Building

Criminal Act Related to Condominium

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Criminal Act Related to Condominium

Criminal provisions related to condominium is regulated in Article 21 until Article 23 of the Law Number 16 of 1985 (“Law 16/1985”) on Condominium.

Article 21 paragraph (1) of Law 16/1985 regulates criminal sanction, that is stated, “Any person who is intentionally against the provisions of Article 6 of Law 16/1985, Article 17 paragraph (2) of Law 16/1985 and Article 18 paragraph (1) of Law 16/1985 shall be punished by a maximum imprisonment of 10 (ten) years or a maximum fine of Rp 100,000,000, – (one hundred million rupiah)”.

Further, in Article 21 paragraph (3) of Law 16/1985 regulates criminal sanction that is stated, “Any person by whose negligence causes infringement of the provisions as referred in Article 6 of Law 16/1985, Article 17 paragraph (2) of Law 16/1985 and Article 18 paragraph (1) of Law 16/1985, shall be punished by a maximum jail of 1 (one) year or a maximum fine Rp. 1.000.000,- (one million rupiah)”.

The provision of criminal sanction as referred in Article 21 paragraph (1) of Law 16/1985 is categorized as a crime. Whereas provision of sanction in Article 21 paragraphs (3) of Law 16/1985 is unlawful act.

In Article 22 of Law 16/1985 it is stipulated that, beside that imposed negligence criminal act as defined above, it must also comply with the provisions as referred in Article 6 of Law 16/1985, Article 17 paragraph (2) of Law 16/1985, Article 18 paragraph (1) of Law 16/1958. Under Article 23 of Law 16/1985, it is stated that, Government Regulation governing the implementation of law 16/1985 may contain punishment of jail of criminal act by maximum 1 (one) year and/or fine of Rp. 1.000.000.- (one million rupiah).

Criminal act in relation to Condominium that may be categorized as infringement and crime is any actions that are against provision in Article 6 of Law 16/1985, Article 17 of paragraph (2) of Law 16/1985 and Article 18 paragraph (1) of Law 16/1985 as follows:

1. Requirement of Technical and Administrative
The provision in Article 6 of Law 16/1985 stipulates that, the construction of Condominium shall meet the technical and administrative requirements. Furthermore, the provision of technical and administrative requirement are governed by Government Regulation. Technical requirement is defined as regulation concerning building structure, security, safety, health, convenience, and others related with the architecture, including the completeness of infrastructure and environmental facilities. While the administrative requirements are the business license of the company’s housing construction, permits of location and/or allocation, as well as building construction permit (IMB).

2. Implementation of Execution Mortgage and Fiduciary After Announcement and Notification
This provision is regulated in Article 17 paragraph (2) of Law 16/1985 which stipulates that, for the execution of mortgages and fiduciary in order to repay a debt, may only be performed after 1 (one) month after it is notified in writing to the parties concerned and published in two newspapers circulating in that area, and/or local print media, without any parties that claim the objections. Announcement and notification provisions of the obligation before the execution of mortgages and fiduciary are intended in this Law to protect the other parties’ interests.

3.Feasible Occupancy Permit
The provisions in Article 18 paragraph (1) Law 16/1985 regulates that, condominium units that have been built can be sold for occupancy after obtaining feasible occupancy permit from Government of the relevant region. Feasible occupancy permit is also
required for non-residential condominium. The provisions in this Article are intended to secure the safety, security and order of the tenants.

Sofie Widyana P.

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The Function of Proportional Comparison Value for the Owner of Condominium

Article 1 Paragraph 7 of Government Regulation of Republic Indonesia on Condominium (“GR 4/1988”) explains the definition of Proportional Comparison Value, is number which shows a comparison between condominium units toward the right upon the common part, common properties, and common lands.

Proportional Comparison Value may be calculated by using 2 (two) ways, which are:

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1. Based on the related amount or value of condominium units towards the total amount of building area.

2. The comprehensive value of condominium at the first time when the developer calculates the total construction costs to determine its selling price

The elucidation in the Article above states that

Proportional Comparison Value from condominium units as referred is calculated when the time developer calculates the total development cost. The price of each unit condominium towards the price of common part, common property, and common lands at the time of calculation of total development cost is used as the basis of Proportional Comparison Value. The Proportional Comparison Value is used as a basis for conducting the separation and the issuance of “Certificate of Condominium Units”, and also as a basis for determining rights and obligations of ownership and management of common part, common property, and common land.

