advice needed in buying property in bali

[Fred2]

Are you sure mat???

 

[mat]

Are you sure mat???

Yes. I went to a meeting of mixed marriage couples on Friday last, with the speaker being a specialist in mixed marriage issues. Here are her contact details; Evi Susanti Panjaitan, SH. notaris/PPAT Mobile Tel 081 238 292 77. Kantor: Jl Merdeka Raya IV No. 7. Kuta 80361 Bali-Indonesia. E-mail evispanjaitan@gmail.com Fax [62]361-750601 Telephone[62] 361-757200/757300

 

[Fred2]

21 (3) UU5/1960(3) Any foreigner, who after the coming into force this Act has obtained the right of
ownership through inheritance, without a will or through communal marital property
and any Indonesian citizen too, having the right of ownership and losing nationality
after the coming into force of this law, are obliged to relinquish that right within a
period of one year after the obtaining of that right of after losing that nationality. If
after expire of that period the right of ownership is not relinquished, then it becomes
invalid by the provision that the right of other parties, incumbent hereon, endure.
I hope she show you were the law has changed??? Can you give us the the new regulation No UU...... please

 

[Georgie]

The nominee type of structure is, as far as I can tell, the most used. When notarized in a good way, there are usually no problems. My advice is to find a good lawyer to arrange it all for you. Find a foreign lawyer, with long time experience in Bali, there are a few.

Even the "incomplete contracts" with plenty of "holes" in them are still respected.

Of course there are the stories of the crooked nominee, exploiting the holes in contracts. Even when a contract is made up with the best legal structure, a nominee may try to "go for it".

A typical exploit would be that you have a contract with somebody that dies, and you did not arrange inheritage in the contract. The heirs don't have a contract with you, but now they own the land...

Since this nominee structure is used a lot, it has a "legal mass". If this way of owning land in Bali would be declared "illegal", the public relations for Bali would suffer enormously, so nobody will challenge this "en mass".

I heard once, that if you hold this structure "against the exact letter of the law" it is a doubtful structure.

But, I know plenty who use the nominee structure, and all are happy with it, both the nominee and the foreign owner. The main thing is, when done properly, it works. But don't use a nominee you don't know very well. Don't go for the beautiful smile and "It's all ok, trust me". Ask around, talk with foreigners, talk with Notaries married to a foreigner, there are a few.

A rather "new" thing is the "Hak Pakai" title. It is not freehold, but it is right of use. A freehold title "Hak Milik", can be changed to "Hak Pakai", and this title can be in a foreigners name, so you don't need a local nominee.



The downside of this arrangement is that with every 25 year renewal you have to pay a 5% tax on the current value of the land.

And then there is of course the lease, which is supposed to be the "safest", but not always financially attractive, unless you can earn you money back within the lease period, and leases are hard to sell, say after half the lease period.....

For larger properties a PMA structure may be suitable. A PMA is a Ltd, same sort of structure, and this PMA can obtain the use of property by means of "Hak Bangunan" right to build. The land is "owned" by the PMA, this PMA can be owned by foreigners, without the "use" of Indonesian Citizens. The shares of this PMA can be traded. A PMA assumes a business, so owners would be elgible for tax, at least USD 1200 a year, but they would also get a Kitas and Working Permit for 5 years.

I heard the stories about people loosing their "Nominee" property, but I never met anyone in person who has, I wonder if anyone on this forum actually met someone.. All I know, are happy with it, allthough somewhat scared sometimes, after all we are strangers overhere. Some may say that the law is not in favor of foreigners, and know examples of this, but I know otherwise too. Just recently a guy who borrowed money to a Balinese, but the Balinese failed to pay back, and this foreigner now holds the property of this Balinese, by nominee....


And, don't trust anyone with green glasses.... They may tell the "Agrarian Office" that they lost their certificate, and have a new one issued 8) (Another possible exploit)

Just kidding rinto...


I think its important too, that when you have decided to buy something somewhere, to "go local", meet the people living in the area, the Kapala Desa and other officials there, if possible. Meet the people of the Desa, village, without the presence of who ever introduced you to the property....

Good advice.

A friend of ours was very keen to purchase a property while here on holiday 2 weeks ago, a lovely villa, the agent told him he could go with the PMA and Hak Pakai after many meetings about using "the agent as Nominee". He luckily was not keen on the Nominee, he doesn't want to live in it, or in Bali so he couldn't do Hak Pakai, the agent had dragged him off to a Notaris who didn't speak English and showed him a lot of Certificates and examples of what he could have and he was very confused and felt pressured so we put him on to our lawyer. He has since given up on the idea as he does not want to start a business here and was advised by our lawyer that he could not just obtain a PMA for the purpose of purchasing property (which another friend had done 2 years ago). Our lawyer is in Jakarta and specialize's in property, gives advise to the Real Estate Board etc and he said they are tightening up on this arrangement of a PMA just for property purchase, he said you could still use a Nominee Trading Company to purchase (same cost to set up but no KITAS/work permits).

