Can anyone explain the purchase process in Bali???

Tina Amer

New Member
Apr 2, 2017
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Melbourne, Australia
Hi All,

Ok so I have come to an agreed amount with current owner and now I am trying to find out the process from here. The owner emailed me a said.....

"From memory, I think this is how the procedure works:
On receipt of a 10% deposit, payable in Australia, they proceed with the process of preparing the transfer of documentation into your name, and for this they will require your full details (address, date of birth, etc, etc). When those deeds have been prepared the balance is payable by bank transfer to the Commonwealth Bank in Kuta, and on receipt of that, everything is lodged in your name. Tricia and I will be in Bali from 25 October to 31 October and can sign any necessary papers at that time, and then everything, including an English translation will be couriered or emailed to you."

My question: does that mean I do not get to see paperwork until all money has been paid? if not, when in the process should I be seeing some paperwork?????
I know the current owner and it's not that I don't trust him, it's just that it's a new process for me and I was always told never pay anything until you have read the fine print.
 

spicyayam

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Jan 12, 2009
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Are you buying a villa or something? How you "purchase" it will be largely dependent on the title of the property?

I know the current owner and it's not that I don't trust him, it's just that it's a new process for me and I was always told never pay anything until you have read the fine print.

It could be your friend doesn't know the process either. Get a lawyer/notary to check the documents before you pay a rupiah.
 
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Mark

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Apr 19, 2004
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The transaction needs to be processed by a notary in Bali (in the regency where the property is located). And, as noted, above, foreigners can't own land. Strong recommendation to you is to meet with a notary to understand the process and have the relevant documents prepared and signed. Don't hand over a penny unless you have a written agreement, prepared by the Bali notary and signed by the seller. Paying someone directly in Australia for a property in Bali sounds like a tax evasion mechanism and anyhow should not be done without the aforementioned written agreement. It sounds like you are entering a danger zone...be careful! Oh, and don't do anything that you wouldn't do in your home country regarding a real estate transaction.
 

davita

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Mar 13, 2012
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We do not have enough info to guide you on all aspects but, if you are buying property in Bali, all money should be deposited through the Notaries escrow account and never direct to the seller. Same anywhere.

One of the documents they will provide is an Akta Jual Beli (Bill of Sale). You also want to ascertain that the villa has a current Izin Mendirikan Bangunan (IMB) which includes a document, and a plate attached near the entrance to the villa.
Most Notaries will provide all this but it's best to show you have information and willing to be involved...keeps them on their toes.

If you plan to legally rent it out in the future you will also need a Pondok Wisata permit. I know many that rent out villas without but that's an illegal act and the authorities are more and more looking into this...be careful.
 
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ronb

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Aug 14, 2007
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Ubud, Bali
Good advice above. It sounds like you are trying to manage a property transaction in Bali while you're not here. Not a good idea. Jump on a plane and come and oversee it all.
 
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Tina Amer

New Member
Apr 2, 2017
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Melbourne, Australia
Are you buying a villa or something? How you "purchase" it will be largely dependent on the title of the property?



It could be your friend doesn't know the process either. Get a lawyer/notary to check the documents before you pay a rupiah.

Thanks Spicey - yes I am arranging to use my bosses Notary - he has "owned" properties in Bali for many years
 

Tina Amer

New Member
Apr 2, 2017
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0
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52
Melbourne, Australia
We do not have enough info to guide you on all aspects but, if you are buying property in Bali, all money should be deposited through the Notaries escrow account and never direct to the seller. Same anywhere.

One of the documents they will provide is an Akta Jual Beli (Bill of Sale). You also want to ascertain that the villa has a current Izin Mendirikan Bangunan (IMB) which includes a document, and a plate attached near the entrance to the villa.
Most Notaries will provide all this but it's best to show you have information and willing to be involved...keeps them on their toes.

If you plan to legally rent it out in the future you will also need a Pondok Wisata permit. I know many that rent out villas without but that's an illegal act and the authorities are more and more looking into this...be careful.

The villa comes with a valid permit already - I made a point of confirming that as we do want to lease it to guests :) thank you
 

Tina Amer

New Member
Apr 2, 2017
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Melbourne, Australia
Good advice above. It sounds like you are trying to manage a property transaction in Bali while you're not here. Not a good idea. Jump on a plane and come and oversee it all.

I have arranged to fly over in two weeks time. No money will exchange hands until I get there first and oversee paperwork :) thank you
 

davita

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Mar 13, 2012
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it is under a nominee set up
Tina...if you are using the same nominee you can save a bundle of money as the Title Deed (Sertipikat Tanda Bukti Hak Milik) will not need to be transferred. The owner of the land is still the original nominee.
All you need is to get the notary to change the names on the Deed of Statement (Akta Pernyataan) from the 'benefits to the use' from the seller to yourself and, of course, make the contract to buy those from the seller.

