The Purchase Offer Letter (Kaitsuke Shomeisho) in Japan: What It Says, Whether It Binds You, and Whether You Can Withdraw

The short version: a purchase offer letter says "I want to buy", but it is not a contract

When you find a property you like in Japan, the first step is usually not signing a contract. It is submitting a written purchase offer to the seller through the agent. In Japanese this is the kaitsuke shomeisho, also called a konyu moshikomisho or kaitsuke moshikomisho^[6]. It states the price you are willing to pay and your main conditions, and the seller uses it to decide whether to negotiate with you. The letter itself has no legal binding force, and you can in principle withdraw it. However, if negotiations have gone far and you back out without a good reason, there are court rulings that awarded damages to the seller^[4][7]. Some agents also collect an "application deposit" (moshikomi shokokin) at this stage. That money must be returned if you withdraw your application^[2][3]. Here is how it works from the buyer's side.

What goes in the letter: price, deposit, financing and an expiry date

No law prescribes what a purchase offer letter must contain, and the form is usually supplied by the agent^[7]. Typical items are: details identifying the property such as its address and floor area, your offered price, the amount of earnest money (tetsukekin) you plan to pay at signing, your preferred contract date and handover timing, whether you will use a mortgage and how much you expect to borrow, an expiry date, and where needed your annual income and occupation^[7][6]. Income should match your withholding slip or tax return and must not be overstated^[6].

The expiry period is usually around 1 to 2 weeks and is set by the seller's side or the agent. If you need to arrange a mortgage or sell your current home first, a longer buffer may be appropriate^[6][7]. Too long a period makes it hard for the seller to judge whether there is room to negotiate; too short a period may not leave enough time for a loan review^[7].

A single property may receive several offer letters at once. There is normally no "first come, first served" rule. The seller and agent compare the price and terms of each offer to decide whom to negotiate with first, so a later buyer with better terms may be given priority^[6][7]. When the seller is willing to talk, they sometimes return a "letter of intent to sell" (uriwatashi shodakusho) stating the intended price, handover timing and validity period. It is likewise non-binding, but for the buyer it confirms that negotiations are open, and some banks treat it as one of the reference documents in a mortgage review^[6].

Is it legally binding? How the courts see it

Under Article 522 of the Civil Code, a contract is formed when one party makes an offer and the other accepts, and unless a law specifically requires it, no written form or other formality is needed^[1]. So if the seller receives your letter and says "fine", is the sale concluded? The courts have essentially said no.

A legal Q&A published by the All Japan Real Estate Association summarises the key rulings. Because real estate is a high-value, consequential asset, established practice treats a sale as concluded only when a written contract is signed and earnest money or a part payment changes hands. The Tokyo High Court, in a judgment of 30 June 1975, endorsed this practice and held that signing the contract document and handing over a part payment could be regarded as requirements for the sale to be formed^[4]. The Osaka High Court went further in a judgment of 26 April 1990: a purchase offer letter merely expresses a wish to buy in the future, and even where a purchase offer letter and a letter of intent to sell have been exchanged, the contract is formed only after the parties go through concrete negotiations and reach agreement, a point the court said is generally understood in the real estate industry^[4]. The Tokyo District Court, in a judgment of 25 December 2014, held that even with a draft contract and a memorandum of agreement in place, no contract had been formed where the parties still planned to negotiate open terms and the timing of registration and the settlement date were undecided^[4].

For a buyer this means that submitting a purchase offer letter is not signing a contract. The seller can decline, and you have not yet taken on an obligation to buy. What binds you is the sales contract both sides sign after a licensed real estate transaction specialist has explained the important matters^[2].

Can you withdraw after submitting? In principle yes, but the risk grows as talks deepen

Since the letter is not binding, cancelling it does not in itself trigger a penalty^[6]. There is, however, a doctrine known as "fault in contracting" (keiyaku teiketsu-jo no kashitsu). Before a contract is formed the parties owe each other no obligations in principle, but once negotiations have advanced far enough that the other side reasonably trusts the contract will be concluded, a party who then refuses to sign without a legitimate reason may be liable for the losses this causes^[4][5].

