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The Key Issues in the Real Estate Transaction in Indonesia (Part I)

20 August 2019 Super User 13 times
Real estate transaction in Indonesia is simple, but yet tricky and requires a little knowledge. It is very interesting to dig a little bit of this. Just to make sure you have the big picture. When you're purchasing a land and/or a building, you're dealing with a seller or the representative of the seller. You must deal with the owner of the property in order to protect your future investment. The owner must have legal rights to own the property that you are looking to buy. He/she must be able to present his certificate of title to prove his/her ownership. The certificate is issued by the government of the Republic of Indonesia. The authorized government agency that responsible for issuing a certificate of title called Badan Pertanahan Nasional (National Land Registry), so called the BPN. They have offices in every city in Indonesia. The certificate of title is issued by the land registry office where the property located. The property such as land, houses, apartments are classified under the category of Immovable Property. The legal owner of the immovable property is the person that his/her name printed on the title certificate. 
 
Owner of the Property
The ownership of immovable property is different with the movable ones, such as cars, etc. The legal owner of this type of property is the one whose name(s) printed on the certificate of title. If the ownership has passed-away, his next of kin is the property’s legal owner. They usually consist of the surviving spouse, and his/her children. So, if the owner of the property has gone, make sure you’re dealing with the right person. As for the movable assets such as cars, the person that controls the property can be considered as the owner, although you might want to check the ownership of the certificate as well. At Wijaya & Co, we always pay attention to details of our client’s case. 
 
The certificate of title in real estate property is the strong evidence that serves as proof of ownership, as well as proof of registration from the local land registry. Article 19 of Basic Agrarian Law that the government of Indonesia is conducting land registration in order to provide legal privilege to the owner as per certificate of title. You will automatically be included within the land registry database  and therefore are subject to the prevailing laws and regulation in Indonesia. 
 
Background Check
it is very important to conduct a background check before you’re making any further transaction with the seller of the real estate property. This will give you information about the current status of the property title. The information is enough to get you to decide whether you want to proceed with the sale ans purchase transaction.
You will see if there’s any mortgage put on the property. If yes, you need to make sure the owner to remove the mortgage first, before making any further transaction with you as the buyer. You will find out if the property is under any potential dispute or no. The background check is extremely important and I would suggest not to proceed with the transaction before the background check has been finalizee.
 
Transfer of Title
You need to perform a proceeding of title transfer when you purchase a real estate property. Your name must be registered as the latest owner of the property after you agree to make the payment to the seller. They will include the Sale and Purchase Agreement signed by you as the buyer, and the seller of the property, as well as the date when you entered the agreement. They will print your name as the current owner of the property on the certificate of title. This proceeding involving the local land registry where the real estate property is located. You will be recognized as the legal owner after the proceeding completed. Please contact me should you wish to discuss any further about this.
 
Our thanks to Mr. Asep Wijaya of Wijaya & Co for sharing this article!

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This blog is about our works in the field of law and we have been doing regarding legal issues in international civil law in Indonesia. You may use our articles without permission as long as you mention our name, the article tile, and our website address. Happy reading!

 

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