose each separately: Receiving the electronic version does not oblige you to use the online explanation, and using the online explanation does not oblige you to receive the electronic version. You can still choose paper documents and a face-to-face explanation.

What Does the Written Contract Contain When You Sign?

Once the sales contract is formed, the agent or business operator must promptly deliver a written document with the specialist’s name. With your consent it can be delivered electronically. It must record:

• The names and addresses of both parties, and the property
• For a used home: the condition of the main structural parts, as confirmed by both parties
• The price, and the timing and method of payment
• The handover date and the timing of the application to register the transfer of ownership

Items recorded only if agreed include: payments other than the price, cancellation, penalties, how a failed loan is handled, who bears loss from force majeure such as natural disasters, responsibility or insurance measures where the property does not match the contract, and who bears taxes and public charges. Before signing, compare this document with the explanation of important matters once, and confirm that the earnest money, cancellation and penalty terms are consistent.

A paper contract is generally subject to stamp duty (印紙税), with the amount depending on the amount stated in the contract. For contracts made before March 31, 2027 with a stated amount above 100,000 yen, a reduction applies. For example:

• Above 5 million and up to 10 million yen: 5,000 yen
• Above 10 million and up to 50 million yen: 10,000 yen
• Above 50 million and up to 100 million yen: 30,000 yen
• Above 100 million and up to 500 million yen: 60,000 yen

There are other brackets. The Ministry of Land, Infrastructure, Transport and Tourism’s explanation for consumers also notes that electronic contracts are not subject to stamp duty.

At signing, the agent or business operator must also verify your identity and the purpose of the transaction under the Act on Prevention of Transfer of Criminal Proceeds (犯罪による収益の移転防止に関する法律). Every buyer purchasing through an agent or business operator goes through this check. It is not aimed only at foreigners.

How Much Earnest Money Do You Pay?

When the seller is an ordinary owner, the law currently sets no cap, and the amount is agreed in the contract. When the seller is a business operator itself, earnest money cannot exceed 20% of the price.

A business operator acting as seller includes a developer selling a new condominium directly, and also a business that bought a used home and resells it. Whether the seller is a business operator is decided by the seller named in the explanation of important matters.

Buying from a business operator itself brings a further protection: when earnest money and similar payments exceed a threshold, the business must put safeguards in place before it can accept them. The “earnest money and similar payments” here means amounts paid after signing and before handover that count toward the price, including the earnest money.

• Property not yet completed (for example, an off-plan condominium): the total exceeds 5% of the price, or exceeds 10 million yen
• Property already completed: the total exceeds 10% of the price, or exceeds 10 million yen

Safeguards include a guarantee from a bank or similar institution, or insurance. For completed properties, the money can alternatively be held by a designated custodian. If the business should have taken these measures and did not, you may decline to pay the earnest money and similar amounts. Where registration of the transfer of ownership has already been done for you, no safeguard is needed.

After Signing, When Can You Still Change Your Mind, and at What Cost?

It depends on two things: where you are in the timeline, and who the seller is. The table below follows the order of events.

How Does Cancelling by Forfeiting Earnest Money Work?

The rule works both ways. You can cancel by giving up the earnest money you paid. If the seller wants to cancel, the seller must actually deliver twice the earnest money to you. Either right can be exercised only before the other side begins performing the contract.

The law does not list which acts count as “beginning performance”, so it is judged case by case. From signing to final payment and handover there is generally a gap of several weeks to several months. If you plan to cancel by forfeiting earnest money, first confirm with the agent or a professional how far the other side has progressed. An agent or business operator may not, without good reason, refuse or obstruct your cancellation by forfeiting earnest money.

• Buying from an ordinary owner: Under industry interpretation, this Civil Code rule can be changed by contract, for example by setting an earnest-money cancellation deadline (手付解除期日), after which you can no longer cancel by forfeiting earnest money. If there is no special agreement, the payment is treated as earnest money that can be used to cancel.
• Buying from a business operator itself: However the contract names the payment, it is treated as earnest money that can be used to cancel, and any contrary term unfavorable to you is void. The business cannot shorten your period with a cancellation deadline.