The Fukuoka High Court's judgment of 29 June 1995 is one example. In a sale of land for a condominium development, the preparation of the contract document, the arrangements for settling the price and even the date of the groundbreaking ceremony had been confirmed when the prospective buyer refused to sign, and the court upheld the seller's claim for damages^[4]. Sumitomo Mitsui Trust Realty described another type of case: the parties exchanged a purchase offer letter and a letter of intent to sell, fixed the contract and settlement dates, the seller commissioned a design firm to prepare plans, and after the building permit procedure was complete the prospective buyer refused to sign, citing rising construction costs. The lawyer's view was that this could satisfy the two requirements of negotiations having advanced enough to create trust that a contract would be formed, and that trust having been betrayed^[5].

What these cases have in common is that the terms were essentially settled and the other party had already spent money preparing to sign. In an ordinary resale condominium purchase, a buyer who steps back before terms are agreed, or who withdraws for a legitimate reason such as failing a mortgage pre-screening, would not normally fall into this category. Even where there is no legal liability, a casual withdrawal wastes the seller's and agent's time, and you may not get another chance to negotiate for the same property. If you must withdraw, explain your reasons through the agent as early as possible^[6][7].

The application deposit: can you get money paid at this stage back?

Some real estate companies collect an "application deposit" (moshikomi shokokin, or moshikomikin) when they accept a purchase offer letter, as a form of reservation or priority handling^[8]. It differs from the earnest money paid at signing. Earnest money is subject to rules on maximum amounts and protective measures, while there are no specific rules on collecting an application deposit before a contract, and its legal nature is unclear. If a contract is eventually signed, it is normally credited toward the earnest money and ultimately toward the price^[8].

What buyers most want to know is whether this money comes back if they withdraw. The answer is that it must be returned. Article 47-2, paragraph 3 of the Real Estate Brokerage Act prohibits a licensed broker from acts that obstruct the withdrawal of a contract application and fail to protect the other party's interests, with the specific acts to be set out in a ministerial ordinance^[2]. Article 16-11 of the Act's Enforcement Regulations lists, as one such prohibited act, refusing to return money already received when the other party withdraws a contract application^[3]. Whatever the money is called when it is collected, funds handed to a broker before a contract must be refunded if you withdraw the application. In addition, where the broker is merely an intermediary and not the seller, the purpose of collecting an application deposit is itself unclear, and the prevailing view is critical of the practice^[8]. If an agent says it will not accept your offer without an upfront payment, ask them to explain what the money is for and keep the receipt.

What this means for buyers: things to settle before you submit

Do not submit before your terms are settled. The letter can be withdrawn, but it is the starting point of your negotiation with the seller. Changing the price, deposit or handover timing after you have written them down damages trust^[7]. Decide your budget, borrowing capacity and move-in timing first.

Offer within a range the seller can accept. An offer far below the seller's expectations may simply be rejected with no chance to negotiate^[7]. The agent usually has a sense of the seller's position and whether there are competing buyers.

Get a mortgage pre-screening done first. The letter asks whether you will use a mortgage and how much you expect to borrow, and the seller uses this to judge your ability to complete^[7]. Having a bank's pre-screening result before you submit reassures the seller and reduces the chance of a later withdrawal because a loan was declined.

Do not submit through several agents at once. Making an offer on the same property through a second agent after submitting through one may be treated as nuki koi, poaching, with a risk of breaching your brokerage agreement, and the industry generally avoids it^[7].

Check the expiry date and how to withdraw. Validity is usually 1 to 2 weeks^[6][7]. If the seller has not replied by then, the offer lapses. If you do withdraw, notify the agent in writing or by email so there is a record.

Buyers living abroad should allow extra time. Viewings, obtaining a pre-screening result and preparing signing documents all take time. Build these periods into the expiry date and the preferred contract date when you submit.

Summary

The purchase offer letter (kaitsuke shomeisho) is the buyer's written statement of intent and conditions to the seller, covering price, earnest money, financing and an expiry date^[7][6]. Under the Civil Code and the case law, it alone does not form a sale, and it can in principle be withdrawn^[1][4]. But backing out without good reason after terms are essentially settled and the other side has spent money preparing to sign can lead to a damages claim under the doctrine of fault in contracting^[4][5]. If you paid an application deposit at this stage, the broker must refund it when you withdraw^[2][3]. If you are considering buying in Osaka, feel free to contact us. We can help you prepare the purchase offer letter and explain what each condition means, in Chinese, Japanese or English.