Reviewing implications of indonesia’s new condominium law on the property industry
Reviewing Implications of Indonesia’s New Condominium Law on the Property Industry
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Condominium
Legal Sanction that may arise due to the use of Building prior to Obtain Certificate of Feasible Function (“SLF”)
Under Article 1 number 16 of Local Regulation of DKI Jakarta Number 7 of 2010 on Building (“LR No. 7/2010”), Certificate of Feasible Function (“SLF”) is a certificate which is granted by Local Government against the building that has been completed and has met the requirement of feasibility function based on examination’s result of building’s feasibility function as a requirement to be utilized.
Under Article 237 paragraph (1) of LR No. 7/2010, any person prior to utilization of building shall have SLF. SLF is granted to building which has been completed, met the requirement of reliability and feasibility function of building, and its use function has to comply with Building Construction License (“IMB”).
Legal sanction that may arise if using the building prior to obtain SLF is regulated in Article 283 paragraph (2) of LR No. 7/2010, as follows:
“Every building owners, building users, service providers of building construction who violate the provisions on Article 13 paragraph (3), Article 15 paragraph (1), Article 124 paragraph (3), Article 183 paragraph (1), Article 186 paragraph (4), Article 188 paragraph (1), Article 191, Article 192, Article 195, Article 231 paragraph (1), Article 237 paragraph (1), and Article 245 paragraph (1) are punished with a maximum confinement of 6 (six) months or a maximum fine of Rp 50,000,000 (fifty million Rupiah).”
In the criminal provision, there is an article which is related to SLF, namely Article 237 paragraph (1). Therefore, it can be concluded that any building owners, building users, service providers of building construction who do not have SLF when utilizing the building, shall be punished with a maximum confinement of 6 (six) months or a maximum fine of Rp 50,000,000 (fifty million Rupiah).
Alsha Alexandra Kartika
Criminal Act Related to Condominium
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.
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.
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
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
Administrative and Technical Requirements of the Construction of Strata Title
Background In densely populated urban areas, where available land is very limited, it is necessary to develop residential in the form of strata title to provide a complete, balanced, and harmony with its surroundings. Strata title is a storey building built on an...
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
Condominium on the Land with Right to Build over the Land with Right of Management
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”).