According to Indonesian law and regulation, land sale and purchase is a transaction that must involve public official. Unlike movable object transactions such as buying television, table and other goods, when agreement on the price is met, payment made by the buyer, the ownership status is automatically transferred by law. The buyer as new owner may take the goods
However land and building transaction is different. They are immovable objects and its transaction is made with specific terms. Even though buyer agrees on the price and might had made payment in cash and in full to the seller, the land/buildings ownership however is remain unchanged. The transaction does not create any transfer of ownership right legally.
Lack of knowledge in law often creates dispute in land transaction activity and this article will lay out the common issues in the land transaction as well, elaborate on the legal way to purchase land in Indonesia
The followings are 4 things that makes a land purchase is illegal and how to avoid them
1. Fake certificate.
In Indonesia, it is common to find fake or duplicated certificate especially in cities or certain areas where there is high demand on land. Buyer must conduct legal due diligent carry out by professional to examine the authenticity of a certificate whether the certificate given by the seller is authentic or fake. This examination will be taken to various entities and authorities, Lurah, tribe chief, and last namely BPN (Badan Pertanahan Nasional). BPN will check the certificate based on the land registration map, letter of measurement and land book. This procedures are regulated in article 34 of the Republic of Indonesia Government Regulation number 24 of 1997 concerning Land Registration.
2. Private deed or privately made Deed or commonly refers as perjanjian bawah tangan
Although the principle of pacta sunt servanda guarantees that every individual given freedom to enter into or not to enter into an agreement/contract with whomever he/she wishes, in a land sale- purchase transaction, an agreement without notarial deed is invalid.
A land sale and purchase is only valid when carried out in the presence of an authorised official in that area. The authorised official in this matter is Notary PPAT a special public official in handling land transactions.
3. Land certificates are pledged to third party
Land that is being pledged as collateral to a bank or being used as collateral for debt will make land transaction invalid. Many land owners use their land certificate to banks or Pegadaian in Indonesia in order to receive loan. Failure to deliver their duties and obligation will causes issue with land certificate
4. Land and buildings is in a legal dispute.
Disputed land usually occurs due to unclear ownership status, measure lines land, and/or land being the object of confiscation of collateral, or inheritance disputes. Therefore, it is necessary to carry out a proper legal due diligence carried out by legal experts such as lawyer or legal consultant
The following are the steps to consider when buying land
1. Land buyers have the right to request land certificates which can be in the form of SHM, HGB, or other’s form in accordance with the agreed land status to investigate its authenticity.
In the hierarchy of land ownership in Indonesia, Hak Milik (freehold) is in the highest position where land ownership has no time limit and can be inherited to beneficiaries/heir according to law and regulation. Hak Guna Bagunan (right to built), right to cultivate/manage, right to use and lease right are below which can be owned by non-Indonesian citizens with temporary status .
2. Land buyers make visits to land/building objects together with land seller before buying the land/building. If the land is in an area that applies customary law and the land has not been registered in the BPN database, the buyer can request information from east-west, north-south neighbours of the land and to further collect informations to trace the history and legality of land ownership based on local customary law (Agrarian Law Reference)
3. Request proof of payment of building land tax. This document to ensure that the seller has paid off his obligations to avoid problems in the future, this can be done at the tax office (kantor perpajakan)
4. Evidence that the land is not in dispute. To ensure that land or building is not a disputed object buyer can get clarification by visiting BPN office and or check at the local district court’s website
How to process and process the sale and purchase of land.
After all documents has been confirmed to be correct and clear, buyer may continue the purchase buy obtaining the
the deed sale – purchase as common refer as AJB (Akta Jual beli Tanah). This is an absolute requirement for the reregistration of the new owner to transfer names carried out by PPAT officials. Each buyer and seller must carry out their obligations, namely the seller pays income tax (PPH) 2,5% of the purchase price and the buyer pays (bea peralihan hak tanah dan bangunan) the transfer of land/building right 5% or as stipulated in the law regulations
The deed will be drawn up and signed by the PPAT. In this proceeding the buyer will provide an original copy of the identity card, family card (kartu keluarga) while the seller is must provide an original copy of the seller’s identity card (KTP) with a statement of agreement from the husband / wife in the case of property is not concluded in pre/postnuptial agreement, death certificate if the land owner has died and document proof of payment of land tax (PBB) payment of land tax (PBB)
Note: This legal article is intend for educational purpose only, please consult to your lawyer before applying