Buyers Ownership Guide
1. Freehold (Right of Ownership) – Hak Milik
This refers to absolute ownership of land and corresponds to freehold title in common law terms. This right can only be held by an Indonesian citizen. It can be sold, transferred, bequeathed, and mortgaged.
2. Lease Hold (Right to Rent) – Hak Sewa
This is the right to use, leasing land owned by another private party for building purposes. The right cannot be registered at the land office and therefore does not exist in certificate form. This right may be held by a foreigner permanently domiciled in Indonesian or a foreign legal entity having a representative office in Indonesia, and may not be mortgaged.
3. Right of Use (Hak Pakai)
This is the right of use over state-owned (crown land) or property owned by public or private persons/entities for a specific purpose for (generally) a finite period and occasionally for an indefinite period. This land right may not be sold, exchanged or transferred unless explicitly stated in an agreement.
The main points regarding this subject are that there are actually two types of Leasehold.
In case of Hak Sewa it’s an agreement between two individual persons and the government is not involved.
In case of Hak Pakai, the agreement is registered in the Badan Pertanahan Nasional Office. For the durance of the period, the Right of Ownership of the Land Ownership is temporarily transferred to the Government.
The advantage of Hak Pakai is that the document can be used for bank (credit or guarantee) purposes and it’s more save then Hak Sewa because you actually rent your property from the State.
In both cases you can resell (“over contract”) the agreement as long as this right it is specifically mentioned in the agreement. Again the Hak Pakai status is a better option. The shorter the remaining period the “cheaper” the lease. But as long as prices in Bali rise this should not be a too big problem.
Of course there is the right of extension of the lease period as long as this is mentioned in the original agreement. This should be described accurately because if not, the owner will be able to “rip you off” for the next period. Benefit for the owner will be the fact that he will be the proud new owner of your well maintained beautiful villa with pool.
4. Ownership – Kepemilikan
In case of Hak Sewa the Owner always stays the Owner.
In case of Hak Pakai the owner is temporarily the state. After this period the ownership goes back to the original owner.
In both cases when the title ends you have to get out of the land and you will lose your right of ownership of the building on the land.
5. Strata Title
Strata title is a form of ownership devised for multi-level apartment blocks and horizontal subdivisions with shared areas. The ‘strata’ part of the term refers to apartments being on different levels, or “strata”.
Strata title was first introduced in 1961 in the state of New South Wales, Australia, to better cope with the legal ownership of apartment blocks. Previously, the only adequate method of dividing ownership was company title, which suffered from a number of defects, such as the difficulty of instituting mortgages. This term also applies to house-type strata title units in Australia.
Strata Title Schemes are composed of individual lots and common property. Lots are either apartments, garages or storerooms and each is shown on the title as being owned by a Lot Owner. Common Property is defined as everything else on the parcel of land that is not comprised in a Lot, such as common stairwells, driveways, roofs, gardens and so on
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