Real Estate
Establishment of the Tenant Association of Condominium

Establishment of the Tenant Association of Condominium

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Background

Condominium is a building built in an environment which is divided into parts that are functionally structured horizontally and vertically and consisting of units that can be owned individually and can be used separately, particularly for residence, which is completed with common equipment, common facility, and common land. In the condominium, there are private property managed by the owner himself and the common rights which should be used and managed together because it involves the common interest. Utilization and management of condominium and its environment should be arranged and conducted by the tenant association. There are some regulations on the tenant association, such as Law Number 16 of 1985 on Condominium (“Law 16/85”), Government Regulation Number 4 of 1988 on Condominium (“GR 4/88”), and Decree of State Minister of Public Housing Affairs Number 06/KPTS/BKP4N/1995 on Guidance on Making Deed of Establishment and Article of Association of Tenant Association of Condominium (“Decree”).

Tenant Association

According to Article 1 of Law 16/85, tenant association is an association which consists of tenants as its member. Article 19 of Law 16/85 states that tenants of condominium shall establish a tenant association, having the main task to regulate manage, and also to guarantee order, principle of mutual aid, and harmony based on the Indonesian personality, in order to manage the common equipment, common facility, and common land.
Tenant association, by the Law 16/85, is given the status as a legal entity with the deed of establishment and articles of association, therefore, the tenant association may act in and out on behalf of the owner, and with its authority, the tenant association shall realize the comfortability of the environment of the condominium in order. Establishment of tenant association should be executed with a deed that is legalized by Regent, Mayor Head of Region II, and especially in Jakarta, shall be legalized by the Governor Head of Special Capital City Region of Jakarta

Establishment Meeting

Refer to the Decree, it is stated that in the establishment of tenant association, firstly, the owner and/or tenant of condominium shall convene the meeting of establishment of tenant association (“Meeting”), and the result of such Meeting shall be stated in the minutes of Meeting. In the Meeting, it shall appoint some of the member/participant of the Meeting, and such member/participant shall be given the power of attorney to appear before the Notary to make all of the statements as the result of the Meeting. Furthermore, in the Meeting, without prejudice to the permission of the authorities, shall decide and arrange the article of association of the tenant association in accordance with the Decree.

On the tenant association, its membership was chosen based on the family principle by and for the member of tenant association through the general meeting of tenant association which held especially for that necessity, provided that the board of tenant association at least shall consist of a chairman, a secretary, a treasurer, and a management supervisor.

The person who can be the member of the tenant association is a legal subject who has, or use, or rent, or lease or utilize unit of condominium concerned, having status as a tenant. Establishment of tenant association is very important, because it has a main task and authority to manage and maintain the environment of the condominium, and arrange the regulation on tenancy rules. Membership of tenant association is based on the reality of occupancy, means that the person who can be a member of the tenant association are those who actually inhabit or occupy the unit of the condominium either on the basis of ownership or other legal relation. If the owner has not yet occupied, use or utilize the unit of condominium, thus, the developer becomes a member of the tenant association. If the developer of condominium is has not yet sold the entire of the units of the condominium, the developer shall act as a member of the tenant association.

Isrilitha Pratami Puteri

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Revocation of Lands Rights

Revocation of Lands Rights

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Revocation of Lands Rights

Background

In order to implement the provision of the granting of rights of land in accordance with Law Number 5 of 1960 on Agrarian Principle Regulation (“Law No.5/1960”) and Government Regulation Number 40 of 1996 on Right to Cultivate, Right to Build and Right of Use of Land, the procedure of the revocation of such land rights must also be regulated, which is already set forth in Regulation of Agrarian State Minister/Head of National Land Agency Number 9 of 1999 on Procedure of Granting And Revocation of Rights of State Land and Right of Management (“Regulation”).

Revocation of Rights of Land

Point 1 letter 14 of Regulation states that revocation of land rights means the revocation of the decree of the granting of land rights or land rights certificate (“Granting Decree”) due to the administrative legal error in the issuance of such Granting Decree or in order to implement the court decision which has obtained the permanent legal power.

The revocation includes the revocation of: (a) decree of the granting of land rights; (b) certificate of land rights; and (c) decree of the granting of rights in order to regulate the land acquisition. The revocation of land rights is conducted through the decree of Minister who is responsible in agrarian/land field (“Minister”). Minister may delegate such revocation to the Head of Regional Office of National Land Agency, which is the National Land Agency Office for the provincial level (“Regional Office”) or to the appointed officer.

