Comprehensive Guide to
Property Purchase Process
Navigating the property purchase process can be complex, but this comprehensive guide will walk you through each essential step, from the initial inquiry to finalizing the transaction. Whether you’re interested in acquiring property in Lombok or anywhere else in Indonesia, understanding the legal framework, necessary permits, and local practices is crucial for a successful investment. With the right knowledge and preparation, this guide ensures that your property purchase is smooth, legally compliant, and financially sound, whether you’re buying in Lombok, Bali, Jakarta, or any other region in Indonesia.
Stage 1: Property Search and Selection
Determining Property Criteria
- Desired Location: Strategic position, accessibility, future development, environmental factors, neighborhood characteristics, and checking area zoning criteria for compliance with government regulations.
- Available Budget: Purchase price, additional costs, renovation budget, tax considerations, and maintenance reserves.
- Property Specifications: Land area, building size, room count, orientation, and special features.
- Purpose Requirements: Residential, commercial, mixed-use, investment potential, or development opportunities.
- B. Site Survey
- Physical Property Inspection: Land shape, boundaries, environmental conditions, road access, utility availability, and building structure (if applicable).
- Area Analysis: Regional development plans, flood risks, security conditions, nearby public facilities, infrastructure projects, and community environment.
Stage 2: Due Diligence
A. Legal Verification
- Ownership Documents: Verify certificate type (Freehold/Leasehold/Traditional), validity period (for leasehold), registered owner, encumbrance records, and building permits.
- Ownership History: Check land origin, previous transfers, potential disputes, legal claims, and development restrictions.
B. Technical Assessment
- Zoning Compliance: Confirm land use designation, building coverage, floor area ratio, setback lines, and height restrictions.
- Environmental Aspects: Assess zone classification (green/yellow/red), water catchment areas, protected areas, environmental impact, and natural disaster risks.
C. Administrative Review
- Taxation: Review property tax payments, assessment value, outstanding liabilities, payment history, and future tax implications.
- Licensing: Verify building, location, land use, environmental permits, and business licenses (if applicable).
Stage 3: Negotiation and Agreement
A. Price Negotiation
- Value Determination: Assess market value, comparable properties, development potential, property condition, and location premium.
- Payment Schemes: Choose between cash, installments, bank financing, developer terms, or custom arrangements.
B. Sale and Purchase Agreement
- Document Preparation: Prepare necessary documents like ID cards, tax numbers, original certificates, and proof of tax payments.
- Agreement Contents: Define parties, property details, price, payment terms, timeline, conditions, penalties, dispute resolution, and force majeure clauses.
C. Agreement Follow-up
- Transfer down payment
- Schedule payments
- Prepare deed
- Calculate taxes
- Arrange property transfer
