Tuesday, March 17, 2015

Bali cracks down on Nominee real estate deals


In your own country, would you entrust the ownership of your house or apartment to someone you don't know? If not, why would you do so in a foreign country? But that's exactly what thousands of foreigners do in Bali in their eagerness to "own" a piece of Paradise despite the very real risk that such illegal 'nominee' arrangement can be revoked at any time by the Indonesian "Nominee" owner of the property.

Here is the latest press release on this subject:

The Minister of Agrarian Affairs who is also the head of the National Land Agency (BPN), Ferry Mursyidan Baldan, told Kompas.com that his office will soon survey and inventorying land “owned” by foreigners in Indonesia.

“It is absolutely not allowed for foreigner to own a single inch of land in Indonesia. This is as stipulated by the National Constitution,” said Ferryafter attending the re-launch of a magazine on zoning in Bandung on Sunday, March 8, 2014.

The Minister’s comments were also reported by the State News Agency Antara.

The survey and inventorying of land “owned” by foreigners, according to Ferry, must be done to verify that there is no land in Indonesia controlled by foreigners.

“According to international law, only the home of a foreign ambassador and the Embassy can be owned by foreigners (in Indonesia),” he said.

The Minister said there is a great deal of land in Indonesia, particularly in tourism areas such as Bali and Lombok, that it owned (illegally) by foreign nationals.

In Bali and Lombok many foreigners control land through nominee landowners, using legally questionable powers of attorneys and fictive mortgage agreements. The Minister’s statement has many in the property sector concerned that land could be confiscated by the State or documents used to establish illegitimate foreign control of land declared invalid. The latter could create a windfall for the nominee who would then be established as the sole and rightful owner of the land. Underlining added for emphasis by blogmaster

When Ferry was asked what sanctions can be imposed on foreign nationals known to illegally own land in Indonesia, the Minister replied “there is no sanction.”

“There’s no need for sanctions, we will just divert possession of the land. We will ask if he has an Indonesian wife and divert the land to her. But, if he doesn’t have an Indonesian wife, then the land will be taken by the State,” Ferry explained.

Note by blogmaster: Under no circumstances can foreigners own property under Hak Milik (Freehold) title in Indonesia. There is only one semi-exception. If a foreign investor is married to an Indonesian citizen, providing that a Pre-nuptial agreement was entered into prior to the marriage being registered, the Indonesian spouse may hold Hak Milik land title.

He assured that the coming survey and inventorying of land ownership thought to be “owned” by foreigners will be done in an orderly manner. “This will not be done in a half hazard way. We are doing surveys (in such a way) as to avoid creating an uproar. We are inventorying, not conducting raids. So there is not need for anyone worrying or being frightened."

Also read "Indonesian foreign land title “reforms”: Who’s afraid of the big, bad wolf?" and "A nightmare in paradise".

P.S. The nominee issue has caused people to think twice, though even before the government made nominee arrangements illegal an Indonesian friend who is a lawyer told me that if a case ever came to court a foreigner would never win over an Indonesian, the agrarian law being what it is. There is a way for a foreigner to buy land and have his/her name on the title deed, and that is using 'Hak Pakai'. This is valid for 25 years, is legal and is renewable after the first 25 years (provided the law hasn't changed in the meantime). This could suit people coming to Indonesia to retire as 25 years would probably be long enough to see them out.


Related articles:

What Part Don’t You Understand?

Regulation of Property Ownership by Foreigners

Bali Property Ownership by Foreigners