Australian owning Property in Bali

Sorry Matt - there IS no safe legal way.
People bend Indonesian law by using a 'name-giver' contract where the official and legal owner is a local of your choosing. He or she owns the title (Hak Milik, or freehold) and the house is legally theirs. Your contract with them, where they give you the right to use 'their' property (which you pay for, of course) is designed to sidestep Indo law which says that a foreigner cannot OWN land.

At any time, the title-holder can change their mind and take over the property, sell it - basically do whatever they want with it. And this has happened countless times to hapless expats.

The reason this situation exists is because, despite sneaking around the corners of Indo LAW, you will always lose out because of the Indo CONSTITUTION. And this states that a foreigner cannot CONTROL land - which is exactly what people do when they execute one of those bodgie 'name-giver contracts'.

Just get a lease - 25 years initial term, renewable usually for another 25. Fully protected by the law and no need for shennanigans that are bound to lose you money. You can also sell the unused part of your lease legally to someone else if you decide to bail out early.

And if you think a lease doesn't give you security - talk to any resident of the ACT. There is no freehold land in Canberra - all 'house-owners' are leasing from the government on 99 year leases.

Thank you for your reply I understand where you are coming from the only thing that I hate is if I lease for 25 years it costs me the same if I was to buy the property then after 25 years I have to pay again to stay on ????? for the same amount or usually more money again. It makes it hard but for safety there is no other option.

That's where you need a good Notaris to check the documents and to make sure that you negotiate the best of all possible deals in terms of lease continuance.

An alternative is to test the waters by looking for an 'over-contract' lease to buy. Say someone has a lease with 10 years remaining and wants to bail - you can buy the lease for typically about $70,000 - $100,000 AUD for a nice 3BR villa with pool. For 10 years it costs you substantially less than renting an equivalent villa.

Most importantly, confirm that you can actually get a residency permit. If over 55, you can get a Retirement Visa (KITAS Pension), but if under 55, you will need a full KITAS which allows you to work as well.

However, the government is sneakily trying to reduce expat numbers by refusing KITAS renewals for expats, issuing new KITAS permits for only 6 months with no guarantee of renewal, and no longer allowing Student KITAS for students under 17. Lots of expats have had to go home because the International schools won't accept enrolments unless the student has a KITAS.

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Times are a little fraught for expats here, and will be until the Indonesian Government stops farting around with constantly changing rules.

Best of luck!

thanks again


Matt

borborigmus wrote:

.At any time, the title-holder can change their mind and take over the property, sell it - basically do whatever they want with it. And this has happened countless times to hapless expats.

If you get yourself a good notaris this won't happen, sure there are a lot of horror stories from foreigners who didn't know what they were doing but there are also thousands of expats living here who have tied themselves up with contracts where their sponsor CAN NOT take their land.

Get a good Notaris

If you use a Nomine, The Nominee will sign four documents with the foreigner as follow:
A Loan agreement: acknowledges that the foreigner has lent to the Nominee the purchase price of the land.
A Right of Use agreement: allows the foreigner to use the land.
A Statement Letter: where the Nominee acknowledges the foreigners loan and intention to own the land.
Power of Attorney: The nominee signs an irrevocable Power of Attorney giving the foreigner the complete authority sell, mortgage, lease or otherwise deal in the land.

Hi Matt and Borborigmus,

I am going to lease a property in Jawa Timur. The Notaries here have no experiences with long term lease and therefore no example in English and in Indonesian. Do you have one? and if so would you be so kind to email it to me.

Furthermore, what is the maximum period of lease 25, 30, 40 years. I know the Indonesian law allows you to lease it up to 99 years but I don't know whether it has to be cut in smaller pieces like 25 years. The owner is willing to accept any duration of the lease up to 99 years. Have you knowledge of this element.

I appreciate it if would be able to inform me.
Thanks, Ton

Start a PMA (foreign investment company)

hi mat,,i agree with Borborigmus,people always change their mind, and IT'S HAPPEN,,not once,,but many time,it's happen to my friend,,

good luck

A foreigner can't own land - full stop
A local woman, married to a foreigner can but only if they have a pre nup stating he has no claim to the property.

