GMO GlobalSign Holdings announced on January 11 that it had entered into a memorandum of understanding with the National Association of Real Estate Agents (in Japanese, Zentaku-ren) to jointly develop a legally compliant electronic singing system for Zentaku-ren member companies.
The revision and application of the law on real estate and real estate transactions, scheduled for no later than May 2022, will allow the issuance and signature of real estate documents by electronic means.
The shift to electronic contracts by real estate companies is expected to become an urgent issue for the industry in 2022.
To alleviate this urgency and position itself as the regulators’ choice for electronic signature of property documents, GMO, in collaboration with Zentaku-ren, will strive to enable electronic contracts using the electronic signature service based on the cloud named Electronic GMO Signature and provide it to approximately 100,000 Zentaku-ren member real estate companies.
Commercial law relating to real estate and real estate transactions (in Japanese, Takken-Gyoho) traditionally requires an explanation of matters of importance to the buyer or tenant in a real estate transaction.
This can only be done by a licensed real estate agent and an explanation of important matters (in Japanese, the Jyuyo-Jiko-Setsu-Mei) must be performed before the performance of a contract of sale or lease. This requirement is usually in person and on paper.
However, according to the Digital Reform Law enacted in September 2021, the digitization of real estate documents, including those relating to sales and leases, will be permitted and encouraged by all real estate companies in Japan.
the Ministry of Territory, Infrastructures, Transport and Tourism (MLIT) began experimenting with digital leases in October 2019 with selected real estate companies, extending testing to sales and purchase contracts in March 2021.
Throughout the still ongoing test period, five requirements were set by MLIT for participating companies to demonstrate that they can reliably perform electronic signing of real estate contracts:
- Video recordings embedded with clear sound of explanation of important issues.
- Presentation of the real estate agent’s license to the buyer / tenant.
- Confirmation of identity of the consumer receiving explanation of important matters.
- Shared electronic documents relating to the execution of the real estate contract.
- Explanation of electronic signature procedures.
Number 4 must be sent to the consumer several days before the actual performance of the contract, for which the consumer gives his prior written consent that he wishes to perform his contract electronically on paper.
During the testing phase, hard copies still need to be delivered to all parties once the digital signature event has taken place, but this need will be eliminated once the new law comes into force.
The test phase should continue until May 2022 at the latest in order to streamline workflows and integrate more real estate companies.
Once the real estate law changes to allow full digital execution of real estate contracts in Japan, participating real estate companies will have a significant advantage over their counterparts in the paper industry.
For GMO and Zentaku-ren, their joint development alliance aims to bridge the gap between the traditional and the modern.
Consumers seem happy with the coming change as a recent GMO / e-Seikatsu survey found that more Japanese customers want to sign documents digitally as is the case in other G7 countries.
GMO press release (only in Japanese; January 2022)