 

[mat]

21 (3) UU5/1960(3) Any foreigner, who after the coming into force this Act has obtained the right of
ownership through inheritance, without a will or through communal marital property
and any Indonesian citizen too, having the right of ownership and losing nationality
after the coming into force of this law, are obliged to relinquish that right within a
period of one year after the obtaining of that right of after losing that nationality. If
after expire of that period the right of ownership is not relinquished, then it becomes
invalid by the provision that the right of other parties, incumbent hereon, endure.
I hope she show you were the law has changed??? Can you give us the the new regulation No UU...... please

I did point out you have to be an Indonesian citizen, to be gifted property, inheritance I heard is different. She also told me any property owned by my wife before marriage remains hers only and is not considered joint property. If you have any questions about this, I'm sure Evi will be happy to answer them. Try an email.
She did say it was only for property given, not inherited.

 

[Fred2]

The reason people need a prenup is to protect property in the indonesian spouse name, before & during marriage, purchased, inherited, gifted and any other way you acquire land.
So remember the law in this country is when you marry, everything becomes 50/50 (unless you have a prenup). So your wife owns property before you marry, two years down the track the next door wants to extend there property, he goes to he's mate at the lands office & makes a deal. You & your wife had 12months from the time of your marriage to remove her name from the title. Now this is were your specialist in mixed marriage notaris steps in and.......stop you from losing the property because the law is different for you????? or dose she pay you for your lose????
I will email her if she has not skipped town with all her money.
It all sounds good until the shiiiit hit the fan.
As you know my wife & do not have a prenup, the title of house we have in Surabaya is still in the developer name (indonesian's do this so they do not pay tax) but as a westerner I would like it to be in my wife's name only. We went to the corporate office in Surabaya (not some small notaris) & the news was not good. So I went to Jakarta to the head office ( a massive building above there own shopping complex). WE sat down with one of there fifty or so lawyers, he's english was very good & he explained the law & ways that we can get around it. The out come is if you do not have a PRENUP, you can not hold land in your wife's name.... I wish it was different.

 

[gilbert de jong]

Hi all. I have a PMA company which owns my house in Bali freehold and I have a 2 bedroom villa with 160 degree ocean views in Medewi on the west coast (an hour and a half from Denpasar). We also have a great website which is highly ranked by google.
I need to sell my place as I need cash for another venture at home in Australia however I have no idea what the best course of action is. I know there are a thousand Real Estate places in Bali but can anyone recommend a good one which can produce a fast result? I really need the funds as soon as possible which will be reflected in the price. In other words, it is an awesome property going for very cheap and I need HELP to know how to market it. Thanks in advance to anyone who can help.
Cheers,
Nick Tutty

go to the bank and get a mortgage...loan with the house/land as collateral.

 

[gilbert de jong]

I did point out you have to be an Indonesian citizen, to be gifted property, inheritance I heard is different. She also told me any property owned by my wife before marriage remains hers only and is not considered joint property. If you have any questions about this, I'm sure Evi will be happy to answer them. Try an email.
She did say it was only for property given, not inherited.

put it in Edwards name, with your wife and mother of Edward as the 'guardian' I think it's called.

 

[mat]

The reason people need a prenup is to protect property in the indonesian spouse name, before & during marriage, purchased, inherited, gifted and any other way you acquire land.
So remember the law in this country is when you marry, everything becomes 50/50 (unless you have a prenup). So your wife owns property before you marry, two years down the track the next door wants to extend there property, he goes to he's mate at the lands office & makes a deal. You & your wife had 12months from the time of your marriage to remove her name from the title. Now this is were your specialist in mixed marriage notaris steps in and.......stop you from losing the property because the law is different for you????? or dose she pay you for your lose????
I will email her if she has not skipped town with all her money.
It all sounds good until the shiiiit hit the fan.
As you know my wife & do not have a prenup, the title of house we have in Surabaya is still in the developer name (indonesian's do this so they do not pay tax) but as a westerner I would like it to be in my wife's name only. We went to the corporate office in Surabaya (not some small notaris) & the news was not good. So I went to Jakarta to the head office ( a massive building above there own shopping complex). WE sat down with one of there fifty or so lawyers, he's english was very good & he explained the law & ways that we can get around it. The out come is if you do not have a PRENUP, you can not hold land in your wife's name.... I wish it was different.

Let us all know what she replies. I am only reporting what she said to the many at the meeting.

 

[SHoggard]

go to the bank and get a mortgage...loan with the house/land as collateral.