Sofie Widyana P.

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Covenants Stipulated in Deed of Granting of Mortgage

Introduction

As we already have known, according to Law Number 4 of 1996 on Mortgage of Land along with Properties Related to the Land (“Law 4/96”), the granting of mortgage is conducted by making the Deed of Granting of Mortgage (“Deed”) by the Land Conveyancing Officer (“Pejabat Pembuat Akta Tanah/PPAT”) in accordance with the prevailing laws and regulations. It is also regulated in Law 4/96, particularly in Article 11 paragraph (2) that the Deed may stipulate some covenants, considering the effort to keep the good value of the mortgage object, especially at the time of the execution. The covenants are facultative, means that it has no effect to the validity of the Deed. The parties concerned are free to determine whether or not they will stipulate the covenants in the Deed. However, in the event that the parties concerned are stipulating the covenant in the Deed and registering the Deed at the land office, such covenants shall be binding to the third party.

Covenants Stipulated in the Deed

According to Article 11 paragraph (2) of Law 4/96, the covenants that may be stipulated in the Deed are as follows: [More…]

covenant which is limiting the competency of the mortgage provider to rent out the mortgage object and/or determine or change the lease term and/or receive the rent money in advance, unless with the prior written approval of the mortgage holder;
covenant which is limiting the authority of the mortgage provider to change the form or structure of the mortgage object, unless with the prior written approval of the mortgage holder;
covenant which is giving authority to the mortgage holder to manage the mortgage object according to the stipulation of chairman of the district court which jurisdiction covers the location of the mortgage object, in the event that debtor is in default;
covenant which is giving authority to the mortgage holder to save the mortgage object, if it is necessary for the enforcement of the execution or to prevent the abolishment or cancellation of the rights as the mortgage object, due to the non-fulfillment or violation of the provisions of law;
covenant that the first mortgage holder has the right to sell, on its own authority (power), the mortgage object if the debtor is in default;
covenant given by the first mortgage holder that the mortgage object will not be cleared from the mortgage;
covenant that the mortgage provider will not relinquish its right of the mortgage object without prior written approval of the mortgage holder;
covenant that the mortgage holders will acquire all or the part of the compensation received by the mortgage provider as the settlement of the loan concerned in the event that the mortgage object is released by the mortgage provider or revoked for public interests;
covenant that the mortgage holder will acquire all or the part of the insurance money received by the mortgage provider for the settlement of the loan concerned, if the mortgage object is insured;
covenant that the mortgage provider will vacate the mortgage object at the time of execution;
covenant that the certificate of land right(s) as the mortgage object will be held by mortgage holder.

Furthermore, Article 12 of Law 4/96 clearly expresses that if there is covenant which is giving the authority to the mortgage holder to own the mortgage object if the debtor is in default, such covenant is null and void. Such provision is stipulated in order to protect the interests of the debtors and other mortgage providers, especially if the value of the mortgage object exceeds the amount of the debt that is being collateralized.

Ivan Setiady

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Debt Secured by Mortgage

Background
Referring to Law Number 4 of 1996 on Mortgage of Land along with Properties Related to the Land (“Law 4/96”), particularly Article 10 paragraph (1), it is stated that the granting of mortgage is preceded by a covenant to provide mortgage as the security for settlement of certain debts, which is set out in and as an integral part of the debt (loan) agreement concerned or other agreement which causees such debt. Mortgage is accessoir, which means that the granting of a mortgage should be a follow-up of the principal agreements i.e. agreement that gives rise a legal relation of such debt in which its settlement is secured. Therefore, it can be said that the existence of a mortgage is always agreed upon and follow (accessoir) the principal agreement.

Settlement of Certain Debt

According to Article 3 paragraph (1) of Law 4/96, the debts, in which its settlement can be secured are as follows: [More…]

debt which is already existed at the time of the granting of the Mortgage;
debt which has not yet been existed but has been agreed.

Furthermore, it is also regulated that the amount of the debt which its settlement is secured with the mortgage can be determined at the time agreed (agreed in the related agreement) or determined at the time of the execution petition is filed, under the debt (loan) agreement or other agreement that give rise to the related debt relation.

