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Robert Alexander

New Member
Apr 25, 2022
9
4
3
Hi Everyone

...and I thank you in advance for your info - appreciate it

I am looking at buying a hotel room (20 yr lease with a 10 yr option) within a Resort.
this is a lease arrangement

Am I required to form a Company in order to obtain the lease arrangement ?
The Owner/Builder (Australian) says No
A local lawfirm says Yes

please help
cheers
R
 

britoo

Member
Sep 11, 2018
84
48
18
Hi Everyone

...and I thank you in advance for your info - appreciate it

I am looking at buying a hotel room (20 yr lease with a 10 yr option) within a Resort.
this is a lease arrangement

Am I required to form a Company in order to obtain the lease arrangement ?
The Owner/Builder (Australian) says No
A local lawfirm says Yes

please help
cheers
R


Here is my 10c worth but please note I make no claim to have a definitive answer so this is no substitute for professional advice.

I think it depends on the transaction you are entering into.

If you are leasing it as "Hak Sewa" ie a private party lease agreement which only exists in your, the vendor and the notary's filing cabinets and not at all in official goverment property records then I think, no - you do not need a company to enter into this kind of peer to peer legal agreement.

If you are leasing it under more of a formal sales transaction - see Markit's recent post on Strata title and you do not qualify ie you are non-resident, then I believe the answer is yes - you would need a company to hold the title for you if transacted as a "sales" transaction as is for example HP and HGB - via the land office.

Hope this is helpful but probably not.
 
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spicyayam

Well-Known Member
Jan 12, 2009
3,548
301
83
Just remember that the developer just wants to get paid and they may have no long-term interest in the project.

Why does the lawyer suggest making a company?

Definitely get a lawyer to check the purchase agreement.

Many of these deals go well in the first few years when everything is new and everyone is happy with the project. Problems start happening when issues arise with the maintenance of the property, maintenance of common areas, different interests in the property etc.

That's when people start going over the fine print in the contract, who is responsible for what, and what happens if the developer, landowner, or management company goes belly up.

Will the resort be renting out the villa to guests? I know developers always show the best-case scenario with rental returns, but it never works out well.
 
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britoo

Member
Sep 11, 2018
84
48
18
Just remember that the developer just wants to get paid and they may have no long-term interest in the project.

Why does the lawyer suggest making a company?

Definitely get a lawyer to check the purchase agreement.

Many of these deals go well in the first few years when everything is new and everyone is happy with the project. Problems start happening when issues arise with the maintenance of the property, maintenance of common areas, different interests in the property etc.

That's when people start going over the fine print in the contract, who is responsible for what, and what happens if the developer, landowner, or management company goes belly up.

Will the resort be renting out the villa to guests? I know developers always show the best-case scenario with rental returns, but it never works out well.

Kind of had a similar thought to Spicy that is regards your use of the room which can change the situation too.

If it's just for personal use, then I still think no issue but obviously as Spicy suggests do the due diligence and read the fine print and of course use your own and never the vendor's notary.

However if you and the hotelier plan to do a kind of shadow single room securitisation whereby he rents "your" room out normally for a management fee and you collect the receivables, then I'd say you are operating a (sub)lettings business just like many many Bule here .... at least prior to covid times

In this case I'd suggest you would need a company in order to make it legit, however very many here dont bother and just fly under the radar I believe.
 

Robert Alexander

New Member
Apr 25, 2022
9
4
3
Here is my 10c worth but please note I make no claim to have a definitive answer so this is no substitute for professional advice.

I think it depends on the transaction you are entering into.

If you are leasing it as "Hak Sewa" ie a private party lease agreement which only exists in your, the vendor and the notary's filing cabinets and not at all in official goverment property records then I think, no - you do not need a company to enter into this kind of peer to peer legal agreement.

If you are leasing it under more of a formal sales transaction - see Markit's recent post on Strata title and you do not qualify ie you are non-resident, then I believe the answer is yes - you would need a company to hold the title for you if transacted as a "sales" transaction as is for example HP and HGB - via the land office.

Hope this is helpful but probably not.

Many thanks Britoo
 

Robert Alexander

New Member
Apr 25, 2022
9
4
3
Just remember that the developer just wants to get paid and they may have no long-term interest in the project.

Why does the lawyer suggest making a company?

Definitely get a lawyer to check the purchase agreement.

Many of these deals go well in the first few years when everything is new and everyone is happy with the project. Problems start happening when issues arise with the maintenance of the property, maintenance of common areas, different interests in the property etc.

That's when people start going over the fine print in the contract, who is responsible for what, and what happens if the developer, landowner, or management company goes belly up.

Will the resort be renting out the villa to guests? I know developers always show the best-case scenario with rental returns, but it never works out well.
Hello Spicyayam - thank you for your advise
 

RossM

Member
Jan 19, 2022
75
43
18
Hi Everyone

...and I thank you in advance for your info - appreciate it

I am looking at buying a hotel room (20 yr lease with a 10 yr option) within a Resort.
this is a lease arrangement

Am I required to form a Company in order to obtain the lease arrangement ?
The Owner/Builder (Australian) says No
A local lawfirm says Yes

please help
cheers
R


My input, for what it's worth................

Would you enter into an agreement such as this in your home country? Why are you contemplating such an arrangement in Bali?

What would you do in your home country to secure your investment? Would you consult a lawyer? Would you take his advice and act on it, rather than take advice from an online forum?

It may sound romantic to say you have an investment property in another country, , particularly somewhere as exotic as Balibut take it from me, it is fraught with danger, and the locals will find a hundred different ways separate you from your $$.

The time shares of a decade ago showed just how precarious investing in another country can be, particularly one where the locals see ANY foreigner as a pot of gold to be exploited.
 
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Markit

Well-Known Member
Sep 3, 2007
8,819
661
113
Karangasem, Bali
My input, for what it's worth................

Would you enter into an agreement such as this in your home country?
Many do and the newspapers are full of bad situations - of course the newspapers never write good news or "nothing happened here" do they?

Why are you contemplating such an arrangement in Bali?
That is one of the few ways to "own" your Bali dream.

What would you do in your home country to secure your investment? Would you consult a lawyer? Would you take his advice and act on it, rather than take advice from an online forum?
I first plumbed the depths of the Expat knowledge found in this forum before I moved to Bali and found the knowledge invaluable and it has helped me enjoy the last 14 years here with little or no problems.

It may sound romantic to say you have an investment property in another country, , particularly somewhere as exotic as Balibut take it from me, it is fraught with danger, and the locals will find a hundred different ways separate you from your $$.
Not necessarily true and you can get ripped off anywhere on planet Earth - nothing as easily separated as a fool and his money. Just be as careful as you would be at home and you should do fine here.

The time shares of a decade ago showed just how precarious investing in another country can be, particularly one where the locals see ANY foreigner as a pot of gold to be exploited.
Timeshares are the biggest ripoff anywhere in the world outside of bitcoin.


You can always tell the ones that have lost their shirts, cant you?
 

Robert Alexander

New Member
Apr 25, 2022
9
4
3
My input, for what it's worth................

Would you enter into an agreement such as this in your home country? Why are you contemplating such an arrangement in Bali?

What would you do in your home country to secure your investment? Would you consult a lawyer? Would you take his advice and act on it, rather than take advice from an online forum?

It may sound romantic to say you have an investment property in another country, , particularly somewhere as exotic as Balibut take it from me, it is fraught with danger, and the locals will find a hundred different ways separate you from your $$.

The time shares of a decade ago showed just how precarious investing in another country can be, particularly one where the locals see ANY foreigner as a pot of gold to be exploited.

many thanks Ross
 

spicyayam

Well-Known Member
Jan 12, 2009
3,548
301
83
Personally, I wouldn't buy into this kind of deal.

 
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Robert Alexander

New Member
Apr 25, 2022
9
4
3
Personally, I wouldn't buy into this kind of deal.


BLOODY HELL - Im running a mile

many thanks for the post - greatly appreciate it
 

AuroraB

Active Member
Dec 17, 2021
101
71
28
Personally, I wouldn't buy into this kind of deal.


Good post.