What If You Change Your Mind After That Point?

Once the seller has begun performing, you can no longer cancel by forfeiting earnest money. How the contract can be ended after that, and whether a penalty (違約金) is payable, depends on the contract and the circumstances (according to industry explanation). How the penalty is calculated follows the contract’s penalty clause. When such a clause exists, both the explanation of important matters and the written contract must record it.

If the Loan Is Refused, Do You Get Your Earnest Money Back?

It depends on whether the contract has a loan clause (ローン特約). According to industry explanation, the clause is written in one of two ways: the contract is cancelled unconditionally if the loan is refused (白紙解除, a “clean slate” cancellation), or you keep the right to cancel. Neither counts as cancelling by forfeiting earnest money, and neither counts as a breach, so the earnest money already paid is returned.

The law does not require every contract to contain this clause. When agreed, it should state four things: the financial institution applied to, the loan amount, the approval deadline, and how a refusal is handled.

Who Can Use the Cooling-Off Period?

Only buyers purchasing from a business operator itself. When you buy from an ordinary owner, there is no cooling-off period (クーリング・オフ), wherever you apply or sign.

• Place: You applied or signed somewhere other than the business’s office, a property information center or similar. A place you yourself asked to be given the explanation, such as your home or workplace, is also treated as an office. It also does not apply if you applied at the office and signed elsewhere afterward.
• Deadline: The business must tell you in writing that you can withdraw and how to do so. The period is 8 days, counted from the day you are told.
• Method: Withdraw in writing. It takes effect when the document is sent.
• Effect: The business cannot claim damages or a penalty from you, and must promptly return the earnest money and other amounts received.
• End of the right: Once the property has been handed over and the full price paid, you can no longer withdraw.

What If a Problem Appears After Handover?

This is not changing your mind. It is a property that does not match the contract, and the seller’s liability for non-conformity with the contract (契約不適合責任) applies. Under the Civil Code, you can demand repair. If you set a reasonable period and the seller still does not repair, you can demand a price reduction in proportion to the mismatch, and you can also claim damages or cancel the contract.

Where the property’s type or quality does not match the contract, the precondition is that you notify the seller within 1 year of learning of the problem. That 1 year runs from when you learn of the problem, not from handover. The limit does not apply to a seller who knew at handover, or did not know because of gross negligence. When buying from an ordinary owner, the contract can shorten the period or exclude liability, so check how the contract is written.

**Example: buying a used condominium from an ordinary owner, paying with a loan**

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A buyer living overseas likes a used condominium in Tokyo. The seller is an ordinary owner, selling through an agent. The buyer plans to apply for a loan from a Japanese financial institution.

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• Offer: The buyer submits a letter of intent to purchase and also pays an application deposit. If the buyer changes their mind now, the deposit is refunded under industry interpretation. But if negotiations have gone so far that the seller has reason to believe the deal will close, backing out only then may mean paying damages. – Signing: The contract states the earnest money amount, the earnest-money cancellation deadline, and the loan clause’s financial institution, loan amount and approval deadline. – Before the cancellation deadline, with the seller not yet performing: If the buyer wants out, they can cancel by forfeiting the earnest money. If the seller wants out, the seller must pay twice the earnest money. – After the cancellation deadline: The buyer can no longer cancel by forfeiting earnest money and must follow the contract’s cancellation and penalty clauses. – Loan not approved within the approval deadline: The contract is cancelled under the loan clause and the earnest money is returned.

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What the buyer should do is find three dates in the contract before signing: the cancellation deadline, the loan approval deadline and the handover date. Then confirm the order they fall in.

