Property Investment in Indonesia for Indonesian-Foreigner couple

PURCHASING AN APARTMENT OR OFFICE UNDER STRATA TITLE

The 1996 regulation (No. 41/1996) states that foreigners who reside in Indonesia, or visit the country regularly for business purposes, can purchase a home, apartment or condominium as long as it isn’t a part of a government-subsidized housing development. However, foreigners can only hold land-use deeds, and most developments hold right-to-build deeds. As it stands now, it’s not possible for someone to have a land-use deed for a sub-unit of a right-to-build deed. The length of these titles varies as well. Therein lies some of the difficulties and unclear ownership issues.

CONVERTIBLE LEASE AGREEMENT

One way for foreigners in general to go ahead a purchase property despite these legal ambiguities is to sign a Convertible Lease Agreement with the apartment property management office to purchase an apartment. Basically what this agreement entails is that the foreigner may purchase the apartment, but the title is still held in the name of the developer or property management firm. This lease agreement is for a definite period. The Convertible Lease Agreement states that if and when the prevailing laws and regulations permit the Lessee to become legal owner of the apartment/strata title unit, both the Lessor and the Lessee shall be obligated to sign a Deed of Sale and Purchase and the title shall be transferred to the foreign owner.

If you are interested in purchasing an condominium through this type of agreement, investigate the property management company thoroughly. In the current economic downturn many property developers are undergoing serious economic pressures and construction on many properties has been postponed or canceled. Show your contracts to (your own) bonafide lawyer to ensure that all legal implications are covered thoroughly.

Notes: An agreement with a nominee is often a solution which is used by foreigners, but of course it’s risky. Because it’s still an agreement with trust basis even if we have extra agreement in front of notary to secure our investments. Needless to say that according to the law, this person would be the legal owner. It need not to always happen, but if IT HAPPENS… if your nominee break the agreement, in fact.. they could still walk away from the courts without a big effort. Example of those cases are quite many.

If you’re married with separate property agreement then those things are not a problem, the indonesian spouse could still legally own free hold property. But the one who are not married with prenuptial agreement must be careful when they want to buy an apartment in Indonesia which ist advertised as a “Strata Title Property”.

According to Article 7 of the Law, land used for construction of rumah susun must be:

1.Ownership Rights [equivalent to a ‘freehold’]

2.Rights to Build (HGB)

3.Rights to Use over the state’s lands

4.Rights to Manage (HPL)

# The important thing to note when you are interested in buying an apartment is to examine the rights relating to the unit of rumah susun. Problems can arise if the apartment was built on land that possesses an HGB over a HPL status. Article 38 of the Government Regulation states that if the rumah susun is built on lands that have the status of HPL, the developer must first apply for an HGB over a HPL status. In the event the latter status has not been obtained, then the rumah susun units cannot be sold.

Be careful, The big name / reputation of a bonafide company doesn’t always guarantee a fair trade. Some of case happened, that the developer do not tell the customer the real status of the land, and some of them could even work it out with the officer and delete some notes on the certificate that could declare the real status of the land

(read: http://us.detiknews.com/read/2009/06/08/125024/1144050/10/khoe-seng-seng-penegak-hukum-tidak-memberi-keadilan-pada-saya ).

Check thoroughly the contract and certificate, and if necessary do a cross check with BPN. Do not completely let everything what is urgent for your safety being done by a notary which is chosen by the developer. There could be one little notes in the corner of the thick documents which put you in a big risk. Even if you’re being told that the Contract form is just a normal contract, still do a proper check your selves. However It’s true that every Firms would have a fix form for every customers, but it doesn’t close the opportunity to have a special notes for a single case if it’s required by customers.

The new indonesian government plans to update the working permit regulation for foreigner

The new government has planned to update the working permit regulation for foreigner again. The update consist of an obligation to pass indonesian language test. It is another strategy of indonesian government to welcome the birth of  Asean Economic Society which come soon.

The Minister of Labour will work together with Universitas Indonesia to manage the test and prepare the materials for the foreigner. Additionally the foreign worker have to do a knowledge transfer to their indonesian colleagues. This condition excludes the following foreigner:

1. who work at executive positions in a company (In this case an investor who starts their business in Indonesia would have no problem of course)

2. who work for aftersales service

3. who do “impresariat service” (entertainment, tourism, eventorganizer etc).

Foreigner who only have an associate degree could no longer prolong their previous working permit. Up to now there are so many foreigner who could obtain a working permit and teach English at the small englisch courses just because they are native speakers and this practice has been allowed even if they don’t possess any pedagogic degree in English.
Soon it will not be possible anymore. Every foreign workers muss possess minimum Bachelor Degree and competency certificate for the relevant job. This competency certificate could be replaced by a reference letter which declares the job experience for the related position.

The good thing is: there will be an update for registration system as well. Soon it will be possible to submit all the application process online. This could make the process easier, faster and at the same time minimize the corruption possibility.