All this stuff about agents, someone owning the land in your name and so on is open to you losing the lot.
Some agents claim to be able to legally sell to expats - they all share one thing in common - They lie a lot.

Non-Indonesians can legally acquire property in Indonesia and enjoy full beneficial rights. This is done using one of two methods: by a nominee arrangement or by way of an Indonesian foreign owned company (PMA).

With the nominee method, an Indonesian citizen is nominated to buy the land on behalf of the foreign purchaser. Land title deeds will therefore be in the name of the Indonesian nominee. The notary/PPAT handling the land sale and transfer will simultaneously draw up a power of attorney document giving the foreign purchaser total and exclusive authority to utilise, sell, transfer or lease the land, without any reference whatsoever from the nominee, along with a statement (loan agreement) declaring that the money used to buy the land belongs to the foreign purchaser and not to the nominee.

The power of attorney must give the foreign party full beneficial rights on the property and must waive all rights of the nominee. The foreign party is then free to build on the land, sell or lease the property and transfer the title to next of kin. Often, the nominee will receive a nominal fee for his/her responsibilities as the title holder.

The second method is to form a foreign investment company (Penanaman Modal Asing, PMA). A foreigner can fully control a PMA company and the title of the property will be in the company's name in the form of a right to build (Hak Guna Bangunan, HGB). The HGB expires after 30 years and can be renewed several times. However, there are tax implications to be considered, and the Department of Trade will review PMA companies after 30 years, so it may be necessary to re-apply for the PMA licence

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RhysG wrote:

Non-Indonesians can legally acquire property in Indonesia and enjoy full beneficial rights. This is done using one of two methods: by a nominee arrangement or by way of an Indonesian foreign owned company (PMA).

With the nominee method, an Indonesian citizen is nominated to buy the land on behalf of the foreign purchaser. Land title deeds will therefore be in the name of the Indonesian nominee. The notary/PPAT handling the land sale and transfer will simultaneously draw up a power of attorney document giving the foreign purchaser total and exclusive authority to utilise, sell, transfer or lease the land, without any reference whatsoever from the nominee, along with a statement (loan agreement) declaring that the money used to buy the land belongs to the foreign purchaser and not to the nominee.

The power of attorney must give the foreign party full beneficial rights on the property and must waive all rights of the nominee. The foreign party is then free to build on the land, sell or lease the property and transfer the title to next of kin. Often, the nominee will receive a nominal fee for his/her responsibilities as the title holder.

The second method is to form a foreign investment company (Penanaman Modal Asing, PMA). A foreigner can fully control a PMA company and the title of the property will be in the company's name in the form of a right to build (Hak Guna Bangunan, HGB). The HGB expires after 30 years and can be renewed several times. However, there are tax implications to be considered, and the Department of Trade will review PMA companies after 30 years, so it may be necessary to re-apply for the PMA licence

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Agree with the above, but still you can get conned as its the slow or quick con in Bali.
As happened to many who thought they had the right notaris and nominee, even in cases like Australian expats married to Indonesians who run a SCAM property business so that they assist you acting  as a nominee and eventually take all of the property through deceit( Bali Holmes ) Dreamland home stay is an example of a complete scam set up By an Australian and his wife who have personally stolen from me and other Expats with no remorse.

Even a registered lawyer can be in on the scam with a notaris to make profit anyway they can, so I cant stress how careful you must tread.

hi matt, i read your post

i would like to help you to own villa in bali. as iam local balinese.

if that sound good for you, please contact me and i will be happy to have chat with you
my mobile no : 081386250849

regards
nyoman

Once again. A non Indonesian can't own private property in Bali or anywhere else in Indonesia.

Anyone that offers you a deal is putting your cash in danger.

Heed and beware.

Hi Matt
Only just joined Bali Expat.com, so forgive me in answering to your September 2010 Questions. ARE you still seeking answers to your questions??........ I am from Melbourne and moved retired to Bali 18 months ago so have recently had to overcome many of the challenges,as you are!

aussiehj wrote:

Hi Matt
Only just joined Bali Expat.com, so forgive me in answering to your September 2010 Questions. ARE you still seeking answers to your questions??........ I am from Melbourne and moved retired to Bali 18 months ago so have recently had to overcome many of the challenges,as you are!