I think the faded into the sunset - I PM's him 3-4 days ago... zilch

 

[spicyayam]

The reason people need a prenup is to protect property in the indonesian spouse name, before & during marriage, purchased, inherited, gifted and any other way you acquire land.
So remember the law in this country is when you marry, everything becomes 50/50 (unless you have a prenup). So your wife owns property before you marry, two years down the track the next door wants to extend there property, he goes to he's mate at the lands office & makes a deal. You & your wife had 12months from the time of your marriage to remove her name from the title. Now this is were your specialist in mixed marriage notaris steps in and.......stop you from losing the property because the law is different for you????? or dose she pay you for your lose????
I will email her if she has not skipped town with all her money.
It all sounds good until the shiiiit hit the fan.
As you know my wife & do not have a prenup, the title of house we have in Surabaya is still in the developer name (indonesian's do this so they do not pay tax) but as a westerner I would like it to be in my wife's name only. We went to the corporate office in Surabaya (not some small notaris) & the news was not good. So I went to Jakarta to the head office ( a massive building above there own shopping complex). WE sat down with one of there fifty or so lawyers, he's english was very good & he explained the law & ways that we can get around it. The out come is if you do not have a PRENUP, you can not hold land in your wife's name.... I wish it was different.

How about getting a divorce, then get the prenup and then re-married? It would be interesting to get notary's opinion on this.

 

[davita]

How about getting a divorce, then get the prenup and then re-married? It would be interesting to get notary's opinion on this.

darling yu no i lobber u but u xpect a devorce so i half my property.... u clazy!

 

[mat]

How about getting a divorce, then get the prenup and then re-married? It would be interesting to get notary's opinion on this.

I asked the notaris about this and she said it was a valid option.

 

[nicktutty]

One eyed comments

Nominee agreements are illegal in Indonesia, as any agreement where the purpose is to violate the spirit of Indonesian law, can easily be ruled null and void. This is the case for foreigners buying property and is even codified in the regulations and laws for foreign investment issued by BKPM, as it used to be common practice for the restricted sectors of Indonesian investment that, a foreigner would find a nominee to hold the required local portion of that investment. On the corporate side if you want to see the types of problems that can occur, when using a nominee, just google (Astro, Lippo and TV).

With respect to real estate, whilst such an arrangement could be found illegal, you again just need to google, to find cases where people have had problems. From my own experience as an investment consultant, I have seen several such cases, which are typically ongoing, as legal challenges, and given the amounts at stake, are typically challenged right to the supreme court (civil) and if not successful there, a new series of cases commence in the criminal courts (usually alleging theft and fraud), these legal undertakings can often take many years to be resolved (5+), during which time your ability to sell or do anything with the underlying land could be impaired.

A large percentage of people subject to nominee agreements will not have a problem, as any problem would require the nominee to commence actions in the legal court system, so typically the problems occur, 1) where large amounts of investment are involved, 2) the underlying land is of strategic interest to a 3rd party, or 3) the nominee, intended to screw you in the first place and/or has a desperate need of money or has other liabilities/problems in other businesses or transactions they may be involved in (other business, gambling or other debt). I recently heard of a case that implied, there are money lender's in Jakarta, who will lend against "nominee" agreements (where there is no debt registered on the underlying land certificate), as they have legal team's in place, that can take the necessary actions to quickly invalidate those agreements and kick the tenants off the land.

The critical mass or the number of people using nominee agreements should not be of any comfort, as legal precedence, has no bearing in Indonesian courts. Normally, this is wishful thinking by people who own their own properties via nominee arrangements or have an interest in selling real estate or earning a fee, as a notary or lawyer, to put such arrangements in place. Keep in mind that lawyers and notaries,unlike in developed countries, normally don't carry liability insurance, so if later your agreements are ruled illegal, they typically have nothing to lose, and therefore their incentive is to tell the clients what they want to hear, and that is "don't worry - you are safe".

If as a buyer of a property, notwithstanding the legal risks you do decide to use a nominee arrangement, definitely a mortgage and lease arrangements can protect you, however, you need to make sure that the mortgage is actually registered at the land office, which means the payment of a registration fee (which I believe used to be 1% of loan value) - you also need to ensure the loan is legal and be aware that whilst not normally enforced, the mortgage may create a Indonesian tax liability. I am aware of several cases where in order to save the fee the notary prepares and executes the agreements but never actual registers the mortgage at the land office - again telling the client they can save money this way and "don't worry you will be safe". Holding of the land certificate alone, is not adequate protection, as there are procedures that can be followed, and that might be easily facilitated by corruption, to easily procure a new land certificate if your nominee wanted a certificate to secure a loan against your property or to sell the land without your approval.

If you are using Austrindo, or taking comfort from any lawyer in Indonesia, I recommend you read the book "Eleven Demons - Secrets of Deincarnation in Bali - by Michael Donnelly" - I am not sure whether this is available in Indonesia, for obvious reasons.

This may not be what you want to hear, but the reality is that Indonesia does not provide a good environment for foreign investment, especially in property, and if you are not comfortable with the legal risks that you potentially might incur (if your nominee happens to fit the criteria detailed above) the safest way to procure rights to property, is a Hak Pakai arrangement, which will increase your transaction costs significantly.

Very silly thing to say that Indonesia is not a good place to invest. As a developing nation myself and several of my associates have had plenty of successful investments here.