The Land Sale and Purchase Agreement lies at the heart of every property deal in Indonesia. Buyers and sellers who understand the legal roadmap, verification, agreement, taxes, and registration avoid costly detours and protect their investment. This guide walks you through each stage in clear, actionable steps.
Legal Process for Land Purchase in Indonesia
Indonesia’s land law follows a strict sequence:
- Verify the land title at the National Land Agency (BPN).
- Conduct due diligence to uncover disputes, unpaid taxes, or zoning violations.
- Sign the Land Sale and Purchase Agreement (Akta Jual Beli, AJB) before a Land Deed Official (PPAT).
- Pay transfer taxes: BPHTB for the buyer and income tax (PPh) for the seller.
- Register the transaction: Submit the AJB and tax receipts to BPN so they can cancel the seller’s name and issue a new certificate for the buyer.
Follow this legal order to reduce the risk of disputes or delays and ensure a secure transfer of ownership.
Understanding the Land Sale and Purchase Agreement
The AJB turns a handshake into a legally enforceable transfer. Drafted and read aloud by a PPAT, it records the agreed price, payment method, and delivery date. Indonesian Civil Code Article 1320 demands four pillars: consent, capacity, a specific object, and a lawful cause.
If any pillar fails, Article 1321 warns: “No agreement shall have legal force if it is made due to a mistake, or obtained through coercion or fraud.” Because the AJB meets these standards, it unlocks registration at BPN and secures the buyer’s title.
Read More: Why Electronic Land Certificate is The Future of Property Security
Identifying Land Ownership Rights
Indonesia recognises four main land rights:
- Hak Milik (Right of Ownership): Perpetual ownership is available only to Indonesian citizens.
- Hak Guna Bangunan or HGB (Right to Build): Allows PT PMAs or companies to construct buildings on land for up to 80 years.
- Hak Pakai (Right of Use): Grants long-term use rights, commonly used for residential or tourism purposes.
- Hak Guna Usaha or HGU (Right to Cultivate): Permits large-scale agricultural operations.
Understanding these rights reveals who can legally own the land, how long they can use it, and what terms and renewals apply—critical details before price negotiations.
Purchasing Land from the Government
Indonesian law never speaks of “state‑owned” land. Article 33(3) of the Constitution states, “The earth, water, and natural resources contained therein shall be controlled by the state and used for the greatest prosperity of the people.”
When the state controls land, you may apply for a right, often through auction or allocation, under Ministerial Regulation 9/1999. Success hinges on a written request, site survey, and ministerial decision that converts state‑controlled land into a registrable right.
Foreign Ownership of Land
Foreign nationals cannot hold Hak Milik, yet they still invest by using long‑term Hak Pakai or by forming a foreign‑owned company (PT PMA) to obtain an HGB. Cekindo notes that a residential Hak Pakai can run 30 + 30 + 20 years, while BP Lawyers stress the need for strict compliance with use clauses. Because rules evolve, foreigners should consult counsel before signing any Land Sale and Purchase Agreement to avoid later revocation.
The Due Diligence Process
Due diligence involves six essential checks:
- Land Certificate Verification: Confirm the land certificate’s validity with the National Land Agency (BPN).
- Permit Review: Check all necessary permits, including the Building Permit (IMB), to ensure compliance.
- Tax Clearance: Verify that all land-related taxes have been paid in full.
- Physical Boundary Inspection: Walk the land boundaries to detect encroachments or boundary disputes.
- Structural Survey: Hire a professional to evaluate the condition of buildings and land structures.
- Due Diligence Report: Compile a report detailing ownership, permits, compliance, liabilities, and land condition. This report can influence negotiations and may justify revising the price or even cancelling the Land Sale and Purchase Agreement.
Finalizing the Transaction and Registering the Land
On signing day, the PPAT reads the AJB aloud; both parties pay taxes and sign. The PPAT then files the deed, tax slips, and identity documents with BPN within seven days.
BPN updates the land book, strikes the seller’s name, and issues a new electronic certificate. Keep the original deed and certificate safe; they prove ownership, support future sales, and unlock bank financing.
Partner With Experts for a Seamless Transaction
Ready to secure land in Bali, Jakarta, or beyond? Let Seven Stones Indonesia guide you through every step from due diligence to a certificate in hand. Our bilingual team collaborates with trusted notaries and handles complex foreign structures daily. Contact us today, and turn your Land Sale and Purchase Agreement into a worry‑free investment.
Source: hukumonline.com, rumah123.com, bplawyers.co.id, indonesia.themispartner.com
Image: Getty Images