Management of apartments is an ongoing issue here with developers unilaterally controlling everything and making profit from their "management / maintenance' fees: https://www.thejakartapost.com/news/2016/04/15/jakarta-apartment-owners-in-weak-position-ylki.html

From Jakarta experience and a low-rise condo I rented; the “maintenance” fee I paid was >50% of the actual rent. In addition, I paid for utilities with “management" fee added to these bills. No actual maintenance took place outdoor or indoor unless I requested myself. Spare parts including air condition usually scavenged from empty units. Vacant units and buildings quickly fell into a bad state of disrepair due to lack of upkeep. When the economy slowed down they started to fire staff without offering to reduce “maintenance” fee or rent, so I moved on.

So buying an illiquid asset under this type of management regime you often find here is not for me...
 
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Robert Alexander

New Member
Apr 25, 2022
9
4
3
Personally, I wouldn't buy into this kind of deal.


Bloody Hell ... I am running a mile from this !
Many thanks for the article
cheers
Rob
 
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Robert Alexander

New Member
Apr 25, 2022
9
4
3
Good post.

Management of apartments is an ongoing issue here with developers unilaterally controlling everything and making profit from their "management / maintenance' fees: https://www.thejakartapost.com/news/2016/04/15/jakarta-apartment-owners-in-weak-position-ylki.html

From Jakarta experience and a low-rise condo I rented; the “maintenance” fee I paid was >50% of the actual rent. In addition, I paid for utilities with “management" fee added to these bills. No actual maintenance took place outdoor or indoor unless I requested myself. Spare parts including air condition usually scavenged from empty units. Vacant units and buildings quickly fell into a bad state of disrepair due to lack of upkeep. When the economy slowed down they started to fire staff without offering to reduce “maintenance” fee or rent, so I moved on.

So buying an illiquid asset under this type of management regime you often find here is not for me...
Good post.

Management of apartments is an ongoing issue here with developers unilaterally controlling everything and making profit from their "management / maintenance' fees: https://www.thejakartapost.com/news/2016/04/15/jakarta-apartment-owners-in-weak-position-ylki.html

From Jakarta experience and a low-rise condo I rented; the “maintenance” fee I paid was >50% of the actual rent. In addition, I paid for utilities with “management" fee added to these bills. No actual maintenance took place outdoor or indoor unless I requested myself. Spare parts including air condition usually scavenged from empty units. Vacant units and buildings quickly fell into a bad state of disrepair due to lack of upkeep. When the economy slowed down they started to fire staff without offering to reduce “maintenance” fee or rent, so I moved on.

So buying an illiquid asset under this type of management regime you often find here is not for me...

Bloody Hell ... I am running a mile from this !
Many thanks for the article
cheers
Rob
 
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JackStraw

Well-Known Member
Mar 14, 2017
431
265
63
Not sure what your family situation is but if you have children that are Indonesian citizens, I recommend buying a property using Hak Pakai. You can transfer it to their name when you die and they can transfer it to Hak Milik meaning they own it outright. Hak Pakai is the closest thing a bule can get to owning a property since it doesn't involve a lease agreement or the need for a local nominee.

Leasing property from a local essentially means they take your cash and let the property fall apart unless you want to fork up the money to fix it yourself. So if you are going to spend 20 years paying money to someone else and investing in the house you live in, it may as well go towards a house you own and can then sell later for profit.
 
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Robert Alexander

New Member
Apr 25, 2022
9
4
3
Not sure what your family situation is but if you have children that are Indonesian citizens, I recommend buying a property using Hak Pakai. You can transfer it to their name when you die and they can transfer it to Hak Milik meaning they own it outright. Hak Pakai is the closest thing a bule can get to owning a property since it doesn't involve a lease agreement or the need for a local nominee.

Leasing property from a local essentially means they take your cash and let the property fall apart unless you want to fork up the money to fix it yourself. So if you are going to spend 20 years paying money to someone else and investing in the house you live in, it may as well go towards a house you own and can then sell later for profit.

I think I will pass on the idea of leasing property in Bali. Thank you Jackstraw ~ I appreciate your thoughts ( I was kinda going there myself) Cheer's
 
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