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2026-09-08
How to read the explanation of important matters for a second-hand house ― the 9 items a licensed real estate agent always checks before the contract
When you buy a second-hand house, a licensed real-estate transaction specialist (宅地建物取引士) gives you an "explanation of important matters" (重要事項説明) before the contract. Where in the document of several dozen pages should you look? Registration, statutory restrictions, private roads, utilities, building condition survey, flood risk, liability for non-conformity, earnest money and the loan clause, and condominium management. This article sets them out in the order a licensed agent actually reads them.
About this translation ― This page is an English translation of an article originally written in Japanese by KuraLab's operator, a licensed real-estate transaction specialist (宅地建物取引士) and administrative scrivener (行政書士) in Japan. The Japanese original is the authoritative text; where the two differ, the Japanese version prevails. The article explains Japanese law and procedure in general terms as of the date shown. It is not legal, tax or immigration advice for your situation ― please confirm with a licensed professional in Japan. Japanese terms are kept in parentheses so you can search for them. Read the Japanese original
The day before the contract, the buyer, a man, telephoned. "I received a copy of the explanation of important matters (重要事項説明書). It is 48 pages and I cannot read it by tomorrow. Where should I look?" I gave him the page numbers for nine items. That night he read only those nine, and at the explanation session the next day he asked three questions. One of the three changed the terms of the contract. This article is about those 48 pages, the nine items and the three questions.
In a sale of a second-hand house, the Real Estate Brokerage Act (宅地建物取引業法) requires a licensed real-estate transaction specialist (宅地建物取引士) to give the buyer an "explanation of important matters" before the contract is signed. The specialist shows their licence card, hands over a written document (the Article 35 document) and explains it orally. It often runs to several dozen pages, and understanding all of it on the day is impossible. Get a copy in advance and read the following nine items first.
The nine items, what to look at and what happens if you miss them: registration record (owner, mortgage, co-ownership; otherwise the title or security is not cleared by handover). Statutory restrictions (zoning, building coverage and floor area ratios, road, setback; otherwise a rebuild may only allow a smaller house than now). Private road (share, consent to passage and excavation; otherwise rebuilding or pipework becomes impossible). Utilities (water, sewerage, gas, service pipes; otherwise re-laying costs arise). Building condition survey, earthquake resistance, asbestos (whether done and the results; otherwise you buy without knowing about leaks or deterioration). Disaster risk (flood hazard map, warning zones; affects insurance premiums and future saleability). Liability for non-conformity (scope, period, exclusions; otherwise you cannot claim when a defect appears). Earnest money and loan clause (amount, cancellation deadline; otherwise you miss the deadline and lose the earnest money). Management, for a condominium (fees, reserve fund, arrears, repair plan; otherwise a lump-sum levy or increase is coming).
First, the registration record. Is the owner the seller, and is there a mortgage? A mortgage is normally repaid out of the sale proceeds and cancelled, but check that the arrangement for this is written into the explanation. If the property is co-owned, confirm that all co-owners are sellers.
Second, statutory restrictions. The zoning district (用途地域), building coverage ratio and floor area ratio, height limits, and the type and width of the road and whether a setback is needed, as described in another article on this site on road access. This is where you learn whether a house of the same size as now could be built after a rebuild. If the property is in an urbanisation control area (市街化調整区域), check whether rebuilding is possible at all.
Third, private road obligations. If the road in front is a private road, are you buying a share in it, and has consent been obtained for passage and excavation (to connect water pipes)? Without a share in the road and without consent, problems arise at a future rebuild: construction vehicles cannot enter, water pipes cannot be re-laid.
Fourth, utilities. The status of water supply, sewerage (or a septic tank) and gas (city gas or propane), and who owns the service pipes from the road to the site. Circumstances such as a service pipe running through a neighbour's land, or a pipe too narrow and needing replacement at a rebuild, are written here.
Fifth, the building condition survey (inspection). Since April 2018, in sales of existing housing, the explanation of important matters must state whether a building condition survey was carried out and, if so, summarise the results. The survey is not compulsory, so "not carried out" is common, but if one was done, this is where you learn about deterioration and leaks. Look at the date of construction and whether an earthquake-resistance diagnosis was done (especially for buildings from before May 1981) at the same time. Whether there is a record of an asbestos survey is also an item.
