Thread: Property Ownership Indonesia

Not Hak Pakai. Hak Pakai is a certificate issued by the land office, and can be issued to a foreigner, see the link in your quote.

There may have been situations where a nameholder structure didn't hold up in court. I have seen one (1) paragraph "contracts", probably signed with pink glasses which were simply laughable.

Just the other day I heard a story at the notary. A foreigner, who already paid 75.000 EUR with a check to a friendly Balinese guy, found out the Balinese guy still had to buy the land himself. The money already disappeared from the account. Maybe it still works out, but it might as well not.

Well its time we touched this subject I guess.

Some time this appeared on Bali Discovery :

http://www.balidiscovery.com/messages/m ... sp?Id=4023

Foreigners trying to obtain a freehold title on land in Indonesia should note that current law is clear in both its letter and intent: namely, foreigners cannot directly hold freehold title on Indonesian land.

Despite this lack of equivocation by the Government on the continuing prohibition of foreign land ownership; it is ironic to discover real estate companies have erected booths in the arrival halls of Bali's airport, placed ads in local publications and distributed brochures – all advertising "freehold" land in Bali. Given the state of current property law, the very use of the English language term "freehold" in connection to a local property transaction involving a foreigner is highly suspect and is a tactic that, in other jurisdictions, would form the basis of a criminal prosecution.

Which inspired me to write this:

http://www.bali-information.com/balifreehold.php

In addition to:

http://www.bali-information.com/Indones ... ership.php

and:

http://www.bali-information.com/bali-ne ... /hak-pakai

I called Jack, because I don't think, I try to deceive anyone by mentioning the type of title of a property on the site.

But I must admit, some advertising is focusing a lot on Freehold Freehold Freehold Freehold, and considers legalities a minor issue during the sales talk.

Anyway, a bit later this appeared also on BaliDiscovery:

http://www.balidiscovery.com/messages/m ... sp?Id=4024

balidiscovery.com: If a foreigner wants to invest in a property in Bali, how can this be done in compliance with Indonesian law?

Rainy Hendriany: There are several possibilities. Firstly, the lease of land under Hak Sewa (Leasehold) is perfectly legal and requires only a simple contract between lessee and lessor. Such a contract cannot be longer than 25 years but through various renewal clauses, the lease can be put in place for periods of time which are adequate for the needs of most investors. In this vehicle, the land title remains with the Indonesian owner of the land.

Secondly, as a result of Government Regulation 41 of 1996 (PP41) and several other subsequent changes in other regulations, it is now possible for most foreigners to own Hak Pakai title - the right to use and build a residence on the land. In this case, essentially the land title is returned to the Government and the foreigner would be issued with a Hak Pakai land certificate in his/her name for 25 years which with one extension of 20 years would therefore be valid in total for 45 years.

But, one can also find companies who offer pre-paid renewals of this Hak Pakai construction up to a hundred years.

Finally, the Hak Pakai atas Hak Milik structure has more recently been widely used. In this structure, the foreign investor is essentially using the Hak Pakai structure mentioned earlier and has the comfort of being issued with a Hak Pakai land title in his/her name for 25 years whilst the Hak Milik certificate remains in the name of an Indonesian citizen not the Indonesian State as in the case of the Hak Pakai structure alone. As a civil law jurisdiction, Indonesia recognizes the right of its citizens to enter into contracts between consenting parties and this provides the basis for the various side agreements to support such a structure, including pre-agreed automatic extensions which must be applied for at least 3 years prior to the expiry of the current certificate.. A Hak Tanggungan is normally also employed between the parties.

Actually the above is what some people also call a nameholder structure.

Also look here for more details:


http://www.apfm.biz/glossary.html


Anyway, the true Hak Pakai (not the one over Hak Milik) can also be mortgaged.

Hmmm, mortgages for foreigners in Bali, another free business idea ;)

Well, I have seen Jack a few times, and I think he likes Bali very much. He has a an protective attitude towards the island, hence the remarks like "And Forgive Us Our Trespasses" and "The Bali Land Grab".

He, as a travel agent has various interests in a smooth and legal functioning of the real estate business I guess. Too many sharks and crooks are bad for the business in general. Many rice paddies disappearing because of developments, also not good.

But sometimes a bit more of nuance would be nice. I remember Bali Discovery wrote once about the 50 meter distance from the high tide line people need to stay for erecting permanent buildings. But, there are plenty of places where this distance is officially only 5 meters, or 10, or 15.

But the "villa crack down" is good to talk about. People building villas, and renting them out without a license or paying taxes should stop. He has send out plenty of warnings, and also solutions.

He is a straight and honest guy. He has friends in the real estate business, and he tells them the same. BEEP off with your freehold. Lease. Bali is for the Balinese.

Between Hak Milik, Hak Pakai and Hak Tanggungan I'm about ready to Hak Myheadoff.

The answer is to get a reputable lawyer to do the paperwork and researching and then get another lawyer to watch the first one. :roll: