Legal Nominee Agreements Anyone?

[Markit]

Over the years I've had to listen time and again to some supercilious asshole know-it-alls (other than me) telling us all how generally stupid, illegal and unenforceable the favored "nominee" land purchase agreement is.

I would love to hear their explanation of this case: https://www.balidiscovery.com/messages/message.asp?ID=13429

I wait with baited breath.

 

[davita]

Over the years I've had to listen time and again to some supercilious asshole know-it-alls (other than me) telling us all how generally stupid, illegal and unenforceable the favored "nominee" land purchase agreement is.

I would love to hear their explanation of this case: https://www.balidiscovery.com/messages/message.asp?ID=13429

I wait with baited breath.

The civil case was concluded in the plaintiff's favour around Xmas and the property was returned.

This is a criminal case of embezzlement and fraud where a notary is allegedly involved in the illegal act of transferring said property.

 

[tel522]

seems strange we come back to the nominee thing , when the law is quite clear , foreigners cannot own land period . the legal system here hmmm !

 

[davita]

seems strange we come back to the nominee thing , when the law is quite clear , foreigners cannot own land period . the legal system here hmmm !

I don't know anyone that disputes that foreigners cannot own hak milik land in Indonesia. The nominee method doesn't grant ownership of such land to foreigners.....so what's your point?

 

[spicyayam]

Over the years I've had to listen time and again to some supercilious asshole know-it-alls (other than me) telling us all how generally stupid, illegal and unenforceable the favored "nominee" land purchase agreement is.

I would love to hear their explanation of this case: https://www.balidiscovery.com/messages/message.asp?ID=13429

I wait with baited breath.

Of course we know foreigners cannot own freehold land in Indonesia, but in my opinion they give tacit approval. Notaries are basically government employees and they themselves create nominee type agreements. Same with the BPN which is the department for recording ownership and land sales. Maybe the government understands that it does bring money to the country, but they can still be satisfied no foreigner has their name on the certificate of a freehold property as the "owner".

From what I have seen here and on other forums, foreigners believe they will instantly lose any court case where there is a dispute with ownership and of course there has been some high profile cases which support this. But from some of the cases I have heard about, this is not always the case and if it is anything as valuable as land/house it is worth hiring a lawyer and taking it to court.

Unfortunately it seems impossible to get more information about past court cases, unless it is a well known case.

 

[tel522]

the nominee system was underlined as illegal by the minister of agraria last year , seems a pointless discussion , but again its everyones choice to risk their investment . something I would never do until the law is changed for mixed married, the bill had its second reading 2 months ago .

 

[ronb]

In this case the courts appear to have confirmed that the nominee arrangements of Patrick Alexander were OK. I reckon that people who have entered into nominee arrangements can breathe easy.

 

[davita]

The original civil court case is referred here.....Bali News: Actor Handed Losing Script

I recognise balidiscovery says that the land was returned to the foreigner but how can hak milik land be returned to a foreigner when foreigners are not permitted to own hak milik except when inherited....and then they have to dispose within 1 year. Something is not clear here and I cannot find any info as they dont publish court cases to the public. Anybody have any more information?
IMO it is plausible the court found the 2nd transfer from the original nominee to nominee #2 was fraudulent and returned the title to the original nominee.
The contractual agreements involving bank loans etc. between the actor and the winning foreigner are plausible but could have nothing to do with hak milik ownership.

Markit's post above is a new criminal case, derived from evidence from the civil court, where the actor has been charged with embezzlement and fraud. That case has not yet been prosecuted.

The 'principle' of the so-called 'nominee ownership' is not being prosecuted...it could be the fraudulent embezzlement of anything.

 

[ronb]

Yes, the case before the court was to do with Jeremy Thomas underpaying for 12 are. But if the original nominee arrangements of Patrick Alexander were "stupid, illegal and unenforceable" to use Markit's words, then the court case would have gone nowhere. The fact that the case proceeds suggest to me Patrick Alexander's position was OK.

 

[davita]

Yes, the case before the court was to do with Jeremy Thomas underpaying for 12 are. But if the original nominee arrangements of Patrick Alexander were "stupid, illegal and unenforceable" to use Markit's words, then the court case would have gone nowhere. The fact that the case proceeds suggest to me Patrick Alexander's position was OK.