Article 3 paragraph (2) of Law 4/96 states that the mortgage can be encumbered upon a debt due to a legal relation or upon one or more debts due to several legal relations. Based on that, Rachmadi Usman, S, H., M.H. interprets that the granting of a mortgage is possible upon:

several creditors who combine in providing loan to a debtor under a legal relation (loan agreement);
several creditors who provide loan to a debtor under several and different legal relations (loan agreement) for each creditors.

Ivan Setiady

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Establishment of the Tenant Association of Condominium

Background

Condominium is a building built in an environment which is divided into parts that are functionally structured horizontally and vertically and consisting of units that can be owned individually and can be used separately, particularly for residence, which is completed with common equipment, common facility, and common land. In the condominium, there are private property managed by the owner himself and the common rights which should be used and managed together because it involves the common interest. Utilization and management of condominium and its environment should be arranged and conducted by the tenant association. There are some regulations on the tenant association, such as Law Number 16 of 1985 on Condominium (“Law 16/85”), Government Regulation Number 4 of 1988 on Condominium (“GR 4/88”), and Decree of State Minister of Public Housing Affairs Number 06/KPTS/BKP4N/1995 on Guidance on Making Deed of Establishment and Article of Association of Tenant Association of Condominium (“Decree”).

Tenant Association

According to Article 1 of Law 16/85, tenant association is an association which consists of tenants as its member. Article 19 of Law 16/85 states that tenants of condominium shall establish a tenant association, having the main task to regulate manage, and also to guarantee order, principle of mutual aid, and harmony based on the Indonesian personality, in order to manage the common equipment, common facility, and common land.
Tenant association, by the Law 16/85, is given the status as a legal entity with the deed of establishment and articles of association, therefore, the tenant association may act in and out on behalf of the owner, and with its authority, the tenant association shall realize the comfortability of the environment of the condominium in order. Establishment of tenant association should be executed with a deed that is legalized by Regent, Mayor Head of Region II, and especially in Jakarta, shall be legalized by the Governor Head of Special Capital City Region of Jakarta

Establishment Meeting

Refer to the Decree, it is stated that in the establishment of tenant association, firstly, the owner and/or tenant of condominium shall convene the meeting of establishment of tenant association (“Meeting”), and the result of such Meeting shall be stated in the minutes of Meeting. In the Meeting, it shall appoint some of the member/participant of the Meeting, and such member/participant shall be given the power of attorney to appear before the Notary to make all of the statements as the result of the Meeting. Furthermore, in the Meeting, without prejudice to the permission of the authorities, shall decide and arrange the article of association of the tenant association in accordance with the Decree.

On the tenant association, its membership was chosen based on the family principle by and for the member of tenant association through the general meeting of tenant association which held especially for that necessity, provided that the board of tenant association at least shall consist of a chairman, a secretary, a treasurer, and a management supervisor.

The person who can be the member of the tenant association is a legal subject who has, or use, or rent, or lease or utilize unit of condominium concerned, having status as a tenant. Establishment of tenant association is very important, because it has a main task and authority to manage and maintain the environment of the condominium, and arrange the regulation on tenancy rules. Membership of tenant association is based on the reality of occupancy, means that the person who can be a member of the tenant association are those who actually inhabit or occupy the unit of the condominium either on the basis of ownership or other legal relation. If the owner has not yet occupied, use or utilize the unit of condominium, thus, the developer becomes a member of the tenant association. If the developer of condominium is has not yet sold the entire of the units of the condominium, the developer shall act as a member of the tenant association.

Isrilitha Pratami Puteri

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Construction Work Contract

Background

Construction service is one of the activities in the field of economy, social and culture which has important role in the achievement of various objectives to support the realization of the national development goals. Therefore, the implementation of construction services needs to be regulated to carry out the orderly of the construction work. Construction services are stipulated under the Law Number 18 of 1999 on Construction Services (“Law No. 18/1999”) and Government Regulation Number 29 of 2000 on Implementation of Construction Services (“PP No. 29/2000”) jo. Government Regulation Number 59 of 2010 on Amendment of PP No. 29/2000 (“PP No. 59/2010”).

In a construction work, there are 2 (two) parties that are involved , namely the service user and the service provider. The service user and service provider are bound in a working relation of construction services, provided that such working relation is set out in a construction work contract.

Construction Work Contract

Based on Article 1 of Law 18/1999, construction work contract is the overall document regulating legal relationship between the service user and the service provider to implement the construction work. Basically, the construction work contract is made separately according to the stages in the construction work, which consists of the construction work contract for the construction work planning, construction work performance, and construction work supervision.