When You Hear These Claims, Stop and Check

• “Earnest money in Japan is capped at 20%”: True only when a business operator is itself the seller. When you buy from an ordinary owner, the law sets no cap.
• “You can withdraw within 8 days of signing”: The cooling-off period applies only where a business operator is itself the seller and you applied or signed somewhere other than its office or similar.
• “A used home means buying from the owner”: A business may also buy a used home and resell it. Go by the seller named in the disclosure document.
• “The application deposit is not refunded”: Under industry interpretation it is money held on deposit and is returned, and a business may not refuse to return a deposit.
• “The seller gives a 1-year warranty”: The Civil Code’s 1 year is a notice period running from when you learn of the problem, and when buying from an ordinary owner the contract can shorten or exclude it.

How Do You Decide What to Do Next?

Before signing, make sure you can answer these questions:

1. Is the seller named in the disclosure document an ordinary owner or a business operator itself?
2. How much is the earnest money? Is there an earnest-money cancellation deadline, and what date is it?
3. How is the penalty calculated?
4. If you use a loan, does the contract have a loan clause, and are the financial institution, amount, approval deadline and the handling of a refusal all written clearly?
5. When buying from a business operator itself, if earnest money and similar payments exceed the threshold, what safeguard is in place? Does the cooling-off period apply?

In these situations, pause first: the conditions in the disclosure document or written contract do not match what you were told verbally; a business operator is itself the seller and earnest money and similar payments exceed the threshold, but no safeguard has been explained; or you cannot understand the cancellation or penalty clause. For the settlement, registration and post-purchase filings that follow signing, return to the main article, “How Does Buying a Home in Japan Work? From Viewing and Offer to Explanation of Important Matters and Title Registration”.

Frequently Asked Questions

When Buying Property in Japan, What Is the Difference Between the Application Deposit and Earnest Money?

The application deposit is paid when you make the offer and, under industry interpretation, is money held on deposit by the business, returned even if you cancel. Earnest money is handed to the seller at signing, and to cancel with it after signing you give it up. When you buy from an ordinary owner, how long you can cancel by forfeiting earnest money depends on the contract.

Is There a Cooling-Off Period After Signing When Buying a Used Home From an Owner?

No. The cooling-off period applies only where a real estate transaction business is itself the seller and you applied or signed somewhere other than its office or similar. A used home may also have been bought by a business and resold. Go by the seller named in the disclosure document.

Can the Explanation of Important Matters Be Held on the Same Day as Signing?

The law only requires it to be completed before the sales contract is formed, and does not say how many days ahead. If you need time to read, ask the agent to provide the document in advance. If an online explanation is used, the document must be handed to you beforehand anyway.

Glossary

• Purchase application (申込み): An offer telling the seller what price you intend to pay.
• Letter of intent to purchase (買付証明書): The document submitted with the offer. The law sets no format, and it is generally regarded as not equal to a contract.
• Money held on deposit (預り金): Money a business holds temporarily; the business cannot refuse to return it when you withdraw your application.
• Explanation of important matters (重要事項説明): The statutory procedure in which a licensed specialist hands over a written document and explains it before signing.
• Real estate transaction specialist (宅地建物取引士): The professional who gives the explanation of important matters and must show the specialist’s card.
• Real estate transaction business (宅地建物取引業者): A business that buys, sells or brokers real estate.
• Sales contract (売買契約): The contract in which buyer and seller agree the price, handover and registration timing and so on.
• Earnest money (手付金): Money handed to the seller at signing, which can be used to cancel before the other side begins performing.
• Earnest-money cancellation deadline (手付解除期日): A date set in the contract, after which you can no longer cancel by forfeiting earnest money.
• Penalty (違約金): The amount the contract says is payable on cancellation or breach, calculated as the contract provides.
• Loan clause (ローン特約): An agreement that if the loan is refused, the contract can be cancelled and the earnest money returned.
• Cooling-off (クーリング・オフ): The system that lets a buyer withdraw in writing when buying from a business itself and applying or signing somewhere other than its office or similar.
• Liability for non-conformity with the contract (契約不適合責任): The seller’s liability when the property delivered does not match the contract.
• Stamp duty (印紙税): Tax paid on a paper contract according to the amount stated in it.

