The purpose of the Government Regulation No. 41 of 1996 (the “GR No. 41″) is to give a legal certainty for foreigners who own property in Indonesia. Foreigners who are domiciled in Indonesia are foreigners who give benefits for national development.

The requirements of property ownership by foreigners who are domiciled in Indonesia are as follows:

1. Property which is built on a land:

• Having a Right to Use (Hak Pakai) over a state land;
• Having a Right to Use which based on an agreement between the foreigner and the holder of rights over land (for example: Rights to Own or Rights to Build)

2. Strata title units which are built on a land with Right to Use over a state land.

The agreement between foreigner and the owner of the land must be made in writing, with a deed made by a land official (Pejabat Pembuat Akta Tanah), registered in the book of land (Buku Tanah) and certificate of Right to Use. According to the Law of Principles of Agraria, the agreement between foreigner and the owner of the land is not a lease agreement or cultivated agreement. The agreement is made with the terms agreed by the parties but shall not exceed 25 (twenty five) years time period. The term of the agreement can be extended with a new agreement which shall not exceed another 25 (twenty five) years time period, provided that the foreigner is still domiciled in Indonesia.

If the foreigner is no longer domiciled in Indonesia, in a period of one year, the foreigner must release or transfer their rights over the property to other who is eligible. If the foreigner did not release or transfer it, then the state will take over and sell it through a tender. For property which is built over a land owned according to an agreement with the owner of the land, then the property will belong to the owner of the land. The results from the tender of house and land held by the Government will be returned to the foreigner after deducted by tender fee, stuffs and other fee.

Handy Samot