Strata Title
Construction Work Contract

Construction Work Contract

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

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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Parties That Can Be Involved In Legal Conflicts in Condominium

Parties That Can Be Involved In Legal Conflicts in Condominium

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A life in condominium is different from life in ordinary house. Tenants not only have next door neighbours but also have upstairs and downstair neighbours. In condominium there is also a governing body that regulates the management of the condominium environment, maintenance and the construction of environmental infrastructure and social facilities for the purpose of living together with all tenants in condominium.

However, legal conflicts often arise in living in a condominium. The parties involved in are as follows:

a. Developer;
Developer acts as condominium manager until a Tenant Association is established. Article 65 of Government Regulation No. 4 of 1988 on Condominium regulates the period of condominium management by the developer, at least three (3) months and a maximum of one (1) year since the establishment of Tenant Association.

Problems that often arise from the interests of developer are:
1) Developer decides on the charge of condominium management fees. Potential conflicts that arise are objections to the number of the fee that will be charged towards the tenants, who may feel that it is too high.
2) Developer basically has the principle of getting profit in constructing condominium, and it can be applied by determining service charge or management fees one sidedly.

b. Tenants Association;
Tenants Association is a representative of tenants, it takes care the interests of condominium tenants. Potential conflict that might arise is the decisions made by the Tenants Association which are not necessarily in the best interests of the tenants. This is happened often because there are strongholds that support or oppose the management of a Tenants Association. This has happened in some places.

c. Owner and Tenant;
Owners and tenant as the parties who are using a strata title unit and its environment, have an obligation to comply with disciplinary or house rules in accordance with the Article of Association and Bylaws, to pay management fees and sinking fund, to pay fire insurance premium, and to maintain the strata title unit and its surroundings. Potential conflict that may arise is if there are violations againts the rules, committed by the owner and/or tenants, and also disobedience of the owner and/or tenants in paying the management fees.

Conflicts that are possible to arise as described above are the result of the absence of detailed regulations as a legal protection for regulating the management and condominium’s life in Indonesia. Although there are Law No. 16 of 1985 on Condominium (the “Law of Condominium”) and Government Regulation No. 4 of 1988 on Condominium, but these rules cannot comprehensively accommodate the problems that can arise in living in condominium.

Ways that can be done to accommodate the problems above are as follows:
a. Toset a proper regulation and the provisions in the Article of Association and Bylaws which govern the things that might potentially inflicting legal conflicts;
b. Socialization from the housing agency or Regional Government about life in a condominium;
c. Guidance and instruction on how to manage condominium properly and effectively.

Ardhityo Rompas

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Rights and Obligation of Owner and Tenant in a Condominium or Strata Title Unit

Rights and Obligation of Owner and Tenant in a Condominium or Strata Title Unit

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Condominium is a multistory building for residential purpose, which every unit of it can be owned separately. As a residential building that can be owned separately, tenants of condominium have boundaries in making use of spaces and facilities inside of condominium. In a condominium there are common equipment, common facility, and common land. Those things are shared rights of a condominium which cannot be owned individually because they are one functional unit of condominium that cannot be separated.

Owner and/or tenant of a strata title unit has rights and obligations that are regulated by Government Regulation No. 4 of 1988 on Condominium (the “GR No. 4 of 1988”). Some of the regulations are mentioned below.

Article 61 GR No. 4 of 1988,

Paragraph (1)

Every tenant has the right to:
make use of condominium and its environment including common equipment, common facility, and common land safely and orderly;
to get protection as stated in its Article of Association and Bylaws;
to choose and be appointed as the management of Tenant Association.
Paragraph (2)

Every tenant has the obligation to:

obey and execute the regulation in a condominium and its environment in accordance with its Article of Association and Bylaws;
pay the contribution for management and fire insurance premium;
take care of the condominium and its environment including the common equipment, common facility, and common land.
Paragraph (3)

Every tenant is prohibited to:

act or do something which can endanger the security, the order, and the safety of other tenants, building and its environment;
modify the shape and/or adding building parts outside their strata title unit without the permission of the Tenant Association.
Other right which is not regulated in the paragraph mentioned above is that tenant who is also a member of Tenant Association has the right to vote. Tenant can use their right to vote in a General Meeting of the Tenant Association.

The right to vote consists of 3 (three) categories, as follows:

1. Residential Vote (Hak Suara Penghunian)

This is the right of member of Tenant Association to vote in order to determine issues on condominium’s order, the use of facility, and the obligation to pay contribution for management and fire insurance premium for shared rights such as common equipment, common facility and common land. Every owner of strata title unit can only cast one vote.

2. Management Vote (Hak Suara Pengelolaan)

This is the right of member of Tenant Association to vote in order to determine issues on maintenance, renovation, and the development of environment infrastucture, including social facilities, common equipment, common facility, and common land. Management Vote is counted according to its proportional comparative value from every strata title unit.

3. Ownership Vote (Hak Suara Pemilikan)

This is the right of member of Tenant Association to vote in order to determine issues on the relationship between tenant, the appointment of management of Tenant Association, and expenses of strata title unit. Ownership Vote is counted according to its proportional comparative value from every strata title unit.

According to the explanation above, every owner and/or tenant of strata title unit has rights and obligations which have been regulated by law. These regulations has a binding power with legal sanction, especially for obligations, which has to be executed by the owner and/or tenant of strata title unit.

The legal sanction related to tenant’s obligations is regulated under Article 77 GR No. 4 of 1988. Article (1) from the paragraph says, “anyone who violates the provisions of Article 30, Article 31, Article 34, Article 35 paragraph (1) and paragraph (3), Article 38 paragraph (2), Article 39 paragraph (1), Article 61 paragraph (2) and paragraph (3) and Article 67, is charged with a maximum inprisonment of 1 (one) year and/or a maximum fine of Rp.1.000.000,- (one million Rupiah).

Ardhityo Rompas

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Strata Title Ownership for Foreigner and Foreign Entity in Indonesia

Strata Title Ownership for Foreigner and Foreign Entity in Indonesia

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Indonesia as a developing country is one of the investment destination for developed countries to expand their global business activities. That is why more foreigners domiciled in Indonesia to do their business. However, there are boundaries or conditions for foreigner to own a residence especially a strata title, which is going to be discuss further here.

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