I'm not disputing that a nominee can own hak milik property but 'indebted' to a foreigner...I have 2 such properties myself.

What I cannot clarify is how the court can 'return' hak milik property to a foreigner when he didn't own it in the first place. IMO his original nominee is the rightful owner if the 2nd nominee was considered to have illegally converted the title.

Can anyone throw some facts of this case as I think the balidiscovery report is the writers interpretation of the findings.

 

[ronb]

The nominee arrangement is basically a lease agreement with plenty of conditions. So for and expat to sell his nominee owned property to a new "owner" there are 2 possibilities
1. the same nominee is retained by the new owner, so it is just transferring the lease with conditions
2. the new expat owner wants a new nominee (or if he/she is Indonesian, just him/herself), so the land certificate has to be transferred from the old nominee to the new
Either way the process can be handled by a notaris - no need for a court.

In this court dispute, the new owner had only paid maybe one quarter of the value and hoped he had duped the seller into this low, but he hoped, a legally binding payment. Apparently the court disagreed.

 

[davita]

The nominee arrangement is basically a lease agreement with plenty of conditions. So for and expat to sell his nominee owned property to a new "owner" there are 2 possibilities
1. the same nominee is retained by the new owner, so it is just transferring the lease with conditions
2. the new expat owner wants a new nominee (or if he/she is Indonesian, just him/herself), so the land certificate has to be transferred from the old nominee to the new
Either way the process can be handled by a notaris - no need for a court.

In this court dispute, the new owner had only paid maybe one quarter of the value and hoped he had duped the seller into this low, but he hoped, a legally binding payment. Apparently the court disagreed.

Absolutely agree with your points 1 & 2.

The court case apparently included the following...'Moreover, Thomas then colluded with a Notary to illegally transfer ownership of the land to Lie Halim for a further Rp. 17 billion.' Also, the defendant sued 8 or 9 different people which, imo, makes the case more complex than your explanation.

I've only read the balidiscovery interpretation of what the defendant's lawyer said so have no real info on what the court actually concluded and, as such, don't know if it determines the 'nominee structure' per se. I'd be happy to hear any facts pertaining to that.

The criminal case may not come to any conclusion in that regard either as it is about embezzlement and fraud...will need to wait and see.

In any event neither may have any bearing on the nominee arrangements as 'precedence' is not a legal entity in Indonesia.

 

[Markit]

Of course we know foreigners cannot own freehold land in Indonesia, but in my opinion they give tacit approval. I think maybe we can think again? This article sheds considerable more light on the actual details leading up to the case: Bali News: Actor Handed Losing Script


From what I have seen here and on other forums, foreigners believe they will instantly lose any court case where there is a dispute with ownership and of course there has been some high profile cases which support this.

Everyone with a nominee agreement put this lawyers name in your contacts list - Attorney Ida Bagus Putu Astina


But from some of the cases I have heard about, this is not always the case and if it is anything as valuable as land/house it is worth hiring a lawyer and taking it to court.

Unfortunately it seems impossible to get more information about past court cases, unless it is a well known case.

And your lovely wife is also a lawyer!

 

[spicyayam]

I would like to her my wife's opinion on the case. I think you know the English language reporting here is quite limited and there are probably a lot of details of the case left out.

Let's also not forget the case was held in the Gianyar court, so will likely be appealed in Denpasar.

 

[davita]

Let's also not forget the case was held in the Gianyar court, so will likely be appealed in Denpasar.

The District Court made its decision on 26 December 2015. Isn't there a statute of limitation on when an appeal to a High Court can be submitted?

 

[spicyayam]

What I cannot clarify is how the court can 'return' hak milik property to a foreigner when he didn't own it in the first place. IMO his original nominee is the rightful owner if the 2nd nominee was considered to have illegally converted the title.

My wife said he would either have a year to sell or change the title to hak pakai.

The District Court made its decision on 26 December 2015. Isn't there a statute of limitation on when an appeal to a High Court can be submitted?