IMHO, all those requirements don’t sound exaggerating at all. The protests about it in indonesian medias lately sound even funny in my ears. I think it’s just another political strategy of opposition partys to attack the new governmentIf. If the domestic workers have to obtain Bachelor Degree for the job, why should it be judged as ridiculous and arrogant if the indonesian government want that foreigner must fulfill the same regulation? And despite the fact that indonesian language is quite easy peazy compares to german or english for example, it absolutely makes sense to learn how to speak the local language if one wants to live in that particular country. What kind of logic to assume that integration is only obligatory for Indonesians in Eurepe and not vice versa? If developed countries say they only expect well trained and high qualified foreign workers then Indonesia has the same right to expect the same from it’s foreign workers. We also want the best for the development in our country. Totally make sense ;).

Prenuptial Agreement & List of Notary in Indonesia

 (Source: KKC Docs, article made by Ana EP Kiwitter. This following information are collected from discussion board of KKC and some other portals such as online Law Consulting Service by Wijaya & Co)

Most people think of marriage as the ultimate emotional and spiritual bond and looking forward to a life of happiness. However when faced with negotiating a premarital agreement, they realize that not only do they have to decide what will happen to them when they divorce or die, but that they also have to negotiate these issues with their fiancee.

The main reason why prenuptial agreement becoming essential for indonesians who marry foreigner is the fact that according to the family law one would have joint property after marriage and it makes the other 50% value of the property belongs to foreigner. The situation would be complicated because foreigners are not allowed to own freehold property in Indonesia. The Indonesian government can, by law, take virtually every purchased property away from the grieving party if they did not create such a protective document PRIOR to marriage. (note: The freehold status would turn out into limited lease hold).

To avoid this kind of trouble, it would be prudent to draft a prenuptial agreement complying with Indonesian law to ensure that your financial interests will be upheld by Indonesian court.

Legal Aspects

The Indonesian marriage law of 1974 has a very simple provision for prenuptial agreements, when compared to the former Dutch law, Civil Code. The law governing the prenuptial agreement only consists of one article. It stipulates that the agreement should be made prior to marriage. The agreement should be legalized by the marriage registry. It means, registering with Civil Registry for Non-Moslems or with the Religious Affairs Office (KUA) for Moslems.

Both parties are free to determine the form of law, as long as it abides by the law: religious and moral. The provisions are indeed very abstract. The legislature seems to leave it that way in order to make it flexible with the development of the religion, moral, and public order.

Another provision stipulated in the marriage law is that the agreement cannot be amended during marriage, except upon approval of both parties and cannot cause disadvantage to any third party (Banks for example).

In order to be legal and valid in Indonesia, the pre-nuptial agreement must be executed by an Indonesian notary. An agreement which is simply notarized in a foreign country is not sufficient and not valid in Indonesia.

Persons in Need of a Prenup

Consider a prenuptial agreement if you have at least one of the following conditions:

1. You are the person who is bring a lot of assets to the partnership, including a retirement account
2. You have children from a prior marriage
3. You own your own business or are a partner in a company
4. You on a fast career track and are likely to earn a hefty salary in the future
5. You are Indonesian planning to marry to a foreigner
6. Anyone who is paying for his or her spouse to get an advanced degree which is likely to result in significant future earnings
7. You plan to purchase land/home in Indonesia during your marriage

Making a Prenup

Indonesian law does not provide a ready-made framework for a prenuptial agreement. Somehow you are bound by law, religion, morals, and public order considerations in drafting the agreement.

An Indonesian prenuptial agreement must be tailored to the particular needs of the husband and wife and sufficiently flexible to take into account changes in your future circumstances during the course of the marriage.

Begin by collecting all the things you want to be included in the prenuptial agreement. Ask your lawyer to draft the agreement and request his/her recommendations.

Make note that the property purchased in Indonesia will be under Indonesian spouse’s name (remember to arrange some protection article in the agreement for the foreign spouse). For mixed couples what is needed is a prenup which instigates separation of assets as the rule so that a WNI spouse can legally own and hold a Surat Hak Milik on property purchased. This negates the foreign spouse being an automatic owner of 50% of the property due to the usual joint property rule for married couples in Indoneisa. This is one of the most important points of the pre-nuptial agreement.

You need to specify the percentage of the wealth that each spouse will receive if the marriage was dissolved. Included in the agreement should be full disclosure of all assets and liabilities, including the value of each asset. Make sure that the terms of the agreement do not promote dissolution of assets.

Keep a copy of all drafts of the documents so that there is a record that you have reviewed every draft. Keep all the drafts, correspondence, and notes so that the file reflects the negotiations and the various resulting revisions. Name and number the drafts in consecutive order such as “draft number three”. This record will be very helpful if the agreement is later contested.

Avoid commingling assets and keep careful records. A qualified accountant or bookkeeper can assist you with this task. Even if the agreement is set aside or revoked, careful bookkeeping will make it easier for the court to trace assets and will save you lots of money.

