Real estate transaction in Indonesia is pretty straight forward but yet tricky as well as interesting business practise. Several aspects blended in one single deal. It involves various legal fields such as property law, taxation law, inheritance law, as well as family law in general. In real estate transaction, the most familiar and usual one is sale and purchase transaction. It happens on daily basis. It just business as usual.
The Basic Agrarian Law in Indonesia stipulates that sales and purchase transaction is the evidence that proves the transfer of title from the seller to the buyer. The law imposed that real estate transaction must be carried out and meet two criterias i.e. transparent and paid in full. It must be carried out in front of and under the supervision of the authorized officer. The law also imposed that it must be paid in full. In other words, the transaction cannot be executed if you have any shortfall in the payment.
These are the things that you need to do before you proceed with the sale and purchase in real estate transaction in Indonesia:
This is a must. No transaction can be carried-out without any formal background check. In order to do this, you need to supply us with the original certificate of ownership. The legal status of the property will be unable to be verified without any originals.
The Seller's Information
You need to obtain the information from the seller that contain the following documents/information:
- Copy of Kartu Tanda Penduduk (So called "KTP"). If he's married, you need to obtain his spouse's KTP too. Chances are, the spouse will also require to sign the sale and purchase agreement with you. If they have no prenuptial agreement, it means the property you are buying is their marital asset, and therefore spousal consent is statutorily required. Otherwise, the transaction you're dealing with potentially illegal;
- Family card (so called Kartu Keluarga/KK). This document shows family members of the seller;
- Marriage certificate, if applicable. In the event, the spouse passed-away, you need to obtain his/her death certificate. In the event the seller is divorced, you need to obtain his divorce verdict and the property division certifying the property is being sold is hers or his;
- Original of certificate of land ownership;
- PBB tax payment. This represents payment of the last five years of building and land tax. This document is important in order to identify the tax applicable in this transaction. You will find out how much the seller should pay, and how much tax you should pay as the buyer.
- Tax payer's number. So called "NPWP"
The Buyer's Information
If you're buying the property, you need to make sure you have the following documents available for the transaction:
- Copy of KTP. When you're married, you need to supply your spouse's KTP too;
- Family card. This would also be required in order to identify your next of kin legally;
- Marriage certificate. We need to know your status, and how the state will treat the property under the current status i.e separate property or joint property.
- NPWP. They need copy of your tax payer number in order to validate the tax applicable to this transaction.
Sale and Purchase Agreement
Your intention to conduct sale and purchase transaction must be written in the form of agreement. We called it SPA (Sales and Purchase Agreement). Both the seller and the buyer must be present to sign the SPA. You must come with your spouse if you're married. Please contact me should you wish to discuss any further about this.
A valid document like a marital agreement must be presented as well in the event you have a separation of property in your marriage. A prenup or postnuptial can serve as the document that you require no assistance from your spouse. With this document, your spouse doesn't have to come with you to sign the SPA.
A valid SPA must be lodged to the land registry office in order to transfer the title from the seller to the buyer. One thing you need to be aware of payment of the current year taxation must be settled before the title is being transferred. A tax validation will be carried-out before title transferred is being conducted.
Our thanks to Mr. Asep Wijaya of Wijaya & Co for sharing this article!