Original Article: 【こんな営業手法は禁止されている‼】あらためて覚えておきたい、宅建業者の禁止事項について
Sales tactics which are prohibited.
We must comply with the Building Lots and Buildings Transaction Business Law as well as the Consumer Contract Law and other related waivers in connection with solicitation, mediation, and contracting.
Therefore, the following actions are prohibited.
1. Credit for deposit: (Article 47, Item 3 of the Building Lots and Buildings Transaction Business Act)
Specifically, the act of lending a deposit (earnest money) or inducing a contract on the condition that the deposit be paid in installments or at a later time is prohibited.
Due to the principle, freedom of contract, there are no specific legal restrictions on the existence or amount for a deposit.
The only exception is the Building Lots and Buildings Transaction Business Law, which limits the deposit to 20% of the sales price only when the seller is a real estate brokerage.
If the parties to the contract are done by two (or more) individuals, there is no issue if the deposit is “0”.
In such cases, the buyer cannot cancel the contract by waiving the deposit.
The buyer has no choice but to pay a penalty (e.g., 20%). This can be a heavy burden on the buying party.
This is why contracts are often made with a small deposit of 100,000 to 500,000 yen.
However, for clients who still find it difficult to prepare a deposit, lending that amount of money is a form of extending credit.
The same is true if the seller is a real estate brokerage who concludes the contract by saying, “I’ll take 100,000 yen as part of the deposit for now, and the rest can be paid at a later date.”
Although an immediate decision is important, it is important to proceed with caution and not force a client who is in a situation where it is difficult to prepare a deposit.
2. Provision of definitive judgments: (Article 47-2, Paragraph 1 of the Building Lots and Buildings Transaction Business Act, Article 16-11 (a) of the Enforcement Regulations of the same Act, Article 4, Paragraph 1, Items 1 through 2 of the Consumer Contract Act, etc.)
It is assertive information that is often spoken not only by novice salespeople, but also by salespeople with a certain amount of experience. We need to be especially careful when laws are being revised.
We, as real estate agents, need to have a wide range of knowledge including related laws and regulations.
Starting with the Building Lots and Buildings Transaction Business Law, we need to answer questions from clients about the Civil Code, Building Standards Law, Urban Planning Law, Tax Law, Registration Law, etc., even if we are not specialists.
In doing so, do answer any questions if you have a vague idea of what you are talking about. This is the key.
For example, when mediating investment properties, it is not acceptable to mislead clients into believing that profits are assured. Talking about a “sure” profit falls under the category of a definite judgment.
Common questions include, “How much will the real estate acquisition tax be?” or “There is a redevelopment project going on nearby, will the price of this area increase in the future?” These types of questions are often asked.
The real estate acquisition tax is calculated as “tax base ✕ tax rate”, which can be quickly calculated if you have knowledge of tax reduction measures, but it is not possible to predict future price fluctuations.
We should not make a determination on something that cannot be determined with certainty.
For questions which require research, tell the customer that you will answer at a later date. If there is a high degree of uncertainty, it is essential to keep things open ended, such as mentioning “This is only an estimate (or assumption).”
Incidentally, the Consumer Contract Act also provides that the declaration of intent can be rescinded when a contract is concluded by misleading a customer into believing that the contract is certain by “providing a definite judgment.”
Care should be taken not to provide information that is not certain.
3. Acts of pressing a contract by threats or intimidation (Article 47-2, Paragraph 2 of the Building Lots and Buildings Transaction Business Act, Article 4, Item 4 of the Consumer Contract Act)
The Civil Code stipulates, contracts may be entered into based on the free will of the parties and that the state does not interfere with contracts entered into as a result of such free will (the principle of freedom of contract).
However, this does not apply to cases where a contract is coerced into being concluded through intimidation or threats.
The Building Lots and Buildings Transaction Business Law prohibits intimidating the other party in order to “prevent the withdrawal or cancellation of the application for a contract,” but Article 4 of Section 1 of the Consumer Contract Act (Rescission of the Manifested Intention to Offer a Consumer Contract or to Accept Such Offer) stipulates in detail prohibited acts, including cases of intimidation.
We real estate agents are considered “businesses” regardless of whether we are a corporation, organization, or individual. Therefore, even prohibited business acts that are not stipulated in the Building Lots and Buildings Transaction Business Law are restricted by the Consumer Contract Law.
It is necessary to have a better understanding of what kind of acts are in conflict.
4. Not giving time necessary for judgment (Article 47-2, Paragraph 3 of the Building Lots and Buildings Transaction Business Act, Article 16-11(b) of the Enforcement Regulations of the same Act).
Immediate decision is the basis of sales.
After the viewing, we return to the office to close and obtain the proof of purchase.
Although this is the very ideal flow, we are often told, “It is a very expensive purchase, so I would like to think it over at home.
In sales training, we are often told that “returning the house to the home is the end of the process,” and we are instructed that if we do not settle the matter on the spot, the closing rate will drop. In fact, this may be true.