The Agrarian law does not say that ALL indonesians have right of ownership but that ONLY indonesian have right of ownership. This obvious contradiction in laws is what necessitates the need for a pre-nuptial agreement .. so that an Indonesia/foreign couple can in fact purchase property in Indonesian during their marriage.

So it is obviously clear that a prenuptial agreement shouldn’t be made in a hurry or impulsively decided. Unfortunately many of indonesian women have decided to make prenuptial agreement based on too little information and following trend. That’s not a good idea because not everybody could really use the advantage of this agreement. It is possible that this agreement even lead us to unfortunate circumstances in the future.

Reference: article 119 (KUHPer, Buku I, Bab VI “harta bersama menurut undang-undang dan pengurusannya”, bagian 1 : Sejak saat dilangsungkan perkawinan, maka menurut hukum terjadi harta-bersama menyeluruh antara suami-istri, sejauh tentang hal itu tidak diadakan ketentuan-ketentuan lain dalam perjanjian perkawinan. Harta bersama itu, selama perkawinan berjalan, tidak boleh ditiadakan atau diubah dengan suatu persetujuan antara suami-istri. ( From the moment of execution of the marriage, there shall exist by law community of property between the spouses to the extent that no other stipulations have been made in the prenuptial agreement. Rules regarding community property cannot be revoked or amended by mutual agreement between the spouses for the duration of the marriage.)

Record the Agreement

There are two registrations required for a prenuptial agreement. A premarital agreement must be recorded with the registrar’s office of the local district court, and marriage registry. The agreement will take effect for the husband and wife when the marriage recorded at the Civil Registry or the Office of Religious Affairs and shall take effect against third parties upon the date of registration with the local district court where the marriage will take place.

If the agreement is not recorded at the local district court, then the marriage will be considered as if there is no prenuptial agreement exists. Thus, your marriage will have joint-ownership in property. This is the same as if you don’t have a prenup.

Legally speaking, the pre-nuptial agreement does not have to be registered in the court but to the Capil or Kantor Urusan Agama (depending on one’s religion). While many notaris/lawyers advise that the agreement be register in the local cour (Pengadilan Negeri), it isn’t mandatory. The registration is low cost (approx. IDR 100.000) and well worth the further legal protection.

Death to Either Party

If Indonesian spouse pass-away, Foreign spouse will have to transfer the ownership of  the property within one year to indonesian. On the other hand, if the foreign spouse pass away, the Indonesian spouse can maintain ownership of the property.

Updating the Prenup

It is important to understand the need to keep the agreement up-to-date because no agreement can take into account all possible eventualities. The agreement should be designed to accommodate the passage of time and changes in status, such as the birth of children, and increase or decrease in wealth, or the disability of either party.

A post-nuptial agreement is normally not honored in an Indonesian court. The agreement (and legal document) needs to be made before the marriage begins. Under Indonesian law, anything owned in a marriage is joint property unless it has been decided otherwise in a prenup, prior to date of marriage. However there is always a possibility to make it. With some certain conditions the court could possibly acknowlege a postnuptial agreement.

It is also advised to have a pre-nuptial agreement that is valid in your country of origin (for foreign spouse) to govern assets in the foreign spouse’s country of origin. It should be registered in your country, or through the consular section of your embassy in Jakarta.

Notary list in Indonesia:

Source:  KKC Archive by Ana Kiwitter 

1. http://de.scribd.com/doc/79174228/notaris-jakarta-pusat

Daftar Notaris Yogyakarta:

http://portal.jogjaprov.go.id/attachments/article/120/INI%20Kota%20Yogya.pdf

2. Personal recommendation from Fentilya BU:

 Magdawati Hadisuwito SH (Notaris)

Jl. Bantul Km 4,6 No 35 A, Kweni, Panggungharjo, Sewon, Bantul

Telp 0274 – 372 140, 384 167

Fax 0274 384 162

Sumber: Fenty dan Lili Aryatie

 

CATATAN & INFORMASI TAMBAHAN:

Perjanjian Perkawinan menurut Undang-Undang Republik Indonesia No. 1 Tahun 1974 ttg Perkawinan, pasal 29:

Ayat (1) Pada waktu atau sebelum perkawinan dilangsungkan, kedua pihak atas perjanjian bersama dapat mengadakan perjanjian tertulis yang disahkan oleh Pegawai Pencatat Perkawinan, setelah mana isinya berlaku juga terhadap pihak ke3, sepanjang pihak ke3 tersangkut.

Ayat (2) Perjanjian tersebut tidak dapat disahkan bilamana melanggar batas-batas hukum, agama dan kesusilaan.

Ayat (3) Perjanjian tersebut berlaku sejak perkawinan dilangsungkan.

Ayat (4) Selama perkawinan berlangsung, perjanjian tersebut tidak dapat diubah, kecuali bila dari kedua belah pihak ada perjanjian untuk mengubah dan perubahan tidak merugikan pihak ke3.