Our Managing Partner, Eddy Leks was interviewed by Marcopolis on Real Estate Law in Indonesia, specifically on Property Laws in Indonesia : "Can Foreign Investors Own Land?". Marcopolis presents Indonesia Report focused on topics such as investments, doing business,...
Background Ministry of Public Works and Public Housing issued new regulations, namely Ministry of Public Works and Public Housing Regulation No. 01/PRT/M of 2015 on Cultural Heritage Buildings Preserved (“Permen 01/2015”). This regulation came into force since 24...
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
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
Indonesia’s high population growth rate has increased the housing needs of the people. Urgent needs of the available units of house often results on the sale and purchase of the house which is still in the planning process and it is giving rise to the sale and purchase through reservation. Therefore, as a result of it, the sale and purchase of house is conducted through a preliminary sale and purchase arrangement. The preliminary sale and purchase of house will be set out in the Conditional Sale and Purchase Agreement (“PPJB”). The PPJB shall be made in accordance with the guidelines which set out in the Minister of Housing Decree Number 09 Year 1995 on Guidance of Conditional Sale and Purchase of House (“Kepmenpera No.09/1995”) along with its example. Along with the enactment of the Kepmenpera No.09/1995, it is expected that the interests of the buyer and the seller will be secured.
The description of object of the PPJB are: (a) the size of the house building along with its architectural drawings, floor plans, and technical specifications of the building; (b) the area of the land, the land status, and all permits related to the construction of the house and its other rights, (c) the location of the land, (d) the house and land prices, and payment procedures agreed by the parties.
Seller’s Obligation
The obligations of the seller are to complete the construction within the agreed time period according to the PPJB. However, this obligation may be waived in the event that Force Majeure is occurred. Prior to the sales and/or conduct of the PPJB, the seller is required to have: (a) approval in principle of project plans issued by the local government and the location permit issued by the Regency/Municipality Land office. Especially for DKI-Jakarta, the seller shall obtain the license of land appointment and utilization (“SIPPT”), (b) letter of information issued by the Regency/Municipality Land Office which explains that the seller has obtained the land to develop the residential, and (c) Building Construction Permit.
In addition, the seller is also obliged to:
manage the registration of purchase of right of land and building;
represents that the land and the house building as the object (“Object”) of the PPJB is fully owned by the seller, and not engaged in any dispute and is not confiscated by the authority;
represents and release the buyer from any claim on both civil and criminal, which may arise in the future in relation to the Object;
take the responsibility for the existence of hidden defects that can only be known at a later stage, in accordance with the provisions of the Article 1504 and 1506 of Indonesian Civil Code;
bear the cost of the certificate registration process.
Buyer’s Obligations
The buyer is obliged to pay the total price of the Object, taxes, and other costs, the fees of the preparation of the notary deed, the expenses of the PPJB, the registration fees of the acquisition levy of land and building of the land on behalf of the buyer.
In the event there is a late delivery of the house building from the seller to the buyer at the agreed time as set out in the PPJB, the seller will be charged a penalty in the amount of 2%o (two per thousand) of the total price of the Object, for each day of the delay. The seller will also be considered to have authorized the buyer to manage the registration of the acquisition of the Object to the related authorities.
In contrast, the late payment of the installments and other costs by the buyer to the seller, the buyer will be charged a penalty in the amount of 2%o (two per thousand) of the total amount of the installments that is already due and payable for each day of the delay, which may result the unilateral cancellation of the PPJB by the seller.
Delivery of Object
The seller will deliver the building to the buyer together with the signing of the Minutes of Delivery of the Object (“BAST”) after the seller and the buyer have fulfilled all of their obligations. The seller shall notify the buyer in writing with regards to the intention of the delivery of the Object within 2 (two) weeks prior to the ceremony of the Object’s delivery. In the event that the buyer is not willing to sign a BAST within 2 (two) weeks, the buyer shall be deemed to receive the Object with all its consequences. If both parties have fulfilled their obligations before the time limit of delivery, the Object may be delivered from the seller to the buyer earlier.
Maintenance of Object
The seller is obliged to maintain the building within 100 (one hundred) day’s period after the BAST signing date. Repairs are carried out based on the project plan and the technical specifications as stipulated in the appendix of the PPJB. If the 100 (one hundred) days period has ended, the maintenance of the Object will be borne by the buyers. The seller shall be released from the responsibility to repair the Object if a Force Majeure is occurred, such as: earthquake, flood, riot, war, or the changes of the house building that was conducted by the buyer.
Assignment
Both seller and the buyer may assign their rights of the Object (“Right”) to the third party if the sale and purchase before the Land Deed Official (“PPAT”) has not been performed. The buyer may assign his Right to the third party, as long as the buyer agrees to pay the administration fee in the amount of 2,5% (two point five percent) of the total price of the transaction based on the seller’s written approval.
Termination
The PPJB shall not terminate by itself if either party has passed away. It may be terminated if the seller cannot deliver the Object on time and the Object is not in accordance with the floor plans and technical specification of building. As a result of it, the seller is obliged to return the money which has been received plus a penalty, interest, and other expenses.
The buyer may request for the cancellation of the PPJB if the buyer is unable to perform his obligation to pay the agreed price, to pay the installments to the bank as the lender, and the buyer has resigned for any reasons. On that condition, if the payment has not yet reached to 10% (ten percent) from the total agreed price, the money which has been paid will be the seller’s right. On a contrary, if the payment has already exceeded 10% (ten percent) from the total agreed price, the seller is entitled to deduct 10% (ten percent) of the total agreed price, and the remaining payment will be returned to the buyer.
Deed of Sale and Purchase
Deed of sale and purchase of the Object must be signed by the seller and the buyer in the presence of the PPAT if: (a) the house building has been completed and is ready for occupancy; (b) the buyer has paid the entire price together with the taxes and other costs and shall bring along the original receipt at the time of signing; (c) right to build application process has been fully processed and the certificate of Right to Build is already registered under the name of the the seller.
Dispute Settlement
The guidance of the PPJB of house is also addressed the settlement of disputes between the seller and the buyer. The parties shall settle the dispute that occurred in relation to the PPJB amicably. However, if there is no settlement, the parties may settle the dispute through the Indonesian National Arbitration Board (BANI). The costs that is incurred of the dispute shall be borne and paid by the parties in the same amount, namely 50% (fifty percent) and 50% (fifty percent).
Samuel Christian, SH
Background In December 1960, Indonesian Government declared the Law Number 5 of 1960 on the Principle Provisions of Agrarian (the “Agrarian Law”) as the principles legal provisions of land in Indonesia. The Agrarian Law is the principle and basic provisions of the...