Warranties For Buyers
Many consider a home to be one of the “biggest consumer goods,” even the biggest one. Would you buy a car or a computer without a warranty? Well, what about something that’s 10 or 100 times more expensive? Doesn’t such a purchase warrant a warranty? Good news: there are warranties for buyers (both in law, and industry standards) in Japan that protect homebuyers. However, there are rules that determine whether or not the warranty applies, and it’s helpful to know what they are.
First, a Japanese vocabulary word, using difficult kanji that not even all Japanese can read: kashi (瑕疵). It translates to “defect” or “fault.” You’ll likely see this word repeatedly if you read the Japanese version of your real estate contract. If you discover a hidden kashi (one the seller didn’t disclose), you have recourse. Recourse takes a few forms. Compensation, repair of the kashi, or, if (in rare cases) things don’t look salvageable, total cancellation of the agreement.
However, there are certain exceptions in which there might not be recourse. If the seller notified the buyer about the kashi before contract signing, then it’s exempt. If the buyer was negligent, this can also override the seller’s liability.
What Types Of Defects And Faults?
First of all, there are physical defects/faults. These include:
- Corrosion to the main structure
- Land boundaries that are ambiguous
- Land that is sinking
- Obstruction to the plumbing
- Undesirable structures or items buried underground or soil contamination
- Termite damage
- Water leaks (especially related to rain)
Maybe the piece of real estate is just fine, physically. However, there is a non-physical issue. For example, the property might be a stigmatized property. There may have been an accident or incident resulting in death there. For example, there might have been a murder or suicide. Perhaps there was a lonely death (often involving an elderly person living alone) in which someone detected the corpse late. Even if no one died, there could have been a fire or other stigmatizing factor.
There could be asbestos. Or a nearby building giving off a bad smell. Sometimes this category overlaps with a gomiyashiki ([塵屋敷], literally “garbage house”), often belonging to an elderly hoarder. There could be a designated contracted road nearby, that causes restrictions. What if gangsters, such as the yakuza, operate nearby? Or the building is in great shape right now, but it lacks structural safety standards. E.g. it doesn’t adhere to earthquake codes, or it has outdated disaster prevention equipment. Another fault in the piece of real estate is excessive noise. You have recourse for all of these problems.
Another category of faults that can activate a warranty include legal faults. The building itself is physically fine, but it’s in violation of (a) law(s). Or there are serious limits on what you can do with it as the result of a law. Legal faults include unknown easements and leaseholds. Your building’s legal situation regarding local roads, as well as violations of the building coverage ratio, are also faults.
Warranties: Laws And Industry Standards
There are laws that specify warranties for real estate in Japan. However, sellers may write their own clauses that differ from the law. There are some limits on these clauses, though. In the absence of a clause regarding warranties, the Civil Act applies.
According to the Civil Act, the buyer has the right to a warranty unless otherwise specified. This warranty lapses after ten years. During these ten years, the law entitles the buyer to recourse “within 1 year of detecting the defect.”
However, the Civil Act might not apply in your case. Frequently, the seller writes his or her own clause that overrides the Civil Act, for example with 2~3 months. Some sellers draw up a contract that offers a very short warranty or no warranty at all. This is legal as long as the seller is a private individual. Many sellers use the standard sales contract of the Association for Real Estate Distribution Management. In this contract, it states three months. Furthermore, this same standard sales contract covers dishwashers, electrical items, hot water heaters, stoves, etc. with a seven-day warranty. Therefore, make sure to check those things within the first week of purchasing your property.
Real Estate Companies Must Offer A Warranty
However, if the seller is a real estate company, it cannot caveat its way out of a warranty. It also cannot offer an overly-short warranty. It can try, hoping that you, the client, will be naïve enough not to know, but such clauses are illegal. In the event that such a clause is in your contract, it’s invalid. The Real Estate Brokerage Act/Residential Lots and Buildings Transaction Business Law apply. This means there’s a two-year warranty if the seller is a real estate company (i.e. real estate brokerage). This warranty starts on the date of delivery to the buyer. In other words, when you get your keys, the two-year warranty starts. A real estate company is welcome to offer a longer warranty than two years. However, it may not offer a shorter one.
Beware of exceptions to these laws, though. If the seller notified you about the defect or fault, then no warranty applies to that specific defect. If you purchase a piece of real estate from a foreclosure auction, then it’s possible that no defect warranty applies.
Laws Specifically Regarding New Properties
Good news for buyers of new real estate: the law protects you for a minimum of ten years. The developer may extend this warranty up to 20 years, but the warranty period may not be less than ten. You must report the defect/fault within one year of discovering it. This is according to the Law Concerning the Promotion of Quality Assurance of Houses (Product Quality Act). The Japan Real Estate Association also has its own “Mid-to-High-Rise After-Service Standards.”
In order for the law to apply, the piece of real estate must meet the following conditions:
- “It is a new construction.”
- “It has not been occupied.”
- “It is less than one year old.”
- The issue is with the main structural portions of the building. These include problems such as (in) the following:
· Cracks or breakage in foundations
· Columns/supporting beams
· External and/or load-bearing walls
· External windows/doors (especially if there’s a failure in keeping out all the rainwater). For instance, a leakage in an exterior wall would count.
· Interior floors
This seems to require faith in the stability of the developer, though. What if they go bankrupt? Fortunately, the law requires developers either to make a deposit with the deposit office, or take out insurance. Therefore, even if the developer goes bankrupt, you can still make a claim using the deposit office or insurance company.
What about other, less serious things? Well, for defects/faults that aren’t main structural portions of the building, a two-year warranty covers them. Examples include peeling wallpaper, problems with the fusuma (襖, Japanese sliding screen), or the fittings on a door.
The Future Of Laws Regarding Warranties For Buyers
Changes may be coming. On April 1, 2020, the Civil Code applied to real estate warranties will change. The conventional concept of defect liability has been abolished and replaced with “non-conformity liability.” If the contract period is after the revision of the Civil Code, consult with a real estate agent.
Warranties For Buyers: Conclusion
The Civil Code and several other laws and industry standards protect real estate purchasers. A sly seller might try to caveat his or her way out of following these laws and industry standards. However, the law is on your side, especially when buying through a licensed real estate brokerage. Beware of exceptions, e.g., foreclosed properties and private sellers who aren’t licensed real estate brokerages. If you do that, you’ll be fine.