Bridging the Language Gap: How Yamamoto Property Advisory Ensures Clarity in Japanese Real Estate Contracts

For Foreigners: The Importance of Japanese Contracts and How to Explain Them？

 

Pros and Cons of Conducting Real Estate Transactions for Foreign Clients Using Contracts Translated

into Foreign Languages

 

We found a very interesting article on the Real Estate Transaction Promotion Center’s (公益財団法人　不動産流通推進センター）website.

In this article, we will share the content and inform you of our company’s approach to this issue.

 

Background and Key Figures

The background of the article is based on a consultation with a real estate company (Not Yamamoto Property Advisory)

that is not experienced in handling foreign clients.

As real estate transactions with foreign clients increase, said brokerage firm, specializing in sales and rentals, faces the challenge of preparing transaction documents

in foreign languages and arranging interpreters.

 

Although they have not yet handled such transactions, they anticipate doing so soon.

They are considering preparing important documents like sales and lease contracts in English, despite their staff’s limited proficiency in explaining complex contract terms.

Introduction

When engaging in real estate transactions in Japan, providing contracts in Japanese is essential by law.

This ensures precise understanding and prevents legal disputes.

 

Necessity of Japanese Contracts

According to Japanese law, all real estate transactions must be conducted in Japanese.

Japanese contracts are legally binding and recognized as evidence in court.

Foreign language contracts are supplementary and do not hold legal power.

 

Providing Services in English

While they offer services in English to cater to their foreign clients, all contracts are drafted in Japanese.

This approach prevents legal complications.

They ensure that the contents of the contract are thoroughly explained orally when needed.

 

Methods to Deepen Understanding

Using concrete examples to explain the contract details is crucial.

Sharing past incidents and success stories helps clients feel secure about proceeding with the contract.

 

The following is the summary of the article.

 

Transactions with Foreign Clients: The Necessity of Japanese Contracts

Introduction

With the increase in transactions involving foreign clients, they often face the dilemma of preparing transaction-related documents

in foreign languages and arranging interpreters.

Background

As a brokerage firm dealing in sales and rentals, they have heard from peers about the rising number of transactions involving foreign clients.

Although they have not yet handled transactions with foreign clients, it is anticipated that they will soon.

Therefore, they are considering preparing important documents such as sales and lease contracts in English.

However, their staff, although capable of everyday English conversation, lack the language skills necessary to explain important details

and contracts comprehensively.

 

This necessitates the use of interpreters, but they are unsure how to prepare for this adequately.

Their concern is whether they might receive complaints from foreign clients after a transaction, claiming they did not understand

the contract due to insufficient language skills of the interpreter.

 

While they can manage complaints to some extent, they wish to avoid legal disputes that could arise from misunderstandings about contract terms,

cultural differences or miscommunications, potentially leading to lawsuits and claims for damages.

 

Questions

1. Should they prepare important documents in foreign languages, assuming they will not use interpreters for transactions with foreign clients?

2. When dealing with foreign clients requiring interpreters, should the brokerage firm arrange the interpreters?

 

Answers to the above questions.

Conclusion (provided by the Real Estate Transaction Promotion Center, a semi-government organization　公益財団法人　不動産流通推進センター）

For question 1: Real estate transactions can be conducted in Japanese; it is not necessary to prepare important documents in foreign languages.

For question 2: It is generally considered that foreign clients should arrange their interpreters.

 

Reasons

With the internationalization and growing inbound demand, interactions with foreign clients have increased. Even if a real estate transaction involves foreign clients,

the legal acts of concluding a purchase or lease agreement of real estate located in Japan are governed by Japanese law.

Therefore, important details must be explained and documented in Japanese. In the case of disputes arising from the transaction,

the court proceedings will be conducted in Japanese, requiring Japanese documentation.

While some real estate companies provide documents in foreign languages for better understanding,

these are supplementary and meant for reference only. In case of disputes over interpretation accuracy,

the responsibility generally lies with the foreign client who arranged for the interpreter.

The Ministry of Land, Infrastructure, Transport and Tourism has published guidelines to prevent troubles in real estate transactions with foreign clients.

These include manuals and guidelines for smooth handling of foreign clients, suggesting real estate agents familiarize themselves with these resources.

 

Conclusion

Preparing Japanese contracts is legally required and prevents misunderstandings.

Providing clear oral explanations and using supplementary foreign language documents as references help ensure foreign clients understand the terms.

Real estate agents should refer to available guidelines to enhance their handling of international transactions.

 

Insight from Supervising Attorney from the Real Estate Transaction Promotion Center

 

This consultation assumes transactions where the buyer or tenant is a foreigner.

As mentioned, even interpreters with high foreign language proficiency may not be familiar with

specialized terms used in contract relations or important matters explanations.

Therefore, it is crucial to provide detailed explanations, starting from basic concepts, when addressing questions from interpreters.

 

Yamamoto Property Advisory Approach

At Yamamoto Property Advisory, we provide all our regular services in English.

However, all contracts （契約書）and important explanatory documents（重要事項説明書） are provided in Japanese.

 

As mentioned in the article, preparing Japanese contracts is legally required and prevents misunderstandings.

Providing clear oral explanations and using supplementary foreign language documents as references help ensure foreign clients

understand the terms.

 

Real estate contracts often contain legal terminology that can be difficult even for Japanese speakers to understand,

as they involve aspects of civil law, real estate transaction law, tax law, etc.

 

Even with AI translation, conveying all the subtle nuances in English is challenging.

However, foreign clients often lack proficiency in Japanese, so our bilingual staff will carefully explain everything in English,

including all subtle nuances, ensuring you can proceed with confidence.

 

For further information, refer to the original article on the Real Estate Transaction Promotion Center website here.