Bali Real Estates Purchases

Freehold

• Only Indonesian citizens can own freehold land with Hak Milik Certificate (Deed)
• Important to do detailed due diligence report with professional (1% to 3 %)
• Buyers tax 5 %, Sellers Tax 5 % Notaries & Legal 1% to 3 %
• There have been laws passed allowing foreigners to own certain apartments with many restrictions. In the near future many believe that foreigners will be able to purchase freehold land.

Freehold Purchased With PMA

• 100 % foreign owned PMA Company can own title but not Hak Milik only Hak Guna Bangunan
• Can convert back to Hak Milik and sell as freehold in future
• $7,000 to $ 10,000 to start PMA + Legal Fees. Therefore only utilized with large purchases

Freehold Purchased With Nominee

• Nominee can be any Indonesian. Prefer single male
• Pay Small Fee. Usually ( $500.00 to $1,000)
• Foreigner holds Hak Milik Certificate (Deed)
• Mortgage on Land in foreigners name listed on certificate to prevent reissue of deed
• Irrevocable Power of attorney allowing foreigners to sell without nominee´s approval
• Buyers tax 5 % Sellers Tax 5 % Notaries & Legal 1% to 3 %

Leasehold

• Foreigner can lease land for up to 30 years consecutively up to 90 years
• Can have option to renew for additional thirty years
• Should lock in renewal term and price with Notarized agreement
• Can sub lease or re-sell lease
• Not grey area, legal and binding
• Notaries´ fees and taxes usually include in purchase price

Buying The Property

Land parcels for sale in Bali fall into one of two categories:

• Pipil : Land that has been passed down through a local Balinese family but has never been formally registered with the Land Registry Office
• Certificate : Land which has already been registered with the Land Registry Office. Only land which has a certificate can be sold

The conversion of ‘Pipil’ land into certified status is handled by qualified Notaris and normally takes 4-6 months. Once your chosen land has a certificate, a transaction can be completed within 1 day, however, with legal due diligence this process normally takes 1-2 weeks
All land purchases in Indonesia must by witnessed in the presence of an officially appointed ‘Notaris’ or lawyer. The standard contracts are written in Bahasa Indonesia language, however, Bali Real Estates can arrange for translations upon request.

Steps to take for Nominee Ownership

If an Indonesian acts as a nominee for a foreign investor, there are a number of contracts and other documents which must be prepared by and signed in front of a qualified notary.
These include but are not limited to,

1. A Purchase Contract for the property, transferring the rights from the previous owner to the nominee
2. A Loan Agreement for the purchase between the investor and the nominee
3. An irrevocable and transferable Power of Attorney to sell, transfer or otherwise dispose of the property and to represent the nominee in any dispute regarding the property, given from the nominee to the investor
4. The nominee will also be asked to hand over all original land titles to the foreigner. In essence, the Indonesian is owner in name only
5. To the best of our knowledge, those who have utilized this type of purchase, when set up with a professional attorney and notaries have had no problems

The fees for setting up a nominee system may vary from 1% to 2 % of the value of the property. Leasing of land does not require a nominee and is very easy. Land is normally leased for 20 to 25 years with an option to extend. The old saying applies to foreign ownership as to most business ventures “if it was easy, everyone would be doing it.

Please find following documents should signed with your nominee prior to the purchase :

1. Mortgage agreement – cost 1% mortgage value for notary ; 1% of total Mortgage value for BPN Land affair office
2. Power of Attorney – Granting exclusive rights to Mortgager to release the mortgage
3. Financial Loan Agreement
4. Power of Attorney for all rights to the Land
5. Statement Letter – outlining proof of Payment for the property
6. Statement of Indemnity ( for nominee )
7. Power of Attorney for IMB – Authority for building permit
8. Statement letter – No second mortgage
9. Lease Agreement – granting the purchaser for 25 years lease plus an automatic extension of 25 years ( added security ) – Cost 1% of lease value

The fact that it takes some time and expertise has curtailed large speculation of Balinese property keeping prices at a small fraction of similar properties on other major tourist islands around the world.

As more, and more foreigners discover that they can enjoy pleasure, and substantial profit by purchasing Bali real estate, prices will probably escalate more rapidly in the future.

Disclaimer:
We do not guarantee the above information or the future value of any Indonesian real estate. Foreigners should consult a Legal attorney or qualified Business consultant to discuss the best method. We also recommend that you complete detailed due-diligence on any Indonesian property before purchase