That is not a provisional contract, it is a contract

Is there such a thing as a provisional contract in real estate?

Some housing companies might tell you, "If you sign a provisional contract now, you can lock in the price per tsubo."
Is that actually a good deal?

I saw a dangerous post on social media saying, "I wish everyone had a provisional contract like ⚪︎⚪︎ Construction Company," so I am issuing a warning.

There is no such thing as a provisional contract in real estate. That is a contract.

The land and floor plan haven't been decided yet.
The final price is also unknown.
Even so, if you pay 1 million yen in advance, you can avoid future price hikes, and since it's refundable if you cancel, there's no loss.

If you only hear this part, it seems more profitable to sign the contract early, right? It also lowers the hurdle for signing.
Is this a wonderful company?

No, it's the opposite. Is that company okay?

If you sign a contract, pay a lump sum, and then proceed with design and estimates, even if the document says "provisional," it is not just a reservation.
A contract is judged by its content, not the name on the document. Even if it says "provisional contract," if you have agreed to build a house and pay for it, and have paid 1 million yen, it is already a contract.
Isn't a company that doesn't explain this clearly and recommends it across the board being dishonest?

"Provisional contract" is not a safe zone

There is no special system under the Real Estate Brokerage Act that says "you can freely revert to a blank slate if it's a provisional contract."

To put it formally, a construction contract under the Civil Code is established when the construction company promises to complete the work and the client promises to pay for the result.
No matter what you write on the cover of the document, it is a contract under the Civil Code.

That is why it causes problems everywhere

If the sales representative and architect start working after the contract is signed and create drawings and estimates, you may have design fees or survey fees deducted if you cancel.
The client can cancel the contract before the construction is completed, butunder Article 641 of the Civil Code, it is premised on compensating the contractor for damages incurred.

"You can quit anytime" and "you can revert to a blank slate for free" are completely different things.
This is the very reason why there are disputes everywhere.

The price per tsubo is suspicious to begin with

At a stage where the floor plan, area, and specifications have not been decided, what exactly has been fixed by locking in only the price per tsubo?
What even is a fixed price per tsubo?
There is no way the price is uniform in proportion to the size for every plan.

Just like an all-you-can-eat yakiniku restaurant, the contractor simply sets a price where they won't lose money regardless of the plan, and they just call it the "price per tsubo" on their own.
It's an extreme example, but the size of the foundation and exterior walls also changes significantly depending on the plan.

The total cost of a house changes based on the size of the building, equipment, options, incidental work, ground improvement, and exterior work.
Even if the price per tsubo is kept the same, if the total amount keeps creeping up as meetings progress, the amount you pay will naturally increase.

Is that really a good deal?

They make it look like they have fixed the price even though you haven't decided what to build yet.
Is that really a good way to build a house?

For a housing company, if they can get you to pay 1 million yen in advance, they can make it harder for you to go to another company. It might be a strategy to advance negotiations in their favor.
On the client's side, a psychology of "since we've come this far" is born, and since there is also anxiety about cancellation and refunds, it becomes difficult to cancel.

"Let's lock in the price per tsubo before the increase" may look like helpful guidance, but it is just a sales tactic to lock in customers at an early stage.
Do you think that is an honest sales style?

For now, stamping your seal is dangerous⚠️

Originally, a housing contract is something you sign with conviction only after confirming what kind of house will be built, how much it will cost, and to what extent your wishes can be realized.

Under the Consumer Contract Act, you may be able to cancel a contract if you were misled by explanations that differed from the facts regarding important conditions, or if you were only told about the favorable parts while disadvantageous facts were withheld.

What you should look at is not the sales pitch that "it's provisional, so it's fine."

To ensure we have no regrets about a once-in-a-lifetime purchase, we consumers also need to arm ourselves with proper knowledge.

That provisional contract is a contract.