PROCEDURE AND MECHANISM OF PURCHASING LAND IN INDONESIA
Land sale and purchase is a transaction that must involve public officials. Unlike movable object transactions such as buying, television, tables and other goods, when agreement on the price is met, payment made by the buyer, the ownership status is automatically by law is transferred. The buyer as new owner has legal ownership over the good or service and may take it. Land and buildings however are different, they are immovable objects and its transaction made with specific terms. Even though the buyer agrees on the price and might had made payment in cash and in full to the seller, the land/buildings ownership however are remain unchanged if not comply with the law that regulates it. The transaction does not create transfer of ownership right to the buyer
Lack of knowledge in law often creates dispute in land transaction activity and this article will lay out the common issues in the land transaction as well the right way to purchase land in Indonesia
The following are 4 things that makes a land purchase is illegal and how to avoid them
1. Fake land certificates. It is common to find fake certificates especially in cities where land is on high demand. The buyer must know whether the certificate given by the seller is authentic or fake. This check will be carried out by the authorized agency, namely BPN (Badan Pertanahan Nasional). PBN will check the certificate based on the land registration map, letter of measurement and land book. This is procedures are regulated in article 34 of the Republic of Indonesia Government Regulation number 24 of 1997 concerning Land Registration.
2. The land was purchased privately locally named ‘perjanjian bawah tangan’ under Private deed or privately made Deed
Although the principle of pacta sunt servanda guarantees that every individual given freedom to enter into and/or not to enter into an agreement/contract with whomever one wishes, in a land sale- purchase transaction, an agreement without notarial deed is invalid.
The sale and purchase of land is only valid if it is carried out in the presence of an authorized official and signed. The authorized official is namely PPAT from the region where land is located. It is a special official in handling land transactions.
3. Land certificates are pledged as collateral to third parties, such as banks, Pegadaian and that the land seller do not delivered his duties and obligations
Land that is being pledged as collateral to a bank or being used as collateral for debt will make land transactions invalid
4. Land and buildings is in a legal dispute.
Disputed land usually occurs due to unclear ownership status, measure lines land, and/or land being the object of confiscation of collateral, or inheritance disputes. Therefore, it is necessary to carry out an examination called legal due diligence carried out by legal experts such as lawyers or legal consultants
The following are the steps to consider when buying land
1. Land buyers have the right to request land certificates which can be in the form of SHM, HGB, or other’s for in accordance with the agreed land status to investigate its authenticity.
In the hierarchy of land ownership in Indonesia, Hak Milik is in the highest position where land ownership has no time limit and can be inherited to their beneficiaries, Building Use Rights, Management Rights, Use Rights and Lease Rights are below which can be owned by non-Indonesian citizens.
2. Land buyers must make a visit to the land/building objects together with land sellers before buying land. If the land is in an area that applies customary law and the land has not been registered in the BPN database, the buyer can request information about the east-west, north-south boundaries of the land. This is crucial to develop as a material in legal due diligence activities to trace the history and legality of land ownership based on local customary law (Agrarian Law Reference)
3. Request proof of payment of building land tax. This document to ensure that the seller has paid off his obligations to avoid problems in the future, this can be done at the tax office (kantor perpajakan)
4. Evidence that the land is not in dispute. To ensure the validity of land transactions, one of them is that the object of land or building is not in a legal dispute. Buyers can confirm by visiting BPN and or checking the website of the local district court.
Once documents passed the examination and declared to be correct and clear, the next step is to proceed the purchase
The deed of sale – purchase of land or AJB is an absolute requirement for the registration and transfer ownership performed by PPAT officials. Buyer and seller must carry out their obligations, namely the seller pays income tax (PPH)and the buyer pays (bea peralihan hak) the transfer of land/building rights stipulated in regulation
The deed will be drawn up and signed by the PPAT in this transaction the buyer will provide the original copy of the identity card and family card while the seller is obliged to provide the original copy of the seller’s ID card with a statement of agreement from the husband / wife if the property is not included in pre/postnuptial agreement, death certificate if the land owner has died and documents proof of payment of land tax (PBB) payment of land tax (PBB)
Note: This legal article is intend for educational purpose only, please consult to your lawyer before applying