Guidance on Conditional Sale and Purchase Agreement of House According - Indonesia
Indonesia’s high population growth rate has increased the housing needs of the people. Urgent needs of the available units of house often results on the sale and purchase of the house which is still in the planning process and it is giving rise to the sale and purchase through reservation. Therefore, as a result of it, the sale and purchase of house is conducted through a preliminary sale and purchase arrangement.
The preliminary sale and purchase of house will be set out in the Conditional Sale and Purchase Agreement (“PPJB”). The PPJB shall be made in accordance with the guidelines which set out in the Minister of Housing Decree Number 09 Year 1995 on Guidance of Conditional Sale and Purchase of House (“Kepmenpera No.09/1995“) along with its example. Along with the enactment of the Kepmenpera No.09/1995, it is expected that the interests of the buyer and the seller will be secured.
The description of object of the PPJB are: (a) the size of the house building along with its architectural drawings, floor plans, and technical specifications of the building; (b) the area of the land, the land status, and all permits related to the construction of the house and its other rights, (c) the location of the land, (d) the house and land prices, and payment procedures agreed by the parties.
The obligations of the seller are to complete the construction within the agreed time period according to the PPJB. However, this obligation may be waived in the event that Force Majeure is occurred. Prior to the sales and/or conduct of the PPJB, the seller is required to have: (a) approval in principle of project plans issued by the local government and the location permit issued by the Regency/Municipality Land office. Especially for DKI-Jakarta, the seller shall obtain the license of land appointment and utilization (“SIPPT”), (b) letter of information issued by the Regency/Municipality Land Office which explains that the seller has obtained the land to develop the residential, and (c) Building Construction Permit.
In addition, the seller is also obliged to:
-manage the registration of purchase of right of land and building;
-represents that the land and the house building as the object (“Object”) of the PPJB is fully owned by the seller, and -not engaged in any dispute and is not confiscated by the authority;
-represents and release the buyer from any claim on both civil and criminal, which may arise in the future in relation to the Object;
-take the responsibility for the existence of hidden defects that can only be known at a later stage, in accordance with -the provisions of the Article 1504 and 1506 of Indonesian Civil Code;
-bear the cost of the certificate registration process.
The buyer is obliged to pay the total price of the Object, taxes, and other costs, the fees of the preparation of the notary deed, the expenses of the PPJB, the registration fees of the acquisition levy of land and building of the land on behalf of the buyer.
In the event there is a late delivery of the house building from the seller to the buyer at the agreed time as set out in the PPJB, the seller will be charged a penalty in the amount of 2%o (two per thousand) of the total price of the Object, for each day of the delay. The seller will also be considered to have authorized the buyer to manage the registration of the acquisition of the Object to the related authorities.
In contrast, the late payment of the installments and other costs by the buyer to the seller, the buyer will be charged a penalty in the amount of 2%o (two per thousand) of the total amount of the installments that is already due and payable for each day of the delay, which may result the unilateral cancellation of the PPJB by the seller.
Delivery of Object
The seller will deliver the building to the buyer together with the signing of the Minutes of Delivery of the Object (“BAST”) after the seller and the buyer have fulfilled all of their obligations. The seller shall notify the buyer in writing with regards to the intention of the delivery of the Object within 2 (two) weeks prior to the ceremony of the Object’s delivery. In the event that the buyer is not willing to sign a BAST within 2 (two) weeks, the buyer shall be deemed to receive the Object with all its consequences. If both parties have fulfilled their obligations before the time limit of delivery, the Object may be delivered from the seller to the buyer earlier.
Maintenance of Object
The seller is obliged to maintain the building within 100 (one hundred) day’s period after the BAST signing date. Repairs are carried out based on the project plan and the technical specifications as stipulated in the appendix of the PPJB. If the 100 (one hundred) days period has ended, the maintenance of the Object will be borne by the buyers. The seller shall be released from the responsibility to repair the Object if a Force Majeure is occurred, such as: earthquake, flood, riot, war, or the changes of the house building that was conducted by the buyer.
Both seller and the buyer may assign their rights of the Object (“Right”) to the third party if the sale and purchase before the Land Deed Official (“PPAT”) has not been performed. The buyer may assign his Right to the third party, as long as the buyer agrees to pay the administration fee in the amount of 2,5% (two point five percent) of the total price of the transaction based on the seller’s written approval.
The PPJB shall not terminate by itself if either party has passed away. It may be terminated if the seller cannot deliver the Object on time and the Object is not in accordance with the floor plans and technical specification of building. As a result of it, the seller is obliged to return the money which has been received plus a penalty, interest, and other expenses.
The buyer may request for the cancellation of the PPJB if the buyer is unable to perform his obligation to pay the agreed price, to pay the installments to the bank as the lender, and the buyer has resigned for any reasons. On that condition, if the payment has not yet reached to 10% (ten percent) from the total agreed price, the money which has been paid will be the seller’s right. On a contrary, if the payment has already exceeded 10% (ten percent) from the total agreed price, the seller is entitled to deduct 10% (ten percent) of the total agreed price, and the remaining payment will be returned to the buyer.
Deed of Sale and Purchase
Deed of sale and purchase of the Object must be signed by the seller and the buyer in the presence of the PPAT if: (a) the house building has been completed and is ready for occupancy; (b) the buyer has paid the entire price together with the taxes and other costs and shall bring along the original receipt at the time of signing; (c) right to build application process has been fully processed and the certificate of Right to Build is already registered under the name of the the seller.
The guidance of the PPJB of house is also addressed the settlement of disputes between the seller and the buyer. The parties shall settle the dispute that occurred in relation to the PPJB amicably. However, if there is no settlement, the parties may settle the dispute through the Indonesian National Arbitration Board (BANI). The costs that is incurred of the dispute shall be borne and paid by the parties in the same amount, namely 50% (fifty percent) and 50% (fifty percent).
ABOUT THE AUTHOR: Samuel Christian, SH
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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.