If you think about it carefully, various concerns will arise.
If a sales person is with you, he or she will explain the solution and the way of thinking, which will probably dispel your anxiety, but this is not the case at home.
Most of the people who went home saying they would think about it at home do not “think about it.”
Those who leave saying, “I’ll get back to you tomorrow,” still have a better chance.
In any case, it is probably true that the closing rate will decrease if you let them go. Knowing this, the salesperson tries to settle the matter on the spot.
Not giving the customer time to think is considered a violation of the Enforcement Regulations.
If you do not understand why the customer cannot make a decision immediately, no matter how much time you spend, it will be a waste of time.
You need to be able to see this and part with them comfortably. You need to have that kind of tact.
Even if you spend a lot of time closing the deal and forcefully obtaining the application form, the chances of rejection will only increase.
Discern with the understanding that “prolonged solicitation or any other conduct that disturbs the tranquility of one’s private life or business” is prohibited.
5. Calling or visiting at a time that may cause annoyance (Article 16-11(e) of the Enforcement Regulations of the Building Lots and Buildings Transaction Business Law)
The phrase “night and day” may be a dead language, but one gets the impression that it is still alive and kicking in the real estate industry. There are companies that continue to push the old sales techniques. As for hours (9:00 PM to 8:00 AM), it is better to avoid calls and visits.
The Enforcement Regulations describe the hours as “hours that would cause you to remember to be inconvenienced,” and do not mention specific hours.
However, it is commonly accepted that the above hours regulated by the “Enforcement Regulations of the Money Lending Business Act” are the hours that are not considered to be disturbing.
6. Refusing to refund the deposit or refusing to cancel the contract by waiving the deposit (Article 16-11, Items (d) and (iii) of the Enforcement Regulations of the Building Lots and Buildings Transaction Business Law)
The act of making a cash deposit at the time of application for a property is customarily referred to as an “application fee.”
This act is usually done to secure priority or to confirm the seriousness of the buyer’s intentions regarding the purchase, but the “deposit” itself is not legally problematic.
However, a deposit is not the same as a earnest money deposit.
If the customer has a change in mind and are asked to return the deposit, you are obligated to return it promptly. Refusing to return the deposit because it can be used for other properties is a weak excuse. At first glance, it looks like an act of enclosure or to trap the customer.
The act of refusing to return the property is legally problematic and should be handled with caution.
Pyramid of Law to Remember
Prohibited acts of real estate agents are restricted by the Real Estate Lots and Buildings Transaction Business Law and its construction regulations, as well as the provisions of the Civil Code and the Consumer Contract Law. The question is sometimes asked, “Which one takes precedence?
As those who understand the difference between special laws, general laws, ministerial ordinances, etc. know, the Japanese legal system is formed in a pyramid structure with the Constitution at the top.
The priority is thereby given to the “Law” at the top of the pyramid, but when establishing laws, ministerial ordinances, etc., the principle is not to contradict the provisions of the “Law” at the top.
For example, the Building Lots and Buildings Transaction Business Law is given priority when it conflicts with other laws in the real estate industry.
However, the Building Lots and Buildings Transaction Business Law alone cannot govern all matters.
General laws apply to the extent that they do not contradict or conflict with special laws.
Cabinet orders and ministerial ordinances (e.g., construction regulations) are not “laws,” as evidenced by the fact that they are positioned as subordinate regulations to laws. A Cabinet Order is an order enacted by the Cabinet, and a Ministerial Ordinance is an order enacted by the minister of each ministry.
Therefore, penalties cannot be imposed except when specifically delegated by “law.”
The Construction Regulations of the Real Estate Transaction Business Act are also ministerial ordinances, but Article 47-d, Paragraph 3 of the Real Estate Transaction Business Act stipulates that “the interests of the counterparty of the real estate transaction business operator and those specified by Ordinance of the Ministry of Land, Infrastructure, Transport and Tourism and other Cabinet Office Ordinances, etc. The law mandates that “no person shall do anything specified by Ordinance of the Ministry of Land, Infrastructure, Transport and Tourism as something that lacks the protection of the public.”
Therefore, if the construction regulations of the Real Estate Transaction Business Act are violated, penalties will be applied as mandated by the law.
We would like to expand our knowledge of these laws, including their relevance, and take care to develop our business in such a way that it does not become illegal.
The content explained here is something that all practicing real estate agents must understand.
However, consultations regarding prohibited business practices, which are supposed to be understood and complied with, account for a considerable number of inquiries received at National Consumer Affairs Centers and the consultation desks in each prefecture.
Are all the businesses that were consulted committed criminals? I don’t think so.
There are probably many cases where actions performed unintentionally are found to be illegal.
In a country ruled by law, the excuse “I didn’t know there was such a law” is no longer valid. As long as there are regulations, there is no mercy even if you are not aware of it.
It is important to occasionally review your own sales methods to ensure that they do not violate prohibited acts.
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