Just as an aside...most people changing nominee titles are asking to change to Hak Pakai (Leasehold) on top of Hak Milik. This apparently gives an extra level of security to the foreigner....I'd check that out before confirming your buy/sell.
 
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davita

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Mar 13, 2012
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Thanks Spicey - yes I am arranging to use my bosses Notary - he has "owned" properties in Bali for many years
As Mark observed in post #4 the Notary will need to have an office in the regency the property is located...in your case Badung.
 

DenpasarHouse

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Aug 13, 2013
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it is under a nominee set up

Right, so you'll have to forgive me, but this is a bit of a pet peave of mine. You should do a search in this forum for the word "nominee" and read all the results. Here's some things I've written in the past:

The reason everyone is so confused on this simple issue is that the Indonesian constitution and Agrarian law forbids the OWNERSHIP and CONTROL of Indonesian land. In fact, correct me if I'm wrong, it actually only mentions control and not ownership (forbidden to own is just implied). Whenever you make an arrangement, no matter how superficially legitimate, to CONTROL land, your arrangements are automatically invalid.

Frankly, every person with a nominee arrangement has been lied to (or at least received incompetent advice) by the very people they've hired to represent their interests.

It's a little unnerving to realise you've paid people to create documents that 100% prove your intention to break Indonesian law.

However, what's the chance this will all blow up in your face? Actually pretty low. But it's a lot more likely now than it was a few years ago.

Bali News: Paradise is Not for Sale to Foreigners

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.


Just to sum up, just because it's illegal, doesn't mean you won't get away with it. Because the Indonesian justice system isn't consistent (or even competent) you may very well be able to have an illegal arrangement held up in court. BUT you must be aware that in reality, what you're doing isn't legal. In my opinion, Indonesia is slowly but surely getting it's act together. The days of this sort of dodginess are coming to an end, you should asses whether you can really take the risk that they won't eventually catch up with you.
 

davita

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Mar 13, 2012
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Right, so you'll have to forgive me, but this is a bit of a pet peave of mine.


Just to sum up, just because it's illegal, doesn't mean you won't get away with it. Because the Indonesian justice system isn't consistent (or even competent) you may very well be able to have an illegal arrangement held up in court. BUT you must be aware that in reality, what you're doing isn't legal. In my opinion, Indonesia is slowly but surely getting it's act together. The days of this sort of dodginess are coming to an end, you should asses whether you can really take the risk that they won't eventually catch up with you.

We've had this debate here and other forums so many times.
I would ask if your above 'outlined' statement has been a case tested in court? Many articles 'say' it's illegal but I've not yet heard where that has been defined in law.

Notaries transfer Hak Milik title to an Indonesian, which makes them the rightful owners of the land, as conditioned by RI law, so how can that be illegal?
I have two properties and have no illusion that my so-called 'nominees' are the rightful title holders. I simply have to trust that they'll abide by our contract statements to allow me to use the properties...which is only binding under contract law and not constitutional. It would be the same if an Indonesian wished to contract to another Indonesian to live in the property.
The nominee can legally do anything he/she wants with the Hak Milik Title including giving away, inherit by family, or selling, and the foreigner is thus cheated...there has been cases like that and sometimes the foreigner prevailed in court to recover some money... but that's rare and the foreigner never got ownership.
I've never heard of any case where a nominee has NOT been involved and the Indonesian authorities, on their own volition, have brought a case to court. There have been lots of blabbermouth politicians trying to get attention to this but no case in law to my knowledge.....but I'm happy to be corrected.
 

DenpasarHouse

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Aug 13, 2013
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Many articles 'say' it's illegal but I've not yet heard where that has been defined in law.

It's defined in the Indonesian Constitution. The highest law there is. It has been commented on by the relevant Indonesian Government ministers as illegal and they've threatened, but never followed through, to crack down on it.

In light of this, I don't think it's a reasonable arrangement to recommended to others. There is no way any of us would recommend it if it were in our home countries.
 
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davita

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Mar 13, 2012
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I don't agree with you DPH...where does it define in the Constitution an Indonesian cannot own a Hak Milik title to property? To the contrary, that's what happens in law, the Indonesian 'nominee' assumes the Hak Milik title in his/her name. What the Indonesian then wants to contract with HIS/HER property isn't defined in the Constitution.

Just because others say things doesn't make it true...Ministers talk crap all the time.

No-one is recommending but just mentioning it's available. It is ludicrous that foreigners, permanently resident in RI, are subject to this...especially as in our own countries (I'm Canadian) any foreigner, including Indonesians, own freehold properties...but that's another issue.