Referring to Article 23 paragraph (6) of PP No. 29/200, the construction work contract is subject to the applicable law in Indonesia. The construction work contract is made in Indonesian language. In the event that the construction work contract with foreign parties, it could be made in Indonesia language and English language (dual language).

According to PP No. 29/2000, construction work contract is divided by:
forms of compensation, which consists of a lump sum, unit price, additional fee to the services, the combination of lump sum and unit price, or alliances;
period of the construction work, which consists of a single year, or multi-year;
terms of payment for the works, in accordance with the progress of the work, or at regular intervals.

As a minimum, a construction work contract shall include description on:

the parties, clearly stipulating their identities;
work description, clearly stipulating in detail of the work’s scope, work’s value, and performance period;
coverage and/or maintenance period, stipulating the provision of the period of coverage and/or maintenance which is the responsibility of the service provider;
experts, stipulating the provision of number, qualification, and classification of experts to perform the construction work;
rights and obligations, which is stipulating the provision of the rights of the service user to receive the results of the construction work and its obligation to comply with the agreed provisions, and also the rights of the service provider to get information and compensation, and its obligations to perform the construction work;
terms of payment, stipulating the provision of service user’s obligation in carrying out the payments for the results of construction work;
default, stipulating the provisions of responsibilities in the event either party fails to carry out its obligations as agreed upon;
dispute settlement, stipulating the provisions of the procedure of the settlement of dispute due to disagreements;
termination of construction work contract, stipulating the provisions of the termination of construction work contract, caused by the inability of either party to perform its obligations;
force majeure, stipulating the provisions of the circumstances arising beyond the intent or capability of the parties, which is inflicting losses to either party;
construction failure, stipulating the provisions of the obligations of the service provider and/or service user on the failure of a construction;
workers protection, stipulating the provisions of the parties’ obligations in the safety, occupational well-being, and social security;
environmental aspect, stipulating the provisions of the parties’ obligations to comply with the applicable environmental law.

Construction work contract also shall contain provisions on intellectual property right, which includes:

ownership of the planning result, based on the agreement, and
fulfillment of the obligations of the copyright on the planning result that has been owned by its holders and patent rights that has been owned by its holders, in accordance with the laws on copyright and the laws on patent.

Construction work contract may also contain the parties’ agreement on incentives, provided that the incentives may be in monetary form or other forms. Incentive is the award that is given to the service provider for his achievements, among others, the ability to finish the works earlier compared to the agreed period, while maintaining the quality as required as set out in the construction work contract.

Isrilitha Pratami Puteri

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Acquisition Levy of Right of Land and Building

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Background
As we all know, earth, water, and natural resources contained therein controlled by the State and used as much as possible for the prosperity of the people (society). Land and buildings that build on it, in addition to fulfill the basic need, is also constitutes as profitable investment equipment. In other words, land and building have economic value. Therefore, it is reasonable that for those who obtained the right of land and the buildings to give some of the economic value that obtained, to the State through tax payments, especially Acquisition Levy of Right of Land and Building (“BPHTB”). BPHTB is now regulated in Law Number 21 of 1997 on Acquisition Levy of Right of Land and Building (“Law No.21/1997”), as amended by Law Number 20 of 2000 on Amendment of Law No.21/1997 (“Law No.20/2000”).

BPHTB
According to Law No.20/2000, it is stated that BPHTB taxes are imposed on the acquisition of rights of land and/or building. The subject of BPHTB is the individual or entity who obtained rights of land and/or building. The object of BPHTB is associated with the obtainment of right of land and/or building. The obtainment of right of land and/or building consists of:
a. transfer of right due to: sale and purchase, exchange, grant, grant bequest, inheritance, income in the company or other legal entity, resulted in the separation of rights of passage, the appointment of buyers in the auction, the implementation of judgments that have permanent legal force, mergers, consolidation business, business expansion and gifts.
b. conferral of new right due to the continuation of releasing of right, and other than releasing of right.
The rights of land that are subject to BPHTB are Right of Ownership, Right to Cultivate, Right to Build, Right of Use, Right of Ownership on Strata Title, and Right to Manage.
The taxable objects which are exempted from BPHTB shall be the taxable objects that are obtained by:
a. diplomatic representative, consulate based on reciprocal principle;
b. state for performing governmental duties and or development activity for public interests;
c. international organization or representatives of international organization as stipulated by the Minister Decree provided that they neither run business nor do other activities other than their functions and duties;
d. individual or entity due to right conversion or due to other legal acts without any change of name;
e. individual or entity due to endowments;
f. individual or entity for religious service usage.