No idea about that. Maybe the actor has decided to cut his losses

 

[davita]

1. My wife said he would either have a year to sell or change the title to hak pakai.

2. No idea about that. Maybe the actor has decided to cut his losses

1. Was that the determination of the court or her understanding of what should occur?
It does sound like a reasonable finding as the original nominee would have transferred his title to the actor....therefore he no longer owned the hak milik of the property. The 2nd nominee was found fraudulant in converting title to 'Lie Halim' so it fell back to the foreigner. Selling the hak milik within 1 year, or making it into hak Pakai, seems a reasonable compromise, and still maintain Indonesian Agrarian law.

2. I found the answer to my own question....

Article 25, Paragraph (2) of Law No. 48 of 2009 and Article 50 of Law No. 2 of 1986 Regarding General Jurisdiction (March 8, 1986), as amended by Law No. 8 of 2004 (March 29, 2004) provide that courts of general jurisdiction (peradilan umum) have the authority to examine, try and decide both criminal and civil law cases. The court of first instance for courts of general jurisdiction is known as the District Court (Pengadilan Negeri). There are approximately 250 District Courts established in each district and city throughout Indonesia. Please note that a District Court’s verdict will take effect and become enforceable as a final judgment in 14 days from the date of its decision if no appeal is submitted to the High Court.

Maybe the actor is reserving any pleading to the new court on his criminal case.....still pending.

 

[spicyayam]

Was that the determination of the court or her understanding of what should occur?

Her understanding/opinion.

 

[ronb]

I'm not disputing that a nominee can own hak milik property but 'indebted' to a foreigner...I have 2 such properties myself.

What I cannot clarify is how the court can 'return' hak milik property to a foreigner when he didn't own it in the first place. IMO his original nominee is the rightful owner if the 2nd nominee was considered to have illegally converted the title.

Can anyone throw some facts of this case as I think the balidiscovery report is the writers interpretation of the findings.

So Patrick Alexander "owned" 35 are using a nominee. He subdivided and then "sold" 12 are to Jeremy Thomas. He received 1 billion as a deposit on the larger agreed amount, then allowed the transfer of the land certificate to proceed so that Jeremy Thomas could then borrow from the bank using the land certificate as security. He borrowed the money but did not pay off Patrick Alexander. So Patrick Alexander goes to court and the court "awards possession" to Patrick Alexander.

Now, we are reading English translations of court outcomes - but it is clear that this Gianyar court had no trouble with the nominee ownerships. They reversed Jeremy Thomas's nominee ownership and re-instated Patriick Alexander's nominee ownership.

So then Jeremy Thomas and the bank have a problem.

 

[davita]

1. So Patrick Alexander "owned" 35 are using a nominee. He subdivided and then "sold" 12 are to Jeremy Thomas. He received 1 billion as a deposit on the larger agreed amount, then allowed the transfer of the land certificate to proceed so that Jeremy Thomas could then borrow from the bank using the land certificate as security. He borrowed the money but did not pay off Patrick Alexander. So Patrick Alexander goes to court and the court "awards possession" to Patrick Alexander.

2. Now, we are reading English translations of court outcomes - but it is clear that this Gianyar court had no trouble with the nominee ownerships. They reversed Jeremy Thomas's nominee ownership and re-instated Patriick Alexander's nominee ownership.

3. So then Jeremy Thomas and the bank have a problem.

1. I didn't read, from the balidiscovery report, if the whole Hak Milik lot, or only a portion of the original lot, was transferred from nominee #1 (the foreigner's original) to Nominee #2 (the actor). It just says that the actor was planning to develop the smaller lot.
2. If you have the Court's English translation outcome I'd appreciate you post...maybe then we can determine the real situation.
3. I'd think, as he has been criminally charged, he's more focused on staying out of prison.

IMO the case doesn't determine anything in regard to the nominee structures. I've always contended that the name on the hak milik property title deed (Tanda Bukti Hak Milik) is the rightful owner. Other contractual agreements on the property cannot bestow title nor attempt to circumvent that law.

Again....IMO the report infers the foreigner 'inherited' the Hak Milik property from the court's decision...so spicyayam's lawyer wife's opinion makes sense. He will now either have to sell within 1 year or convert to Hak Pakai or even find another nominee...although I'd be hard pressed to believe the latter considering what happened...:icon_rolleyes:

The case cannot be used as an example because Indonesia adopted Netherland's legal jurisprudence which doesn't include the use of 'Precedence'. So each case of a nominee going rogue, and being sued, will be determined 'on its own merit' without reference to any 'precedence'.