Revocation

1. Revocation of land rights due to administrative legal error

According to Article 107 of Regulation, the administrative legal error means (i) procedural errors, (ii) error implementation of laws and regulations, (iii) error of the subject of rights, (iv) error of the object of rights, (v) error of the type of rights, (vi) error of area calculation, (vii) there is overlap of land rights, (viii) juridical or physical data is incorrect, or (ix) other administrative legal errors.

The decree of revocation of land rights due to administrative legal error in its issuance may be conducted due to (i) the application from the party in interest or (ii) the authorized officer without application. The revocation of land rights due to administrative legal error through the application from the party in interest is submitted directly to the Minister or the appointed officer through the Head or Land Office, which is the National Land Agency for the district/city level (“Land Office”). Meanwhile, the revocation of land rights without application by the authorized officer is conducted if it is found that there is legal error in the issuance process of the Granting Decree without an application.

2. Revocation of land rights due to the court’s decision

The decree of the revocation of land rights due to the implementation of court’s decision which has obtained permanent legal power shall be issued through the application of the party in interest, provided that such application is submitted directly to the Minister or Head of Regional Office or through the Land Office.

Procedure of Revocation of Land Rights

There are some processes in the procedure of revocation of land rights, as follows:

1. Land Office

The revocation application is submitted in writing to the Minister through the Head of Land Office having the work area within the location of the land concerned, and enclosed with documents, such as: (i) copy of identity card and nationality (if the applicant is individual) or copy of deed of establishment (if the applicant is a legal entity); (ii) copy of the Granting Decree and/or certificate of land concerned; (iii) other documents related to the revocation application.
After the application is received, the Head of Land Office shall: (i) inspect and examine the completeness of the juridical and physical data; (ii) record in a form; (iii) provide a receipt of the application; (iv) notify the applicant to complete the juridical and physical data if necessary.
2. Regional Office

In the event that the revocation application is delegated to the Head of Regional Office, the Head of Regional Office shall record it in a certain form and inspect and examine the completeness of the juridical and physical data, and if it is not completed yet, shall request the Head of Land Office concerned to complete the documents.
In the event that the revocation application is delegated to the Head of Regional Office, the Head of Regional Office issue the decree of revocation of land rights or decree of rejection along with the reason.
3. Minister

After receiving the revocation application, the Minister orders the competent officer to inspect and examine the completeness of the juridical and physical data, and if it is not completed yet, shall request the applicant to complete the documents and record it in a certain form.
Minister will decide such application by issuing the decree of revocation of land rights or decree of rejection along with the reason.

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Inheritance of the Right of Use

Inheritance of the Right of Use

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According to Article 41 of Law Number 5 of 1960 on the Principles Provisions of Agrarian (“Agrarian Law”) [Note: sy sudah ingatkan berkali2 untuk gunakan terms yang sama dengan yang sudah kita buat dan ada di web kita[, Right of Use means right to use and collect the production over State Land or land which is owned by private parties. As stipulated in Article 42 of Agrarian Law, Right of Use can be granted to:

Indonesian citizens;
foreigners domiciled in Indonesia;
Indonesian companies established based on Indonesian law and domiciled in Indonesia; and
foreign companies having its representative office in Indonesia.

Assignment of Right of Use

According to Article 54 paragraph (3) of Government Regulation Number 40 of 1996 on Right to Cultivate, Right to Build, and Right of Use Over Land (“Government Regulation 40”), it is stated that the Right of Use can be assigned by the following reasons:

sale and purchase;
exchange;
capital participation;
grant;
inheritance.
Further, the assignment shall be registered to the Land Office (kantor pertanahan). For the assignment of Right of Use as a result of inheritance, Article 54 paragraph (7) stipulates that the assignment shall be evidenced with the testament or heir information document (surat keterangan waris) which is issued by the competent authority.

The Article 42 of Government Regulation Number 24 of 1997 on Land Registration (“Government Regulation 24”) has set out the required documents that must be provided by the heirs for land registration:

land certificate;
death information document (surat keterangan kematian) of the holder of Right of Use;
heir information document (surat keterangan waris).
Moreover, the elucidation of Article 42 of Government Regulation 24 stated that the transfer of right is occurred when the holder of Right of Use dies, which means the heir will become the new right holder. With regards to the party who has the right to become the heir, it will depend on the civil law that applies to the existing right holder.

