GMO GlobalSign Holdings announced on January 11th that it has reached a memorandum of understanding with the National Association of Real Estate Agents (in Japanese, Zentaku-ren) to jointly develop a legally compliant e-singing system for Zentaku-ren member companies.
The revision and enforcement of the Building Lots and Buildings Transaction Business Law scheduled for no later than May of 2022, will enable the delivery and signing of real estate documents via electronic methods.
The shift to electronic contracts by real estate businesses is expected to become an urgent issue for the industry in 2022.
To alleviate this urgency and to position themselves as regulators' choice for e-signing property documents, GMO together with Zentaku-ren will work to enable electronic contracts using the cloud-based, e-signing service named the Electronic GMO Signature and provide it to approximately 100,000 Zentaku-ren member real estate firms.
The Building Lots and Buildings Transaction Business Law (in Japanese, Takken-Gyoho) traditionally requires an explanation of important matters for the buyer or renter in a real estate transaction.
This can only be performed by a licensed realtor and an explanation of important matters (in Japanese, the Jyuyo-Jiko-Setsu-Mei) must be executed prior to the execution of a sales or lease contract. This requirement is usually in person and paper-based.
However, according to the Digital Reform Law enacted in September 2021, the digitization of real estate documents, including those pertaining to sales and leases, will be allowed and encouraged by all real estate companies in Japan.
The Ministry of Land, Infrastructure, Transport and Tourism (MLIT) began experimenting with digital lease contracts in October of 2019 with selected real estate companies, expanding the testing to sales and purchase contracts in March of 2021.
Throughout the still ongoing testing period, five requirements were set by the MLIT for the participating companies to demonstrate they can reliably perform for e-signing real estate contracts:
- Picture-in-picture video recordings with clear audio of the explanation of important matters.
- Presentation of the real estate agent’s license to the buyer / renter.
- Identity confirmation of the consumer receiving the explanation of important matters.
- Shared electronic documents pertaining to the execution of the real estate contract.
- Explanation of the e-signing procedures.
Number 4 must be sent to the consumer several days prior to the actual execution of the contract, for which the consumer provides prior written consent that they wish to execute their contract electronically over paper-based.
During the testing phase, paper based copies still need to be delivered to all parties once the digital signing event has taken place, however that need will be eliminated once the new law comes into effect.
The testing phase is set to continue until May of 2022 at the latest in order to smooth out workflows and onboard more real estate companies.
Once the real estate law changes to allow the full digital execution of real estate contracts in Japan, participating real estate companies will have a significant advantage over their paper-based industry peers.
For GMO and Zentaku-ren, their joint development alliance aims to lessen the divide between the traditional and the modern.
Consumers seem happy with the upcoming change as a recent GMO / e-Seikatsu survey found that more Japanese clients want to sign documents digitally like is common in other G7 nations.
Further Reading
GMO Press Release (Japanese only; January, 2022)