Hi Aussie

I am married to an Indonesian and looking forward to retiring in
Jakarta in the not too distant future. Can you offer any advise about dealing with the purchase of an apartment or property.

Your help will be really appreciated.

Many thanks

Hi always ken to hear your story and challenges.


Matt

Hi Matt,
as said before you can't own a land if you are not native indo.
Marriage is not usefull and your wife will lose 50% of her native rights.
One thing to do, even if it's quite long is to live in Indo for 3 years, in hotels, compounds or rent appartment.
After 3 years in the country (you will have to testify it), you can ask Embassy a TPASS.
There, you seemly become Indo.
Now, what happen too often is that any people want to sell house but the house never belong to them or the land where the house is don't belong to them.
So, be very carefull and ask for all needed papers.
Personnaly, i'm looking to buy restaurant in Indo and i pay cops to accompany me within all my visits.
I don't like that but it's very good help to pay police officer.
Be carefull, this country is hypnotic.

Take care.J

Using the Nomine
The Nominee will sign four documents with the foreigner as follow:
A Loan agreement: acknowledges that the foreigner has lent to the Nominee the purchase price of the land.
A Right of Use agreement: allows the foreigner to use the land.
A Statement Letter: where the Nominee acknowledges the foreigners loan and intention to own the land.
Power of Attorney: The nominee signs an irrevocable Power of Attorney giving the foreigner the complete authority sell, mortgage, lease or otherwise deal in the land.

this is the best a safest way of doing it but please always speak to the notrist frist

Using the nominee approach is in reality the worse and most unsafe method for a foreigner to “own land” in Indonesia.

Virtually any prominent lawyer in Indonesia will tell his or her client that this is the worst approach to use, and more to point, that same lawyer will advise his or her client that in all court cases where the Indonesian nominee pursues his or her right to the ownership of said land, the courts will uphold that right.

The nominee scheme only puts the foreigner at the mercy and good will of the Indonesian nominee. 

The power of attorney document cannot force the Indonesian to sell their land where the Hak Milik is in their name…period.  It will not hold up.

Another point is that it is fallacious thinking that using a notaris for preparing land lease and use contracts is sufficient.  It is not sufficient as notaris are not able to argue cases in court should disputes down the road go that far.  Any foreigner engaging in a long term land contract in Indonesia is far better off to engage the services of an attorney, and preferably an attorney who is based close to where the land is located…same province, same regency etc.

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Ubudian wrote:

Using the nominee approach is in reality the worse and most unsafe method for a foreigner to “own land” in Indonesia.

Is it?

http://beatmag.com/daily/bali-expat-set-up-in-drug-case-while-being-embroiled-in-land-dispute/

Bali expat set up in drug case while being embroiled in land dispute...

...However, she was released after undergoing an intensive investigation because the police determined there was no evidence linking her to the ecstasy pills apparently planted in the car...

..In a letter sent to the beat daily, Johnston said that a dispute began over the ownership of hers and her recently deceased husband's property in Mengwi, Bali. She began to receive threats from a nominee used on the title of the land, who was claiming the property to be her own

Yes, seems it might well be.

hi matt your on wrong forum u need balipod all your questions are already answered cheers abbeyw

Don't get me started on how many people that have been led astray by relying on that "source."

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oct71 wrote:

HELLO!!
THE CATHOLIC COMPENSATION DEPARTMENT,...

Total rubbish
.....7511...2

Wow. An expensive office but only a mobile number.
Anyway - how to spot a scammer's address and post a picture of where they live.

First, search details. The name turned out to be a lie but the address, whilst a mess, did produce a post code.
The wonderful google maps and street view did the rest.

The catholic church must have spent all their cash on the new pope because they only seem to be able to afford a flat these days.

hi
if you want more info ,my company work with the notary of four season hotel and my partner is a lawyer.so we can tell you all informations you need.
check my profile or send me an email.
thx

“If you are willing to buy land in Bali and confused what to do, please contact me. I know a lot of ground notary who can help you in your own land rights.”

