Aug 21, 2011
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While the Indonesian government has plans to allow foreigners to directly buy apartments or commercial property around the third quarter of 2010, currently as of June 2011, foreigners/expatriates in Indonesia still have no legal way to purchase property or land wholly.

Foreigners are able to own condominiums, just not the land upon which it stands. It is therefore easier for foreigners to purchase apartments and such in high-rise buildings that come with a strata title.

They may ‘own’ property through an Indonesian friend where the Indonesian is the legal owner while the foreigner is the ‘rightful owner’. While attractive, this is advised against by lawyers as there is no legal way for the foreigner to fight his case in the event the other party reneges on the contract.

However, if the foreigner is set on attaining property this way, there are 2 types of legal avenues he can take advantage of; the above mentioned method of owning property through a trusted Indonesian friend or through a Convertible Lease Agreement.

Convertible Lease Agreement is somewhat similar to the first method, although this process requires official paperwork and an appointed party, which is an Indonesian representative to whom the land will be legally owned by. The agreement states that if and when the prevailing laws and regulations allow the Lessee to become legal owner of the apartment/strata title unit, both the Lessor and Lessee will be obligated to sign a Deed of Sale and Purchase whereby the title shall be transferred to the foreigner owner.  In the meantime, the legal owner will acknowledge that the rightful owner, who in this case is the foreigner, will have the right to do as he wishes with the land, so long as it falls within the
government guidelines.

However, it is in the best interest of the foreigner to insist that Hak Pakai (which is rights to facilities but not ownership) is in their respective names. A developer with the Hak Bangunan will be able to provide this and foreigners need to ensure this is met to prevent any potential default on the deal from the appointed party’s side.  
If the expatriate is married to an Indonesian, these methods are then a lot safer.

©RUMAH.COM Agustus 2011
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