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Due Diligence in Indonesia

Posted by Admin on May 10, 2022
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A Complete Guide of Due Diligence in Indonesia. The most important initial step is due diligence to see whether the land is indeed problematic or not.

An important step when buying land in Bali is to carry out a thorough inspection of the property otherwise known as due diligence. Doing this right will help you avoid problems with the property before and after your purchase. Here are some important things to consider in the due diligence:

1. Proof of Land Certificate Ownership

The first thing you should do in the due diligence step is to check the ownership of the land by contacting the Land Owner to make an appointment with the landowner.

Asking the landowner to complete the documents to ensure the suitability of the name on the certificate and KTP/Identity provided, the required data are

a. Land Owner’s ID Card
b. Original/Copy of Land Certificate

Ensure the type of land ownership that can be seen from the certificate:

– Right of Ownership
– Right to Build
– Right to Use
– Right to Cultivate

2.  Checking the Land Location accompanied by documentation

– Ensure and document land boundaries

– Make sure the neighbors are correct as in the land drawing map

– Conduct a survey of the surrounding environment such as electricity, roads, other facilities, and the possibility of other projects around the land location

3. Checking the feasibility of the land through:

a. Sentuh Tanahku

Sentuh Tanahku can be accessed through the Touch Tanahku application which is already on the PlayStore or App Store. Through this application, the community can easily access information about the land, for example, before buying and selling land, the community can obtain information about the land or when the community wants to know the location of the land it can be presented on a map. The community can also find out the requirements for the transfer of name or other land service information, both requirements, processing time, and costs.

In the Sentuh Tanahku application there are several features, namely:

i. File info

Showing file management progress list information, Showing detailed file information from a file list, Searches for specific file information.

ii. Certificate Info

Showing ownership list information along with certificate details. If the physical certificate is not yet available on the certificate ownership list, the user can report the certificate information that is not yet available. Collateral List serves to display the list of collateral code information from the certificate. The list of certificates associated with the account holder will be displayed as a list of entitlements (by NIK). Users can touch the list to view certificate details. From the details of the certificate, the user can see the location of the plot of land on the map or help plotting the plot of land if it has not been mapped (see Locating Land parcels). The convenience offered is that verified users do not need to remember the certificate number throughout Indonesia. If the ownership has not appeared, the user can report the ownership through this application.

iii. Plot Land

To plot a field, the user must enter the number of the certificate to be plotted. Next, the user must draw the plot of land on the map according to its shape and location. Furthermore, by touching the save plot menu, the data will be stored on the server. The Land Office will verify the data later. If your field plot has been verified then your field will appear in the field plot.

iv. Land-Plot Location

The user selects the administrative area of a land parcel, then enters the right type and number. By touching the process button, the location of the said land parcel will be shown on an interactive map.

v. Service Info

Shows a list of service information and includes a service search feature to make it easier for users to find information on terms, fees, and completion periods as well as cost simulations. Users can choose the type of service they want, or search by keyword. By touching the service in question, touch my land will display the terms, time, and cost rates.

b. Checking Certificates at Land office

Certificate Checking at Land Office is to check whether the land is blocked, disputed, or is being encumbered with mortgage rights.

Visiting Land Office, The authenticity of the land certificate will be checked based on the registration map, land register, letter of measurement, and land book.
-What must be brought when visiting Land Office are the original certificate of land rights, a photocopy of the applicant’s identity, the application letter, as well as the identity of the applicant, and a power of attorney if the application is authorized to someone else.
– If according to Land Office the certificate is safe, the certificate will be stamped.
-If any discrepancy is found in the certificate, there will be an attempt by The Land Office to submit it to the applicant, either individually or on behalf of a notary, with the aim of ensuring the correctness of the certificate data (plotting).

c. LP2B Check

Sustainable food agricultural land or abbreviated as LP2B is a field of agricultural land that is determined to be protected and developed consistently in order to produce staple food for national food self-reliance, security, and sovereignty. Sustainable food agricultural land aims to protect the area and food agricultural land in a sustainable manner, ensuring the availability of food agricultural land in a sustainable manner.

LP2B checking is aimed at avoiding buying land with LP2B status because land with LP2B status cannot be built for housing even though the legal ownership requirements are complete.

d. Zone Checking by Government

Before you buy land, you must know whether your land is in proper zoning to build or not, here is an explanation:

Zoning arrangements are provisions on sectoral space utilization requirements and provisions for space utilization requirements for each designation block/zone whose zoning is determined in a detailed spatial plan.

Directions for Provincial System Zoning Regulations, hereinafter referred to as Zoning Regulations Directives are directives for provisions that must, may and may not be implemented in the spatial use zone in accordance with the indications of the Provincial system zoning directives stipulated in the Provincial spatial plan.

The zones in Bali are:

– Green Zone Or Green Open Space
– Yellow Zone/Residential
– Purple Zone/Tourism
– Agriculture Area
– Industrial Are
– Sacred Area
– Governmental Area

e. Land Spatial Information for Land Permits

To buy land in Indonesia, it is not enough just to know the type and ownership of the land, of course, you have to pay attention to future permits, you may be able to buy land but the allotment of the land must be in accordance with the business plan that stands on the land, below are the types of permits, that is:

– Land Use Inspection Process
– Location Permit
– Principle License and Investment
– Space Utilization Permit
– Environmental Permit
– Environmental Management Efforts (UKL)/
– Environmental Monitoring Efforts (UPL)
– Building Permit (IMB)

This is a map of the administrative area of ​​the province of Bali:

f. Knowing what the Government’s plan that will do in the area where the land is located

Knowing what plans the Government will do in the area where the land is located

Basically, the government has plans for infrastructure development in every region in Indonesia, of course, if you are going to buy or build a business in Indonesia, you must know your area whether there will be infrastructure planning or not. For example, in the Gilimanuk, Singaraja, Tabanan, and Mengwi areas, there will be plans for the Gilimanuk – Mengwi toll road.

4. Checking the Land and Building Tax (PBB) on the land to find out the annual payment of land

Regarding taxes, you have to be careful whether the previous land tax has been paid by the owner.

Checking your tax payments will also give you an idea of how much you will pay in future land taxes. However, sometimes the tax amount includes land, but not buildings. If you plan to build a property, the taxes will be higher.

The tax rate is 5% on the acquisition of land purchases, while the seller is 2.5 of the total seller price

Disclaimer:

The information provided here is based on our long experience. The process or requirement may vary depending on the specific facts and conditions. In addition, laws and regulations in Indonesia are often subject to change. Please contact us as your consultant to get an up to date information and accurate advice. For more information click here and you can also follow our social media accounts to see the latest information posts. please click on the following links: FacebookInstagramLinkedin, and Twitter.

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