Acquisition Value
According to Article 5 of Law No.21/1997, the tax rate of BPHTB is in the amount of 5% (five percent) of Acquisition Value of Taxable Object (“NPOPKP”). NPOPKP is the acquisition value of tax object (“NPOP”) reduced with the Acquisition Value of Non-Taxable Object (“NPOPTKP”).
The base of BPHTB imposement is the NPOP. BPHTB is applied for the transaction that exceeds the NPOPTKP, in which is determined regionally, with the maximum amount of Rp 60.000.000,- (sixty million Rupiah), with the exception of the acquisition of rights due to inheritance, gift, bequest which received by person/individual in the direct lineage one degree up or down with the grantor, including husband or wife, in which that the NPOPTKP is regionally determined with the maximum amount of Rp 300.000.000,- (three hundred million Rupiah).
The amount payable of BPHTB is calculated by multiplying the tax rate of BPHTB with NPOPKP.

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The Legal Aspect and The Rules of The Right to Build

Background

Nowadays, there are various kind of companies established in Indonesia. In term of construction, these companies require a building located on a land. Therefore, according to Law Number 5 of 1960 on the Principle Provisions of Agrarian, there are several rights over land. One of these rights over land is the right to build which can be defined as the right to establish and own a building on a land. The Government Regulation Number 40 of 1996 develops and improves this right to build. The right to build can be given or imposed on state land, land submitted to the right of management, and land submitted to the right of ownership. The right to build can also be used as collateral for loans pledged with mortgage rights.

Allocation of Right to Build

According to the Article 19 of the Government Regulation Number 40 of 1996 describes that right to build is given to Indonesian citizen and legal entities established under Indonesian law and domiciled in Indonesia. The right to build isn’t given to foreigners and foreign entities, so according to article 39 of the Government Regulation Number 40 of 1996 for foreigners and foreign entities, they only have the right to use. The right to build can be granted for a period of 30 years and can be extended for another 20 years. The right to build is given by a decision of the Minister or by an officer appointed upon the recommendation of the management right holders, and have been registered in the book of land in the land office.

Obligations of Holders of Right to Build

The holder of the right to build has to:

to pay money of which amount and terms of payment are specified in the decision , use the land in accordance with its allocation and requirements as stipulated in the decisions and its agreements;
preserve both land and existing building and preserving the environment;
surrender the land back to the State, the holder of Right to Manage or holder of Right of Ownership after the Right to Build is expired;
deliver the certificate of Right to Build which has expired to the Head of the Land Office.

Assignment of the Right to Build

In article 34 Government Regulation Number 40 of 1996, it is mentioned that the Right to Build can be transferred to another party, through a sale and purchase, exchange, capital investment, grants, and inheritance.

Expiration of the Right to Build.

The Right to Build expires if its term ends, is terminated before the term has expired if any requirement is not fulfilled, released voluntarily by the holders of their rights before the the term has expired, is revoked for public purposes, if the land is abandoned or destroyed.

Isrilitha Pratami Puteri

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Condominium on the Land with Right to Build over the Land with Right of Management

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Background

Article 7 paragraph (1) and (2) of Law Number 16 of 1985 on Condominium, the developer (the “Developer”) may build a condominium over the land with Right of Management (Hak Pengelolaan) (“HPL”). HPL is a right to control, given by the state which the implementation is delegated to its holder. Rights of land that may be granted over the HPL land are Right to Build (Hak Guna Bangunan) (“HGB”) and Right of Use (Hak Pakai) (“HP”). The Developer is obligated to complete the HGB or HP status of the land prior to the initial offer of any property over the land, in accordance with the prevailing laws and regulation. Therefore, the Developer must be aware of the procedure of the obtaining of such rights and other requirements related to HGB and HP over HPL land, which is set out in the Government Regulation Number 40 of 1996 (“GR 40/1996”) and State Minister of Agrarian/Chief of National Land Agency Regulation Number 9 of 1999 on Procedure of the Granting of Rights of Land and Revocation of Right of State Land and Right of Management (“Regulation 9/1999”).

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