Sixth, disaster risk. Since August 2020, explaining the property's position on the flood hazard map has been compulsory. Is it inside an assumed inundation area for river flooding, inland flooding or storm surge; is it in a landslide warning zone or a tsunami warning zone? This directly affects insurance premiums and future saleability.
Seventh, liability for non-conformity with the contract (契約不適合責任). If the house delivered has a defect that differs from the contract (leaks, termites, broken equipment and so on), how far is the seller liable? Where an individual sells a second-hand house, there is often a special clause limiting the liability period to about three months from handover, or excluding some equipment. Always read "what is covered and until when".
Eighth, earnest money and the loan clause. The amount of the earnest money (手付金) and the deadline for cancellation. And whether there is a "loan clause" (ローン特約) that lets you unwind the contract if the home loan is not approved, and its deadline. If approval does not come by the deadline, you must give notice of cancellation within the deadline. I see cases every year of people losing their earnest money by missing this.
Ninth, for a condominium, the state of management. The amount of the management fee and the repair reserve fund, any arrears, whether there is a long-term repair plan, planned major repairs, and the management rules (restrictions on pets, short-term letting, renovation). If the reserve fund is short of the plan, a future lump-sum levy or increase is to be expected.
Here are the three questions as they were asked. First: "The private road column says 'no share', but has consent for excavation been obtained?" The seller's answer was "not confirmed." The contract added a condition that the seller obtain a written consent for passage and excavation from the road's owner, and the consent was obtained before handover. Second: "The liability period for non-conformity says 'two months from handover'; are the water heater and leaks covered?" The answer: the water heater is excluded as "equipment", leaks are covered. The man checked the year of manufacture of the water heater (fourteen years earlier) and negotiated a 150,000 yen reduction in the price. Third: "The loan clause deadline is three weeks from the contract, but the bank says its review takes four weeks." The clause deadline was extended to four weeks and the contract was signed. This third question was the one that changed the terms; without the extension, if the review had not been completed in time, he would have lost 2,000,000 yen in earnest money.
Let me also list the items that were "no problem" for this property. The registration record showed the seller as sole owner, with the arrangement for repaying and cancelling the mortgage out of the sale proceeds written in. The statutory restrictions were a Category I exclusively low-rise residential zone, building coverage ratio 50% and floor area ratio 100%; the current building was at 42% coverage, so the same scale could be rebuilt. Utilities were mains water, sewerage and city gas, with the service pipes within the site. The building condition survey was "not carried out", and the house was built in 1998, so it met the new earthquake standard. Disaster risk: outside the assumed inundation area and outside the landslide warning zone. Not a condominium, so the ninth item did not apply. Of the 48 pages, these six items allowed about 20 pages to be "read and done"; the rest were standard terms and attached drawings.
One example of a written fact providing protection. In this house, a leak was found three months after handover. The non-conformity liability period was two months, and it had passed. But in the "property condition report" attached to the explanation of important matters, the seller had written "Leaks: yes in the past (2019, repaired)." The leak was in the same place as the repair, so the repair had most likely been incomplete; after negotiation, the seller bore half the repair cost. Even after the period had expired, the written entry became the basis for negotiation.
Finally, one point of attitude. The explanation of important matters is a document in which the licensed agent explains what they "know"; what they "do not know" is not written. Ask about anything that concerns you before the explanation and have it reflected in the document. Only facts recorded in writing will protect you later.
The man who was handed 48 pages the day before read nine items, asked three questions, and with one of them protected 2,000,000 yen in earnest money. As I wrote at the end, the explanation of important matters sets out what the agent knows, and what they do not know is not written. The excavation consent was something "not known", and only the question revealed that it was "not confirmed". The nine items are an order for finding those "unknowns" before the contract.
Written by: 長澤 湊（licensed real-estate transaction specialist, administrative scrivener, assistant surveyor） Content checked on: 2026-10-14
This article is a general explanation of Japanese rules and procedures, not advice on an individual case. Figures and rules are as of the date shown. For your own situation, consult a lawyer, judicial scrivener, tax accountant or administrative scrivener in Japan.