Legal Realities of Indonesian Expatriates – Land Ownership

Categorized | Featured, Info for Expats

Posted on 16 July 2012. Tags: Info, Julia Tchezganova, land ownership, Laws in Indonesia, owning apartments, owning land

Legal Realities of Indonesian Expatriates – Land Ownership

By: Julia Tchezganova

When individuals move to Indonesia for the purpose of expatriation, the process usually involves a large number of personal and legal considerations. While it is vital to explore notions of belonging, finding proper communication outlets, and understanding how local culture works, it is nonetheless important to note topics of legal nature. The purpose of this editorial is to provide a general framework for you to think about if you arrive at the idea of land ownership in Indonesia.

It should be noted that regardless of where in Indonesia you reside – Bali, Jakarta, or elsewhere – unless the regulation states otherwise, the laws apply generally. In terms of land ownership for foreigners, the Basic Agrarian Law (Law No. 5 of 1960) limits foreigners from owning lands in Indonesia. Individuals are only permitted to acquire land under the “Right to Use” (Hak Pakai) land title. Hak Pakai is similar to a long term lease, it is granted for 20 years, and may be extended for another 20 years.

Foreign corporations have more options when obtaining land. Once a foreign investment is acknowledged as a legal person under Indonesian law, the investors may acquire two types of land titles, the Right to Build (Hak Guna Bangunan) Land Title, which is valid for 30 years and can be extended for another 20 years, and the Right to Utilize (Hak Guna Usaha) land title, which is valid for 35 years and can be extended for 20 years.

Hak Pakai and Hak Guna Bangunan are commonly granted for residential and business buildings, while Hak Guna Usaha is granted to businesses that require wide land for agricultural, industrial, or mining activities.

If you are interested in owning an apartment in Indonesia as a foreigner, you must know that you are able to purchase apartments in Indonesia if the building has a strata title status. But you will not hold the strata title of ownership; you can only hold the right of use. The two common ways to have property in Indonesia is purchasing property via a Convertible Lease Agreement or a Nominee Arrangement.

Convertible Lease Agreement allows foreigners to sign an agreement with the developer company. With this agreement, the foreigner is able to purchase property (an apartment, for example), but the title is held in the name of the developer. The lessee will obtain the right of ownership automatically if the law regarding ownership changes and allows for foreign ownership. You should know that there is no freedom of contract, and that the contract is generally drafted by the developer. As a result, whenever you contemplate signing a unilateral contract, you absolutely should consult a lawyer before handing over your purchasing rights or your funds.

For a Nominee Arrangement, foreigners give the trust to an Indonesian person, who purchases the property under the Indonesian name.

If you are a part of an Expat/Indonesian couple, the vital preparation for purchasing property is whether or not the Indonesian spouse and the Expat spouse have a prenuptial agreement for separation of property. If there is such an agreement, you can legally purchase the property, but it must be signed before marriage takes place.

Overall, land and property purchase for foreigners is a rather complex activity. Please refer to such websites such as http://www.expat.or.id/info/buyingproperty.html in order to research for more information. Do not hesitate to consult a lawyer, especially when it comes to signing anything. Be careful in trusting when it comes to the purchase of property.

It is highly recommended that if you are interested in land development or purchase of property that you seek representation from a law firm with real estate expertise.

About Julia Tchezganova

Julia acquired two degrees, B.A. and J.D., from universities in British Columbia, Canada. She is currently employed as a legal consultant at Hukumonline. Established in 2000, Hukumonline is the country’s leading provider of legal news and analysis, serving top law firms, both in Indonesia and abroad. It provides comprehensive and authoritative legal information services to the clients in an affordable and an easy-to-use manner. For more information on Hukumonline and to read up-to-date legal news in English, please refer to en.hukumonline.com.

View all posts by Julia Tchezganova →

11 Responses to “Legal Realities of Indonesian Expatriates – Land Ownership”

John Wood says:

July 19, 2012 at 8:48 pm

Julia i have just read your very informative article.
I have a question but i want to give a little history first.
I am an Australian, married to an Indonesian woman for 14 years and have two children. I live here in Indonesia and work overseas. I come back in to Indonesia using a monthly visa.
I have purchased the following in my wifes name.
1 House (aprox 600K)
1 House (Approx 50K0
1 Ruko (Ongoing purchase)(60K)
1 Kuffkink (5K)
1 Small house (2K)

(1K) = $1000 USD

Our relationships is fine but i would still likle some protection just in case. Could you send me details of someone who is well versed in these matters that I could speak to. I would much appreciate it, Thanks

Reply
Julia says:

July 20, 2012 at 6:28 am

John,

I will get back to you on this during next week, unless you already find a firm to assist you.

