If the home you're selling has a history relating to what's known as a psychological defect (shinriteki kashi) — such as a death having occurred there in the past — you, as the seller, have a duty to disclose it to the buyer. Here we look at disclosure from the seller's perspective, and its effect on price.
- The starting point is always to tell your agent the facts accurately first.
- Selling without disclosing carries the risk of contract cancellation or a damages claim.
- MLIT guidelines serve as the practical benchmark for the disclosure decision.
- The disclosure statement should record the facts accurately, in consultation with your agent.
- The degree of price impact varies by case and isn't decided uniformly.
Start by Telling Your Agent the Facts Accurately
If there's a psychological defect involved, the first thing a seller should do is share the facts accurately with their agent. Whether disclosure is required is decided case by case based on the guidelines, but the seller sharing the circumstances honestly from the outset is the essential foundation for that decision.
Why Sellers Have a Duty to Disclose
Both the seller and the agent are required to disclose any matter that could materially affect the buyer's decision to contract. If a psychological defect isn't disclosed and later comes to light, it can lead to contract cancellation or a damages claim under liability for nonconformity with the contract — so disclosing accurately in advance also protects the seller.
The Basic Thinking Behind the MLIT Guidelines
The Ministry of Land, Infrastructure, Transport and Tourism has published "Guidelines on the Disclosure of Deaths by Real Estate Brokers," which is widely referenced as a practical benchmark. Natural deaths such as old age or illness, and unfortunate accidents in the course of daily life, are generally considered not to require disclosure, while deaths involving a crime or requiring special cleaning tend to require it. For the buyer's-side view of the guidelines in more detail, see buy-20.html.
How to Write the Disclosure Statement
Where disclosure is judged necessary, the known facts are recorded accurately in the property condition report or disclosure statement. Rather than vague wording, describe the timing and circumstances as concretely as you reasonably can, and it's best to draft it in consultation with your agent. Organizing what you know in advance also helps you respond calmly if a buyer asks for details during the disclosure statement briefing. Information you've heard from neighbors, even if secondhand, should also be shared with your agent to the extent you're aware of it.
How to Think About the Impact on Price
Properties with a psychological defect are said to tend to be priced below the surrounding market, but the degree of impact varies with the nature of the case, how widely known it is, and how much time has passed — it isn't decided uniformly. You'll work with your agent to consider how it should be reflected in the pricing.
Choosing the Right Agent
An agent experienced in handling properties with a psychological defect can support you consistently — from drafting the disclosure statement, through explaining it to buyers, to discussing pricing. We also cover how to think about other disclosure items, such as pet-keeping or smoking history, in sell-29.html — worth a look as well.
FAQ
Do I always have to disclose a psychological defect?
It isn't decided uniformly — the decision is made case by case, using the MLIT guidelines as a benchmark. Natural deaths such as old age or illness generally don't need to be disclosed, but deaths involving a crime tend to require disclosure.
Does disclosing always lower the price?
The degree of impact varies depending on the nature of the case, how widely it's known, and how much time has passed — it isn't decided uniformly. You'll work with your agent to consider how it should be reflected in the price.
Do I need to disclose something that happened many years ago?
The MLIT guidelines suggest roughly three years as a benchmark for rental listings, but there is no fixed number of years for sales, and it's judged individually based on the nature of the case.
Summary
When selling a home with a psychological defect, it's important to share the facts accurately with your agent and use the guidelines as a benchmark for deciding whether disclosure is needed. Understand both the risk of skipping disclosure and the potential price impact, and proceed in consultation with your agent.