The mechanism of property acquisition process in Japan
The real property Registration is the key to the property ownership acquisition in Japan.
For a safe and smooth property transaction, it is very important for those who buy property in Japan to learn the mechanism of the property registration system.
1. The timing of "ownership transfer"
The ownership transfer is, unlike under the Common Law, not caused based on "Title Transfer". So, please put this idea aside.
The property transaction under Japanese law is an "Ownership Transfer". Furthermore, the "Ownership Transfer" and the "Ownership transfer registration" are different ideas under Japanese law.
Under the law, ownership can be transferred based on both parties' agreement. On the other hand, registration is just required to assert one's ownership right to a third party.
According to a standard Sale and Purchase Agreement, the Ownership is transferred "when the Buyer has paid the Purchase Price in full and the Seller has received the funds" on the handover day.
Therefore, in such a transaction, once the seller has received the final balance, the ownership is transferred to the buyer regardless of the implementation of the ownership registration.
2. The meaning of "ownership registration"
But unless the registration is done, the buyer's ownership is not assured against other third parties.
For example, if a third party (e.g., the tax department) seizes the property for outstanding tax for the seller after the ownership is transferred to the buyer but before the ownership registration is done, the tax department has priority against the buyer.
This means you will be placed in a situation where you may lose the property ownership if any third parties do such seizure registration to the seller before you apply for the ownership acquisition registration.
In other words, the principle of property registration is "First come, first served".
Therefore, once the buyer has released the final balance to the seller, the buyer can acquire the ownership from the seller, but the buyer still cannot assert their ownership to any third parties without the ownership registration.
Thus, in accordance with an ordinary Sale and Purchase Agreement, the following steps are reasonable.
- MINA KAMUY checks the latest registration status of the properties before the settlement
- Buyer remits the final balance to the seller
- Seller confirms the receipt (then, the ownership has been transferred)
- MINA KAMUY applies for the ownership transfer registration
This is the course of action under the Japanese law system.
