How to Draft Conditional Sale and Purchase Agreement of House in Indonesia

If you are looking to buy a house in Indonesia, you need to familiarise yourself with what is called a sale and purchase agreement.

Because of the rapid population growth and increased demand of housing and real estate, the sale and purchase of property is conducted via the form of reservation even when the house is in the midst of planning to fulfill the demanding crowd.

The sale and purchase of a reserved property which hasn’t been built yet is done through preliminary sale and purchase arrangement.

The Conditional Sale and Purchase Agreement, or PPJB is the agreement that is used for the preliminary sale and purchase of property.

The PPJB is governed under the guidelines from the Minister of Housing and shall be made in accordance with the guidelines which set out in the Minister of Housing, namely Kepmenpera 09/1995. This decree is to secure the interests of both buyers and sellers.

In this article, Cekindo will discuss the items covered under the PPJB. Understand it before you buy a house in Indonesia.

Obligations of Buyers

It is the obligation of the buyer to pay the total amount of the property, taxes, notary deed fees, PPJB expenses, registration fee of land’s acquisition levy and land’s building.

If the seller is unable to provide the housing or building to the buyer on the agreed time stated in the PPJB, for each day of delay, the seller will be responsible for a penalty charge of 2% of the total housing price.

On the other hand, if the buyer makes late payment to the seller, for each day of delay, the buyer will be responsible for a penalty charge of 2% of total installments that are due. The seller may also cancel the PPJB due to the late payment.

Obligations of Sellers

The seller is obliged to finish the building construction by the agreed time mentioned in the PPJB.

If Force Majeure occurs, this obligation would probably be renounced. Before executing the PPJB, it is mandatory for the seller to have the below items:

• Project plans approval
• Location permit or SIPPT for DKI-Jakarta
• Building construction permit (IMB)
• Letter of information

In addition to the above obligations, the seller must also meet the following criteria:

• Manage the registration of land and building right purchase
• Fully own the land and building and not involved in any dispute or confiscation
• Represent and release the buyer from both criminal and civil claims
• Be responsible for the hidden defects found out at a later period
• Be responsible for the certificate registration cost

Other Items Included in PPJB

• Building Delivery: once the Minutes of Delivery (BAST) is signed, the seller will deliver the building within two weeks
• Building Maintenance: the seller is responsible for the building maintenance for 100 days starting from the signing date of BAST
• Termination: the PPJB will not terminate on its own either the seller or the buyer has passed away. PPJB can only be terminated when the seller is not able to deliver the building
• Sale and Purchase Deed: The buyer and the seller must sign the sale and purchase deed when the notary (PPAT) is present
• Dispute Settlement: the seller and the buyer shall proceed with dispute settlement based on the PPJB. If a settlement doesn’t occur, both parties can go through the settlement with the National Arbitration Board (BANI)

Cekindo can Assist in Drafting Your Agreement to Buy House in Indonesia

Cekindo provides a full spectrum of legal document and agreement drafting services for you.

Our team of contract experts is impeccably experienced in safeguarding the rights and interests with customised contracts for both local and foreign clients. We thoroughly assess the terms and structures of your contracts or agreements.

After careful and sophisticated evaluation, we will then come up with suggestions that will help you achieve the maximum protection.

In addition, Cekindo can assist you in selecting the best type of agreements or contracts for your business transactions, so that you can realise your objectives more quickly with desired results and low costs.

All contracts or agreements are drafted by Cekindo’s legal experts with your interests in mind, making sure the terms and conditions stated are in full compliance with the agreement law in Indonesia.

Contact us through the form below and get a free consultation.