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Acquisition Levy of Right of Land and Building

Acquisition Levy of Right of Land and Building

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Background
As we all know, earth, water, and natural resources contained therein controlled by the State and used as much as possible for the prosperity of the people (society). Land and buildings that build on it, in addition to fulfill the basic need, is also constitutes as profitable investment equipment. In other words, land and building have economic value. Therefore, it is reasonable that for those who obtained the right of land and the buildings to give some of the economic value that obtained, to the State through tax payments, especially Acquisition Levy of Right of Land and Building (“BPHTB”). BPHTB is now regulated in Law Number 21 of 1997 on Acquisition Levy of Right of Land and Building (“Law No.21/1997”), as amended by Law Number 20 of 2000 on Amendment of Law No.21/1997 (“Law No.20/2000”).

BPHTB
According to Law No.20/2000, it is stated that BPHTB taxes are imposed on the acquisition of rights of land and/or building. The subject of BPHTB is the individual or entity who obtained rights of land and/or building. The object of BPHTB is associated with the obtainment of right of land and/or building. The obtainment of right of land and/or building consists of:
a. transfer of right due to: sale and purchase, exchange, grant, grant bequest, inheritance, income in the company or other legal entity, resulted in the separation of rights of passage, the appointment of buyers in the auction, the implementation of judgments that have permanent legal force, mergers, consolidation business, business expansion and gifts.
b. conferral of new right due to the continuation of releasing of right, and other than releasing of right.
The rights of land that are subject to BPHTB are Right of Ownership, Right to Cultivate, Right to Build, Right of Use, Right of Ownership on Strata Title, and Right to Manage.
The taxable objects which are exempted from BPHTB shall be the taxable objects that are obtained by:
a. diplomatic representative, consulate based on reciprocal principle;
b. state for performing governmental duties and or development activity for public interests;
c. international organization or representatives of international organization as stipulated by the Minister Decree provided that they neither run business nor do other activities other than their functions and duties;
d. individual or entity due to right conversion or due to other legal acts without any change of name;
e. individual or entity due to endowments;
f. individual or entity for religious service usage.

Acquisition Value
According to Article 5 of Law No.21/1997, the tax rate of BPHTB is in the amount of 5% (five percent) of Acquisition Value of Taxable Object (“NPOPKP”). NPOPKP is the acquisition value of tax object (“NPOP”) reduced with the Acquisition Value of Non-Taxable Object (“NPOPTKP”).
The base of BPHTB imposement is the NPOP. BPHTB is applied for the transaction that exceeds the NPOPTKP, in which is determined regionally, with the maximum amount of Rp 60.000.000,- (sixty million Rupiah), with the exception of the acquisition of rights due to inheritance, gift, bequest which received by person/individual in the direct lineage one degree up or down with the grantor, including husband or wife, in which that the NPOPTKP is regionally determined with the maximum amount of Rp 300.000.000,- (three hundred million Rupiah).
The amount payable of BPHTB is calculated by multiplying the tax rate of BPHTB with NPOPKP.

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Legal Aspect on Term of Right of Use Over State Land and Land Under Right of Ownership

Legal Aspect on Term of Right of Use Over State Land and Land Under Right of Ownership

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According to Article 41 of Law Number 5 of 1960 on the Basic Principles of Land (“Land Law”), Right of Use means right to use and collect the production over State Land or land which is owned by private parties. As stipulated in Article 42 of Land Law, Right of Use can be granted to:

Indonesian citizens;
foreigners domiciled in Indonesia;
Indonesian companies established based on Indonesian law and domiciled in Indonesia; and
foreign companies having its representative office in Indonesia.

Further, as stipulated in Government Regulation Number 40 of 1996 on Right of Cultivation, Right to Build, and Right of Use Over Land (“Government Regulation 40”), Right of Use can be granted over a land with land status of:

state land;
land under Right of Management (hak pengelolaan);
land under Right of Ownership (hak milik).

