Transfer of Property Act at Indonesia
In Indonesia, the Transfer of Property Act is not directly applicable as it is in some other countries like India. Indonesia’s legal system is based on civil law, primarily derived from Dutch colonial law, and property law is governed by several key regulations and codes. The transfer of property, particularly real estate, is governed by the Basic Agrarian Law (Undang-Undang Pokok Agraria, UUPA) of 1960, as well as other regulations related to civil law and land ownership.
Key Laws Governing Property Transfer in Indonesia:
Basic Agrarian Law (UUPA) 1960: The Basic Agrarian Law serves as the cornerstone of Indonesia's land laws. It regulates land ownership, usage rights, and the procedures for transferring land rights. The law differentiates between various types of land rights, such as:
Ownership Rights (Hak Milik): Full ownership, which is typically granted only to Indonesian citizens.
Building Rights (Hak Guna Bangunan, HGB): Rights to build and utilize land for a set period, often up to 30 years.
Land Use Rights (Hak Pakai): Rights to use land for a specific purpose and duration.
Civil Code (Kitab Undang-Undang Hukum Perdata or KUHPerdata): Indonesia’s Civil Code governs contracts and general property law. This includes the sale and transfer of movable and immovable property. Article 1457 and the following articles of the Civil Code outline the basic principles of contracts, including those related to the sale of property.
Law on the Acquisition of Land Rights for Foreigners (No. 5 of 1960): Foreigners cannot directly own land in Indonesia. They can, however, enter into long-term lease agreements, or acquire certain rights such as Hak Pakai (land use rights) in specific circumstances. This is important for foreigners involved in property transactions.
Notarial Law and Land Registration:
The Notary Law (UU Jabatan Notaris) and the Land Registration Law (Undang-Undang Pendaftaran Tanah) are also key to property transactions. Property transfers must generally be executed by a notary to ensure their legal validity. Notaries play a significant role in drafting the sale and purchase agreements and ensuring that the transaction complies with the law.
The Land Registration System (Pendaftaran Tanah) mandates that any land transaction must be officially registered with the National Land Agency (Badan Pertanahan Nasional, BPN) to ensure the legality and protection of the property rights.
Process of Transferring Property in Indonesia:
Agreement of Sale (Perjanjian Jual Beli): The process begins with the creation of a Sale and Purchase Agreement (SPA) between the buyer and the seller. This document must be in writing, clearly outlining the terms of the sale, the price, and other relevant details.
Due Diligence: The buyer typically conducts a thorough due diligence process, which includes verifying the property’s title, ownership history, and checking if there are any encumbrances, such as mortgages or land disputes.
Execution of Deed of Sale (Akta Jual Beli): The next step involves the signing of the Deed of Sale (AJB) before a notary. This deed is a crucial part of the legal process and must be notarized for the transfer to be legally recognized. The notary ensures that the transaction follows legal procedures and that both parties understand the terms.
Land Registration: After the deed is executed, it must be registered with the National Land Agency (BPN). The registration process ensures that the transfer of land ownership is officially recorded, and the new owner’s rights are legally recognized. Only after registration does the transfer of ownership become effective.
Payment of Taxes: Property transactions in Indonesia are subject to taxes, such as the Final Income Tax (PPh Final) on the sale of land and buildings, and the Land and Building Transfer Tax (Bea Perolehan Hak atas Tanah dan Bangunan, BPHTB). Both the seller and the buyer may have tax obligations depending on the nature of the transaction.
Issuance of New Certificate: After registration and payment of taxes, the Land Office will issue a new land certificate in the buyer's name. This officially completes the transfer of property.
Key Considerations:
Foreign Ownership: Foreigners cannot own land in Indonesia directly, but they can lease land or set up specific structures, like a PMA (Foreign Investment Company), to hold property under long-term leasehold agreements.
Land Use Rights: Foreigners often acquire property through rights such as Hak Pakai (use rights), which allow them to use the land for certain purposes.
Governmental Approval: Some transfers of land may require approval from government bodies, particularly if the land is state-owned or subject to special regulations.
Summary:
In Indonesia, property transfers are regulated under the Basic Agrarian Law, Civil Code, and other related laws. The process involves creating a Sale and Purchase Agreement, having the transaction notarized, and registering the property with the National Land Agency (BPN) to finalize the transfer. While the Transfer of Property Act as seen in countries like India is not applicable in Indonesia, the principles of property transfer, ownership, and rights are similarly safeguarded by these key legal frameworks.
RELATED Blog
0 comments