When it comes to transactions involving real property it is critical to have a clear and correct understanding of the terminology and legal consequences involved. Do not rely primarily on secondary sources of information such as on forum sites; READ THE ACTUAL LAW. However, there are some reasonably accurate elucidations out there. One good source may be found at:
People here in Indonesia use the terms "buy", "own", "purchase"
incorrectly and all too loosely when referring to a foreign national
having an interest in real property. At the present time, under Indonesian law A FOREIGN NATIONAL CANNOT OWN LAND IN INDONESIA in a absolute or freehold estate form of real property ownership, also known as "fee simple". A freehold estate in Indonesia is called "Hak Milik." A foreigner cannot own real property in Indonesia in a freehold estate form of ownership; therefore a foreigner simply cannot truly "own" property here in Indonesia.
A foreigner, however, can have only a LEASEHOLD ESTATE interest in real property. A leasehold estate in Indonesia is known as "Hak Pakai" and it is NOT true and absolute ownership of the property as in a freehold estate or fee simple form of property ownership. It cannot be bequeathed to an heir.
When it comes to apartments or condominiums (Strata Title) a foreign national can only have a leasehold interest in the unit but cannot truly "own" it or "buy" it. The foreigner simply does not and cannot truly own it. The leasehold period granted to foreigners is 25 years (initial term), can be extended by another 25 years, then renewed for a second and final time for a period of 20 years; making the tolling of the leasehold estate a total of 70 years (25 + 25 + 20 = 70 years). There is not true ownership in this arrangement and the leasehold interest cannot be passed on to an heir. The foreigner does NOT own it!
Regarding apartments there is also a "Convertible Lease" Agreement which states that if and when the lessee can legally own the unit (such as if and when Indonesian law allows foreigners to own real property); then the lessee and lessor will be required to sign a Deed of Sale & Purchase, and title shall be transferred to the foreign national when Indonesian laws allow ownership of property by foreigners. During this interim period however, the person DOES NOT own the unit, and title remains in the name of the builder or developer - which for obvious reasons is highly risky and not advisable.
Regarding the use of an Indonesian "nominee" or intermediary to buy the property in their name, or the use of a "PMA" (Foreign Direct Investment Company) as a way of circumventing the restriction and prohibition of foreigners owning real property in Hak Milik, a summary of these 2 methods can be found at:
If a foreigner is married to an Indonesian and tries to buy the property in the Indonesian spouse's sole name to get around holding deed or title to the property in only a leasehold estate, this creates a legal quagmire. See my previous article with more information and legal citations on this subject:
An
Indonesian (man or woman spouse) in a transnational marriage may lose their
right to possess land because according to the Marriage Law and Law No.
7/1984 on Cedaw ratification, every
possession that is purchased by a mixed couple after they are married
is considered a collective or joint possession. The couple would lose the right
to own land because one of the parties was an expatriate.
Under the Marriage Law No. 1/1974, both the wife and husband,
irrespective of their nationality, have equal rights to family assets.
But this is contradictory to the Land Law No. 5/1960, which states that
foreigners cannot own land in Indonesia.
As a result, an
Indonesian spouse (husband or wife) who married a foreigner loses their rights as a citizen to buy land
and borrow money from a bank for marrying a foreigner, UNLESS there was an existing prenuptial agreement that was entered into by the couple BEFORE the marriage.
I know what you're thinking.... hey, I'll just draft a "prenuptial" agreement after the marriage and back-date it. This will not work as this type of document would have to be notarized to be legally valid and binding, and Indonesian Notaries Public have been informed of this "scam" and instructed not to witness such a back-dated document.
I know what you're thinking now, hey I'll just pay someone to do it anyway as Indonesia is a very corrupt country where graft and "bribes" are commonplace. You could try to do that, but it is not legal or advisable to do so...