About the Information

• The information in this article was checked on September 30, 2026, based on current Japanese laws (the Building Lots and Buildings Transaction Business Act and its enforcement order and regulations, the Civil Code, and the Housing Defect Warranty Performance Act), explanatory documents from the Ministry of Land, Infrastructure, Transport and Tourism and the National Tax Agency, and explanations from some industry bodies.
• The following conclusions are drawn from official documents and are not stated directly by the authorities: a letter of intent to purchase has no statutory format or effect (checked across the full text of the Building Lots and Buildings Transaction Business Act, its enforcement order and regulations); when the seller is an ordinary owner there is no statutory cap on earnest money, and no compulsory treatment of the payment as cancellable earnest money (Article 39 regulates only sellers who are business operators; the scope checked was Articles 39 to 41-2 and 78 of that Act and Article 557 of the Civil Code). The Civil Code does not define what counts as “beginning performance”. The rule forbidding refusal to return money held on deposit binds business operators; the case of money paid directly to an individual seller was not separately checked.
• The following come from industry explanations and are not statutory text: that the application deposit is money held on deposit, and the nature of the letter of intent and fault in concluding a contract (explanations by the Real Estate Transaction Promotion Center and by a lawyer published by the All Japan Real Estate Association, the latter in 2016); that the cancellation deadline and cancellation and penalties after that point depend on the contract, and the two ways of writing a loan clause and its agreed items (Real Estate Transaction Promotion Center). The four conditions for the online explanation come from the Ministry’s interpretation and operation guidelines for the Act, not the statute itself. That electronic contracts are not subject to stamp duty comes from the Ministry’s explanation for consumers; for tax details, rely on the National Tax Agency. The time from signing to settlement is taken from a 2021 consumer explanation by the Tokyo Metropolitan Government.
• The stamp duty reduction applies to contracts made before March 31, 2027 with a stated amount above 100,000 yen. Whether it is extended afterward depends on the tax reform at that time.

Have a question about this guide? Leave a comment below, or ask Zagdim directly.

Sources

• 国土交通省－＜消費者の皆様向け＞不動産取引に関するお知らせ
• e-Gov法令検索－宅地建物取引業法（昭和27年法律第176号）
• e-Gov法令検索－宅地建物取引業法施行令
• e-Gov法令検索－宅地建物取引業法施行規則
• 国土交通省－宅地建物取引業法の解釈・運用の考え方（令和8年4月1日施行版）
• 一般財団法人不動産適正取引推進機構－不動産のQ&A「契約の解除と手付金の返還等」
• 一般財団法人不動産適正取引推進機構－不動産のQ&A「ローン特約・買換え特約」
• 公益社団法人全日本不動産協会－法律相談「買付証明書の法的性格」
• 国土交通省－ITを活用した重要事項説明及び書面の電子化について
• 国土交通省－重要事項説明書等の電磁的方法による提供及びITを活用した重要事項説明 実施マニュアル（令和6年12月版）
• e-Gov法令検索－民法（明治29年法律第89号）
• 国税庁－タックスアンサーNo.7108 不動産の譲渡に関する契約書等に係る印紙税の軽減措置
• e-Gov法令検索－犯罪による収益の移転防止に関する法律
• e-Gov法令検索－特定住宅瑕疵担保責任の履行の確保等に関する法律（平成19年法律第66号）
• 東京都住宅政策本部－不動産取引の手引き９ 残金支払（決済）と引渡し

Important Notice

This article is a general information summary and does not constitute individual legal, tax or real estate transaction advice. The information was checked on September 30, 2026. Rules may change, so rely on the current announcements of Japanese authorities and the content of your individual contract, and consult a qualified professional where needed.