Any foreigner who thinks that any agent, notaris or lawyer can find a way around the land laws in Indonesia which will allow them to have freehold ownership of land in Bali is fooling themselves, and likely also to become prey to less than honest operators who promise (for a fee of course) that they can get this done for them.

When I got my divorce I used Austrindo Solicitors in Kuta to do all the paperwork Peter is Australian but married to a Balinese. He is not cheap but better to be safe than sorry with legal things

Peter Johnson has an excellent reputation on Bali “practicing” law through his firm in a cameo manner.   For many foreigners, especially Australians, having this western legal talent on their side is more comforting than relying on a local Indonesian attorney.  Moreover his firm is effective and has been around for a long time. 

In your particular situation Arlette, which is a divorce with a Balinese, your selection of Peter's firm was a wise choice, but as this string is about Australians “owning property in Bali” let me assure you beyond doubt that even his legal expertise cannot get around Indonesian property laws to the degree that freehold ownership of property here in Bali by a foreigner would be accomplished, as that is simply impossible.  I'm sure Peter would say that as well.

I understand what you are saying my husband has given me permission to use the house and land as I please and that includes selling it. He has signed papers to agree to that and that he would sign all necessary papers in future

I also have a mortgage on the property which will be discharged after it is sold

Mortgages, in the true meaning of the word…a bank lending out the acquisition funds and they holding the Hak Milik (land deed) are very rare in Bali, and mortgage deeds are all but unheard of. 

I've been living here 24/7 for the past 15 years, also married to a Balinese, and with three sons from our union.  As you might expect, I've been through just about every property related issue one can imagine. 

In my case it's all rather simple…everything is legally in the name of my Balinese wife and our three sons.  That's the sole purpose of my life now anyway, so it all fits in very nicely.

For me, what I've found is that a union of marriage to a Balinese goes far beyond the union with the spouse.  Rather it engages a union with the Balinese spouse's family and the entire banjar kampung, where in my case I've held full membership and voting rights for many years…the first and only non Balinese on record in my village to ever gain that status.   

Every situation is obviously unique, so one can only do the best considering all those unique aspects. 

Peter Johnson has an excellent handle on the effects of village adat (village law) and how to work within this most important Balinese principle.  Within Balinese villages it often doesn't matter what's “on the books in Jakarta” rather, what is all important is how the village banjar and the kepala desa view certain issues.

I am purchasing an existing 20 yr  lease on a property in Seminyak.
I would like to know what tax costs are involved in this transaction and who is responsible for their payment.
I am receiving conflicting advice.
Hope you can help.
Sandy

Normaly you don t need to pay it it s the seller..but usually in bali it s 50/50.

Thanks Karim for your reply
Sandy

The payment of the tax, specifically who will be paying it, is generally a facet of any lease agreement and the negotiations leading up to the final lease agreement. 

Regardless of who has agreed to pay it, what is vital is to get a copy of the receipt from the tax office. 

You should at least engage the services of a notaris (even better, a lawyer) whenever taking on a lease here in Bali, and he (or she) should provide you with that document.

Thankyou for your reply
It has been agreed by the seller that he will pay the full transfer fee.
Can you tell me if this tax is paid before settlement so that I can obtain the receipt you mention..

I have engaged a notaris to handle the transaction, but I would prefer to understand the process as well.

Can you tell me if any other taxes are applicable on the transfer?
Sandy

Sandy, as you are taking over an existing 20 year lease in Seminyak the presumption is that you're most likely talking about a rather serious amount of money and that all, if not a sizable chunk of that money, is payable up front…at “the settlement.”

If I were the “seller” of this lease, I'd be inclined to demand that tax payment be made after the “settlement” as until the monetary transaction is completed there is no tax payable, and I'd likely want to use the appropriate sums from the payment of the lease to pay that tax. 

Personally I would not undertake such a large transaction without hiring an attorney.  Moreover I'd hire an attorney based in the Badung Regency.  A notaris can only go so far, and they cannot argue a case on your behalf in a court of law here should a dispute arise some time down the road.

The great American statesman, Ben Franklin, had a great term for this…“penny wise, pound foolish.” 

The tax issue is just one of several things you need to consider when taking over an existing lease.