Property ownership by foreigners is specifically stipulated in Government Regulation Number 41 of 1996 on Property Ownership by Foreigner Domiciled in Indonesia (“Government Regulation 41”). Article 2 of Government Regulation 41 states the type of houses which are allowed to be owned by foreigners:

houses built over state land;
houses built based on an agreement with the holder of Right of Ownership. The agreement shall be made before Land Conveyancing Officer (Pejabat Pembuat Akta Tanah);
condominium built under Right of Use over state land .

The Term of Right of Use

It is stipulated in Article 45 of Government Regulation 40 that the term of the Right of Use over state land is 25 (twenty five) years which can be extended for another 20 (twenty) years. The Government Regulation 40 has set out some requirements before the term of Right of Use can be extended:

The land is used according to the land use;
Conditions of grant of right have been properly fulfilled by right holder;
The right holder fulfills the requirements as the right holder as set out in the Government Regulation 40.
Further, for the extension of Right of Use, Article 47 of Government Regulation 40 states that the extension application must be submitted at the latest 2 (two) years before its expiration date.

Moreover, the Government Regulation 41 has set out different term for Right of Use for the houses that built based on an agreement with the holder of Right of Ownership, the term of agreement must not exceed 25 (twenty five) years which the agreement can be extended with another 25 (twenty five) years. However, the extension for another 25 (twenty five) years shall be made in a separate agreement between the foreigner and the holder of Right of Ownership. Further, the extension can be made provided that the foreigner is domiciled in Indonesia or for the case of foreign company, having its representative in Indonesia.

If the foreigner who owns the house that is built with Right of Use over state land or based on an agreement with right holder is not domiciled anymore in Indonesia, within 1 (one) year, the foreigner has to assign his right to other parties which fulfill the requirements to own the land. In the event the foreigner refuses to assign his right to other parties, the house which is built over state land will be controlled by state to be auctioned. As for the house built based on an agreement with the right holder, the house will be owned by the right holder.

Jerry Shalmont

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The Legal Aspect and The Rules of The Right to Build

The Legal Aspect and The Rules of The Right to Build

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Background

Nowadays, there are various kind of companies established in Indonesia. In term of construction, these companies require a building located on a land. Therefore, according to Law Number 5 of 1960 on the Principle Provisions of Agrarian, there are several rights over land. One of these rights over land is the right to build which can be defined as the right to establish and own a building on a land. The Government Regulation Number 40 of 1996 develops and improves this right to build. The right to build can be given or imposed on state land, land submitted to the right of management, and land submitted to the right of ownership. The right to build can also be used as collateral for loans pledged with mortgage rights.

Allocation of Right to Build

According to the Article 19 of the Government Regulation Number 40 of 1996 describes that right to build is given to Indonesian citizen and legal entities established under Indonesian law and domiciled in Indonesia. The right to build isn’t given to foreigners and foreign entities, so according to article 39 of the Government Regulation Number 40 of 1996 for foreigners and foreign entities, they only have the right to use. The right to build can be granted for a period of 30 years and can be extended for another 20 years. The right to build is given by a decision of the Minister or by an officer appointed upon the recommendation of the management right holders, and have been registered in the book of land in the land office.

Obligations of Holders of Right to Build

The holder of the right to build has to:

to pay money of which amount and terms of payment are specified in the decision , use the land in accordance with its allocation and requirements as stipulated in the decisions and its agreements;
preserve both land and existing building and preserving the environment;
surrender the land back to the State, the holder of Right to Manage or holder of Right of Ownership after the Right to Build is expired;
deliver the certificate of Right to Build which has expired to the Head of the Land Office.

Assignment of the Right to Build

In article 34 Government Regulation Number 40 of 1996, it is mentioned that the Right to Build can be transferred to another party, through a sale and purchase, exchange, capital investment, grants, and inheritance.

Expiration of the Right to Build.

The Right to Build expires if its term ends, is terminated before the term has expired if any requirement is not fulfilled, released voluntarily by the holders of their rights before the the term has expired, is revoked for public purposes, if the land is abandoned or destroyed.

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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Legal Aspects of License for the Representative of Foreign Construction Legal Entities in Indonesia

Legal Aspects of License for the Representative of Foreign Construction Legal Entities in Indonesia

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According to the Regulation issued by State Minister for Public Works Number 28/PRT/M/2006 Year 2006 (“Minister Regulation”), it is allowed for the representative of foreign construction legal entities (“Foreign Entities”) to conduct their business in Indonesia after fulfilling some requirements.

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