Nowadays, the the sale and purchase of unit(s) of condominium (the “Unit”) is growing rapidly, particularly the sale and purchase of the condominium which have not been completed yet, even when the condominium is still in the planning process. The performance of such sale and purchase of condominium is carried out by ordering in advance of the Unit to be purchased, then it will be set out in the Conditional Sale and Purchase Agreement (the “PPJB”). Therefore, in order to secure the interest of the seller (the “Developer”) and the prospective buyer (the “Prospective Buyer”), it is necessary to arrange the specific regulation of PPJB, which is now set under the Decree of State Minister for Public Housing Affairs Number 11/KPTS/1994 on Guidance of Preliminary Binding of Sale and Purchase of Condominium (the “Kepmenpera No.11/1994”). Therefore, with the enactment of Kepmenpera No.11/1994, every PPJB shall be made in accordance with the Kepmenpera No.11/1994.

Letter of Reservation (Surat Pesanan)

Each party who wants to buy the Unit which have not been completed yet (still in the construction process) shall make reservation of such Unit that to be purchased. The reservation is carried out by signing the letter of reservation which has been prepared by the Developer. The letter of reservation at least shall consist of:

  1. name and/or number of the building and the ordered Unit;
  2. floor number and the type of the Unit;
  3. the size of the Unit;
  4. the selling price of the Unit;
  5. the advance payment provision;
  6. building specifications;
  7. the date of the completion of the condominium construction;
  8. provision of the consent to accept the terms and conditions and sign the documents prepared by the Developer;
  9. the letter of reservation shall also be enclosed with the drawing of reserved Unit location, along with the provision of the payment.

In a period no later than 30 (thirty) calendar days after the signing date of the letter of reservation, the Prospective Buyer and the Developer shall sign the PPJB. The parties shall comply with their obligations as set out in the PPJB.

In the event that the Prospective Buyer fails to sign the PPJB in a period not later than 30 (thirty) calendar days after the signing date of the letter of reservation, therefore the Developer is entitled to not return the booking payment to the Prospective Buyer, unless such failure is carried out by the Developer.

The Prospective Buyer may demonstrate the refusal letter from the bank regarding the application of the Housing Credit (Kredit Perumahan Rakyat) that is applied by the Prospective Buyer which is not approved, or otherwise that mutually agreed between the Developer and the Prospective Buyer that may allow the booking payment will be refunded 100% (one hundred percent) to the Prospective Buyer.

Conditional Sale and Purchase Agreement

A PPJB, among other things includes the following:

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(i)     Object to be sold

The condominium as the object to be sold shall have all the necessary licenses and permits, such as Location Permit (Izin Lokasi), evidence of land ownership and the receipt of land redemption, and Building Construction Permit (Izin Mendirikan Bangunan).

(ii)   Management and maintenance of the common facility, common equipment, and common land which is the responsibility of all residents

The Prospective Buyer shall be willing to be a member of the Tenant Association (the “PPRS”). The establishment of PPRS is regulated particularly under Article 19 of Law Number 16 of 1985 on Condominium and Article 54 of Government Regulation Number 4 of 1988 on Condominium.

(iii) The Developer’s obligations

The Developer shall make a report to the local Regent/Mayor regarding the initial offering of the condominium, with copies to the State Minister of Public Housing Affairs. Such report shall be enclosed with, among others (i) a copy of approval letter of Principle License (Izin Prinsip), (ii) a copy of Location Permit, (iii) evidence of procurement and redemption of land, (iv) a copy of Building Construction Permit, (v) the drawing of division (pertelaan) which has been legalized by the local Regional Government. In the event that the Developer has not yet obtained the response from the related state agency within 30 (thirty) calendar days after the date of the report receipt, therefore, the initial offering could be performed.

The Developer is also obligated to:

  • provide all documents in relation to the housing construction, such as (i) certificates of right of land, (ii) site plan, (iii) the drawing plan of architecture that comprises of floor plans and its cuts, including the divisions that show clearly the vertical and horizontal boundaries of the condominium units, (iv) the drawing of the structural plan and its calculation, (v) plan drawing of the common facility, common equipments, and common land, (vi) the drawing of the network and installation plan and its equipments;
  • complete the construction in accordance with the standards which have been agreed;
  • repair the damage that occurs within a period 100 (one hundred) days after the signing date of the Unit delivery and acceptance minutes, provided that the Developer’s responsibility is limited by the design and specification of the condominium and the damages that occurred was not caused by the buyer’s fault;
  • be responsible for the existence of hidden defects that can only be known at a later date;
  • become the temporary manager of the condominium before the PPRS is established and give assistance in appointing the manager of the PPRS;
  • insure the construction work during the construction;
  • in the event that the force majeure is occurred during the construction, the Developer and the Prospective Buyer will consider the best possible settlement with the the main consideration of the condominium completion;
  • prepare the sale and purchase deed of the Unit (“AJB”), and then jointly with the Prospective Buyer, sign the said AJB before the Notary/Land Deed Official (PPAT) on the specified date;
  • the Developer and/or the Notary/PPAT will take care of the Unit ownership certificate on behalf of the Prospective Buyer;
  • deliver the Unit including the public facilities and social facilities perfectly on the pre-determined date. In the event that the Developer in unable to complete the construction at the pre-determined date, the Developer is given the additional period of 120 (one hundred and twenty) calendar days to complete the construction, commencing from pre-determined of the Unit delivery date. In the event that the Developer is still unable to complete the construction, the PPJB will become null and void. Such nullification does not need to be proved or decided by court or arbitration body. The Developer shall refund the payment received from the buyer plus penalties and interest per month in accordance with the prevailing interest rates.
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(iv) The Prospective Buyer’s obligations

The Prospective Buyer shall perform all its obligations set out in the letter of reservation or PPJB, and subject to the terms and conditions of the PPRS’ article of association and other related documents. The Buyer is also obligated to bear all the costs, such as (i) the cost of payment of the required certificates and deeds, (ii) the cost of the PPAT service in the preparation of AJB, (iii) the acquisition levy of land and building of the Unit, (iv) the cost of the registration of the condominium unit(s) sale and purchase (the cost of transferring ownership rights over the name) in the local National Land Agency. Each Prospective Buyer, after become a buyer of the Unit, shall also pay the management fee and the utility charge of the condominium.

After the AJB is signed, but prior to the issuance of the Unit ownership certificate by the local National Land Agency, (i) in the event that such Unit is assigned to the third party, there will be an administration fee set out by the Developer in the amount of no more than 1 % (one percent) of such Unit selling price (ii) in the event that such Unit is assigned to the family members due to any reason whatsoever including due to the inheritance by law, there will be an administration fee for Notary/PPAT in the amount of its terms. Prior to the full payment of the Unit selling price, the Prospective Buyer shall not transfer or assign or encumber the Unit as the collateral for loans without the prior written consent of the Developer.

The Dispute Settlement

The settlement of the dispute that is occurred in relation to the condominium PPJB is carried out through arbitration; comply with the rules of the Indonesian National Arbitration Board (BANI), which the cost of such settlement shall be borne jointly by the parties.