Regards,

Julia

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Barton says:

July 20, 2012 at 9:01 am

John,

If your wife stops loving you for all your ‘charisma’ that is buying property, you’re done for. You obviously have no pre-nup agreement on the “loan of monies to purchase property” and you cannot apply a “post-nup”.

Simply be prepared to say goodbye to it all.

Reply
- Ayuntina says:
  
  June 9, 2013 at 1:02 pm
  
  comment : Hi John, If you need an attorney, you can send me a message. I am an attorney at Jakarta.
  
  Regards
  Ayuntina
  
  Reply
Julia says:

July 27, 2012 at 4:12 am

John,

I would recommend that you see an attorney in Jakarta. There are many firms that can help you with your situation.

Let me refer you to this link, please take a look:

http://www.expat.or.id/sponsors/services2.html#legal

Regards,

Julia

Reply
Briana says:

September 11, 2012 at 9:41 am

Hi Julia, since post-nup is not legally accepted in Indonesia, what is the solution for a mixed couple who didn’t sign prenup, if they want to buy a house/land Hak Milik using the Indonesian spouse’s name?

Thank you,
Briana

Reply
Noorman Mubarak says:

April 25, 2013 at 12:11 pm

Hi Julia, I will be married to a lovely Indonesian lady and will be moving to Jakarta soon. If I want to prepare for a pre-nup, what would be the essentials in the agreement be? We would like to buy more a house but if i recall correctly we cannot buy a house as we are an expat/Indo couple. The house we bought would have to be sold.

Please do advice and thank you in advance!

Best Regards,

Noorman

Reply
David says:

May 4, 2013 at 4:26 pm

Hi Julia, just like to say great article.

I have a question though.

Can my wife legally purchase an apartment? She is legally married to me ( Australian citizen ) and we are both aware that I nor she can purchase a house or land. We did not get a pre-nup. She has been granted an Australian PR visa. She still has a valid KTP card.

We have been told by the apartments developers agents that as long as she is Indonesian and holds a valid KTP card that she can legally purchase.

What do you think?

Thank you.

Reply
Ella1234 says:

May 31, 2013 at 11:22 am

Hi there!

My husband is foreign, I am indonesian and we got married in Europe a few years ago with a prenuptial agreement regarding property (which is in the indonesian language and provides that the laws of indonesia apply to it) signed in Europe between us before we got married, but we did not know we had to register our marriage or prenuptual agreement at the Indonesian Consulate or Embassy or in Indonesia. Since we got married we leave outside Indonesia.

1. Can we report/register now our marriage at the Embassy / Consulate although some years past since we got married?
2. Can we also report/register now our prenuptual agreement, when we register our marriage, which was made outside Indonesia, but is in the Indonesian language and says that Indonesian law will govern it? Is there anything else we need to do for it to be valid in Indonesia?
3. What exactly do we need to do? What documents do we need for these registrations?
4. What documents do we need to get from the Consulate or Embassy to prove we did register both the marriage and the prenuptial agreement?
5. What do we need to do when in future we go to indonesia, do we need to register again the marriage and prenuptial agreement? Do we need to go both together to register these?
6. My passport is valid for another few years but my KTP is expired now – can I renew my KTP at the Consulate or Embassy or do I need to do it in indonesia when in future I go?
7. Are there any time limits for the reporting/registrations with the indonesian consulate or embassy for marriages outside indonesia and prenuptial agreements?
Is there any time limit for renewing the KTP when I leave outside indonesia or my indonesian passport once expired – or I can renew the KTP when I go to indonesia in the future and my passport before I need to travel?
8. Finally, we have children now – do we have to report/register them at the indonesian consulate or embassy or can we just get them a passport (can thor put them on mine) before they travel sometime in the future to indonesia? What documents would we need to show for them and what document to get from the consulate or embassy? Also, what would we need to do when we go with them sometime in the future to indonesia?

Looking forward to your response. Please help me to know these information/facts and so have peace of mind! Any answers you can give me to any of the above questions would be appreciated greatly. Thank you!

Reply
- Ayuntina says:
  
  June 9, 2013 at 1:06 pm
  
  Comment : Hi Ella, I am an attorney at Jakarta. If you need some helps regarding of Indonsian Laws expecially for mix couple,land laws, mix marriage laws, you can send me an email. I will answer you soon.
  
  Thank u n regards
  Ayu
  
  Reply
Fitri Goodwin says:

June 6, 2013 at 3:21 pm

Dear Ella,

I suggest you two get married again in Indonesia in the Civil Registry, so you will be deemed valid marriage under state protection and you can have an agreement between you with their respective witness by the Government. By doing that so you are also allowed to own property in Indonesia.

That’s my advice and good luck
Fitri Goodwin
Bali – Indonesia

Reply