After searching for almost a year, my husband and I finally found a beautiful single detached house with good light. Just when we’re about to put in an offer, we receive news it sold, I was pretty sad; compared every house after to it.
A month goes by, nothing else catches our eye, suddenly we get a call from the seller’s RE agent – the previous buyers’ mortgage didn’t go through. Opportunities don’t come twice so we jumped on it, signed the week after, Nov 15th. Offer was conditional on us successfully securing a mortgage with SMBC Prestia. Closing date is Jan 20, 2023.
We secure the loan with Prestia by early Dec, apply for 2 other banks as backup. Around the same time bank 2 gets back to us and is willing to give us better rates, great! Then bank 3 tells us that they cannot approve the loan because the house does not conform to government zoning regulations。This is yesterday. We are absolutely shocked, this is the first time we’re hearing about this. If the house is an illegal house, it becomes VERY difficult to sell since banks don’t usually provide lending for these types of properties and 99% of buyers rely on lending, especially in Tokyo.
The reason why it was considered illegal is due to zoning regulations. The government’s registered land size (登録面積) is 98.84m2, measured land size (実際面積) at time of building is 99.75m2.
According to zoning regulations, the 建ぺい率 , building coverage can only be 70% of the lot size. The actual size of the building coverage is 69.67m2 – using the measured size, the 建ぺい率= 69.84% but according to the government registered one, the 建ぺい率= 70.5% ー technically an illegal home. Despite the tiny tiny difference, Banks for compliance, often reject lending for houses like this, like bank 3.
It turns out that on the 重要事項説明書 – the document that only those with a Realtors license can prepare and must explain prior to selling the house to us, they did not explicitly talk about this issue. They instead put in a clause that made us acknowledge the difference in actual and registered land size then only used the actual land size to calculate the 建ぺい率。
There is a solution to this, that the government registered land be updated using the recently measured land. This process is usually handled by the measurement company, so we call the measurement company immediately to see if it’s possible to do it, we’re willing to pay, but they say that it’s at the discretion of the builders since they’re the legal owners and they need the neighbours’ written acknowledgement of the new size to register with the government.
We called the agent yesterday to express our concerns and asked that the company register it but he completely blew us off. Was really irritated we were even asking, telling us that there is no concerns since we got a mortgage approved and that the company would not be willing to do it because they don’t want to incur extra costs. We say no problem, we’re willing to pay, still no. At this point I don’t understand why they wouldn’t have done this at the beginning to avoid all these issues, then I remember, they have a bad relationship with the neighbours and the neighbours probably refused to sign off on this. I’m worried that’ll carry over to after we move in too.
Despite all this, I still love the house and would like to purchase it if the government registered land size can be updated to the measured one. If it cannot, is there any way I can get out of the contract with the real estate company for omitting important information? We paid their fee and the deposit already, it’s a few years of savings for us, we would be devastated if we couldn’t get it back.
My husband and I are not native in Japanese, and we’re not familiar with the Real Estate practices here, am I worried about nothing and making it a bigger deal than it is? I would love to hear the opinions and experiences of the many knowledgeable residents here.
Thank you for your kind help and sorry for the wall of text.
TLDR:
Signed a purchase contract for a house only to find out that the house does not meet government zoning regulations. Real estate agency put in a clause that made us acknowledge the difference in registered land size and actual land size but did not tell us the implications of it. How can we get out of this contract and get our deposit and realtor fee back or solve the zoning issue with the neighbour?
1 comment
Contact a lawyer for a consultation.
You may not be able to get out of this, since you signed the contract and the contract included this point. This may be an expensive lesson that you shouldn’t “jump on” opportunities that cost a few years of savings.
If the building truly is encroaching on the neighbor’s property, it could have very serious and very expensive legal issues for you down the line. It won’t be cheap, but you could use a lawyer or agent (not your shitty real estate agent) to pay off the neighbor to sign off on the change, effectively buying the encroached land.