Indonesia has a law that prohibits the sale of land to foreigners. And also according to the law, everything on the land belongs to the owner of that land. Therefore, when building properties, a lease or sublease of the land is executed for up to 20-30 years in the first iteration, and then for another 15-20 years. This is called leasehold - the most common type in Bali.

Importantly, when executing a leasehold, it is advisable to include terms in the contract stating your priority right to renew the lease at market value.

When making a purchase, the developer will usually sign 3 contracts with you:

1) for the construction of the object;
2) for the lease of the land under it;
3) for the management of the object by the management company.

If you want to sell your property, you will only need to re-register the land lease agreement to the new owner.

It is very rare for local people to sell their land to someone as a property (it is freehold). But even if they do, it can only be registered in the name of the company, plus the cost of the land will be significantly more expensive.

As a rule, all developers give you the alternative of using the services of their management company or managing the property yourself. In practice, a third option is also possible, when you engage a third-party management company, and we will advise you trusted companies.

Often, when purchasing any property, the developer will give a mandatory guarantee to extend the lease at the end of the term.

This means that the landlord (owner of the land) makes a documented promise, a contract that he will extend the lease for the next term. This is usually another 15-25 years, depending on the landlord's terms.

The cost of the extension will be calculated at the time of payment at market value, excluding the building. This value will be determined by independent experts based on the market value of neighboring land lots.

Yes, there is no escrow account system in Bali.

However, the investor can protect himself:

1) choosing a contractor with already built objects in Bali and a good reputation

2) registering the right of ownership of real estate at a notary, at least immediately on the land lot

3) conducting full Due Diligence (verification of all documents of the deal) with an independent lawyer

4) determing fines and penalties for delayed construction in the construction contract

5) using proper structure of contracts: there should NOT be an investment contract, but a separate contract for the transfer of lease rights to the land lot and a separate construction contract.

With this set of measures, the buyer will be able to minimize his risks when investing in the construction.

As an alternative, you can consider the purchase of already built residential real estate and our agency can also help in this: from the selection of the option to the transaction.