Bali Villa

Navigating Property Acquisitions in Bali: A Step-by-Step Guide

Purchasing real estate in Bali becomes less daunting when you comprehend the region’s property regulations for foreign investors, have pinpointed your ideal piece of land, and conducted thorough research into the market and localities. 

After setting aside sufficient funds to cover the process, the following steps will guide you through what remains: 

Present a Signed “Intent to Purchase” 

Legal Document to your Chosen Agent and the Property Owner 

  1. Demonstrate your earnestness by providing both the agent and property owner with a legally binding agreement to sign. 

Appoint a Notary PPAT/Public 

  1. The purchaser gets to choose a notary for the transaction, with their fees typically ranging from 1% to 2.5% of the agreed-upon price. While the pivotal legal document you sign is in Indonesian, translation into English or other languages is available. However, remember that the Indonesian version takes precedence. Should the agent act as an intermediary, they will prepare a preliminary purchase and sales agreement for all parties’ signatures. This agreement will then be transformed into a binding purchase and sales agreement by the notary. 

Forward a Deposit 

  1. Never hand the deposit directly to the land seller. Instead, transfer an agreed-upon deposit (commonly between 10-25%) into the notary’s escrow account for safekeeping. An escrow system is a non-negotiable requirement when purchasing property in Bali. –

Ratify a Binding “Purchase and Sale” Agreement 

  1. For the property transaction to proceed, both buyer and seller must concur on the price and conditions, signing a preliminary Binding Purchase and Sale Agreement or a Binding Leasehold Right Agreement to officially express their accord with the stipulated terms. We advise both buyer and seller to procure the services of an independent legal advisor to guarantee their negotiated terms are accurately represented in these documents. 

Notary Executes Due Diligence 

Prior to finalizing the purchase, the notary must carry out a thorough due diligence investigation. They will need to confirm that the seller has legitimate ownership and rights to sell or lease the property, and ensure the land is legal to develop, free of outstanding debts or other legal encumbrances. 

Checking and confirming land documents (like the title deed), construction permits, and the title search is crucial. This process typically takes around a week and should not be hurried to ensure a secure and worry-free property purchase in Bali. 

Ratify a ‘Sales and Purchase Deed’ (AJB) or ‘Leasehold Deed’ 

  1. Following this, the parties must enter into notarial documents representing the property acquisition. These come in the form of a Sale and Purchase Deed or a Leasehold Deed, to officially conclude the property acquisition as stipulated under the binding agreement. 

Assume Ownership of The Property 

  1. Once you’ve transferred the full payment and settled all necessary transaction fees and taxes, you’ll receive the property title and copies of deeds, symbolizing the official transfer of ownership. 

Leasehold 

Legal registration at the land office isn’t required for leasehold acquisitions, with only lease deed copies transferred to the appropriate parties. 

Right to Use (Hak Pakai) over Freehold (Hak Milik) Acquisitions 

For Hak Pakai over Hak Milik acquisitions, a Deed of Grant is executed by the notary, in which the Hak Milik owner provides the Hak Pakai title to the foreigner. The owner of the Hak Pakai may also prepay the owner of Hak Milik for a number of negotiated twenty-five-year renewals via a separate Notarial Deed. 

Disclaimer

Our advice is based on a general understanding of the Bali property buying process, as we aren’t licensed legal advisors. For detailed advice, please consult with a professional.

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