Ownership Terms

The Ocean Views units all have a Hak Milik title. This is the Indonesian equivalent of a Freehold title. Below we explain how a foreigner can secure a Hak Milik title in their own name.

This information is correct at the time of publication however we alwaysadvise that as a potential investor, you seek your own Legal advice at the time of purchase.

Using a nominee:

No one except an Indonesian National can have a Hak Milik (Freehold) Land Certificate in their name, not even a PT company or a PMA company can own a Hak Milik title.
The method we normally use for Foreigners is the Nominee method where the Land Certificate is put into the name of a nominee and there are security documents drawn up between the foreigner and the Nominee, these Agreements are separate and each one is to give the foreigner a more security.

The Agreements are as follows:

  • Layer 1 is in place to protect the foreigner should the nominee not co-operate in the future, one of the most commonly asked questions is “What if I want to sell my house but I can’t find the nominee?” or variations of the same theme, obviously a good relationship between the foreigner and nominee is the best for everyone and this is why the nominee is paid a fee on any future resale of the house. However what if it all goes wrong with the nominee?

    These 2 documents are in place which will enable the house to be sold and the land certificate changed to the new owner Statement from the Nominee: This statement signed at the Notaris by the Nominee is designed to give full rights and power over the land to the foreigner and it states that “actually the entire money to purchase the land, including also the costs for the drawing and Purchase, Taxes and mutation of the certificate into the name of (The Nominee) and to build the house has been given and paid by (The Foreigner) That as such (The Nominee) has only lent his name in such certificate. It further states “That any and all charges/obligations whatsoever related to the land and building shall be for the account of and to be paid by (The Foreigner) and that any and all profits earned shall be for the account of and to be paid to (The Foreigner) also it states that the Nominee warrants and affirms, to surrender any and all rights and obligations for the use of the land and building. It also contains confirmation that (The Nominee) is not the beneficial owner of the land and building and as such shall never exercise whatsoever legal acts related to the land namely but not limited to acts to sell, mortgage, bequeath, rent out to whomsoever, unless with the written consent of (The Foreigner).

    The Second document which goes together with this is the Power of Attorney. This basically gives all rights from the nominee to the Foreigner to sell the land on in the future; this power of Attorney cannot be cancelled as it is tied into the previous statement and the Nominee Waives all rights relating to the land.

    One article written recently suggested that there was a law in Indonesia which enables the nominee to cancel these Agreements however the nominee waivers this right and it is mentioned in the Agreement that this statement cannot be revoked or shall not be ceased due to the reasons regulated in article 1813 of the Civil Code of the Republic of Indonesia.

    The Second document which goes together with this is the Power of Attorney. This basically gives all rights from the nominee to the Foreigner to sell the land on in the future; this power of Attorney cannot be cancelled as it is tied into the previous statement and the Nominee Waives all rights relating to the land.

  • Layer 2 is a mortgage agreement between the foreigner and the nominee. This is the same as what a bank would do and this prevents the nominee going to the land office and telling them he has lost the certificate and can they have a new one. The mortgage is actually registered at the land office and on the certificate and it is impossible to have the mortgage removed until the mortgage is released by the mortgager (The Foreigner). There is also a statement of indebtedness in which the nominee reiterates that the money for the land was paid for by the foreigner.

  • Layer 3 is to offer protection in the case of the nominee dying and is in the form of a Will which gives the land to the foreigner if the nominee dies. This is not always used and depends on the Notaris.

  • Layer 4 is the safety back up of having a lease it is a basic Hak Sewa for 25 years with 3 pre-negotiated extensions, so if all else fails at least you still have 100 years on the lease.

Understanding the Terms:

  • Hak Milik – Freehold Land Title

  • Hak Sewa- Basic Lease of land from a Land owner to a third party, this is totally legal for foreigners. This is not represented in Certificate form and is not registered with the land office.

  • Hak Pakai –The right for a foreigner to use land and build a house on it.
    In this case, the land certificate is changed from Hak Milik to Hak Pakai and the foreigner has the Certificate in their own name. This is for a maximum of 25 years but can be extended for further periods of 25 years. If the land is sold to an Indonesian the land certificate can be transferred back to Hak Milik status. Until recently Hak Pakai was only available on Government land but a recent change in the law allows this to be done with the privately owned land. A foreigner is only allowed to own one Hak Pakai title and it should be for their primary residence in Indonesia. Obviously this raises a question as to renting the villa under a Hak Pakai Certificate and what quantifies someone “residing” in Indonesia, new legislation has served to clarify this by saying under Article 1 (1) of RMA 7/96 states that “a foreigner whose presence in Indonesia gives opportunities for national development” may own a house under Hak Pakai; and Article 1 (2) closes the circle by saying that such a foreigner is one who; “has and maintains an economic interest in Indonesia by implementing an investment in the ownership of that house. In other words, any foreigner who buys a house in Indonesia is contributing to national development and therefore is entitled to hold Hak Pakai.