Property transactions in Bali are down and uncertainty in the property sector seems to be running at record-high levels. Against this backdrop of uncertainty, lawyers and notaries in Bali continue to fashion elaborate multi-part contracts intended to cede something tantamount to “land ownership” based on long term leases, secured by fictional irreversible loan agreements and irrevocable powers of attorney.
Meanwhile, evidence and unfavorable court decisions are mounting to show that such legal constructs are little more than a flimsy house of cards unlikely to stand up to even the most modest legal challenge. First and foremost, it is generally accepted in all legal jurisdictions that agreements specifically fashioned to circumvent the national law, in this case the absolute prohibition against foreign land ownership in Indonesia, are ipso facto both illegal and invalid. Over the past 1-2 year government officials have publicly warned that nominee arrangements are merely “back door” camouflage for foreign ownership and therefore essentially illegal and subject to legal reversal.
Earlier this year, the Agrarian Affairs Minister, Ferry Mursyidan, warned that efforts were underway to take an inventory of land held "illegally" by foreigners in Bali and Lombok preparatory, it is presumed, to seizing these properties and putting those lands back in the control of Indonesian nationals.
Add to this stewing cauldron the fact that it now appears the “absolute power of attorney” documents regularly issued by nominees at the request of notaries and lawyers in order to prop up shaky ownership structures are, at best, highly suspect. A Ministerial Decree issued in 1982 declared that Powers of Attorney in matters involving landed property may not be granted and are therefore subject to revocation at any time. One legal observer told Bali Update, that such powers of attorney “amount to a signed confession of intent to circumvent higher Indonesian law, including the Constitution and could be used against the Attorney (The “ Grantee”) in Court.”
Efforts to fashion Powers of Attorney that survive their creator and pass responsibilities and obligations onto the heirs of the original Grantor are also not recognized in Indonesia or, for that matter, in most international legal jurisdictions.