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Here’s How Prenup Can Help You Own Property in Indonesia

Monday, 06 January 2020
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Legal Ground in General

In Indonesia, foreigners are not allowed to legally own freehold title (Hak Milik) in landed property.  In accordance with Article 21 (1) of  Law number 5 of 1960 regarding  Basic Agrarrian Law imposed that: “Only Indonesian citizens can have a hak milik.” In the event the Indonesian married to a foreigner, she will be precluded to legally own freehold title of a landed property. This stipulation also similar to the situation as if she lost her rights as an Indonesian citizen.

Furthermore, according to Art. 21 (3) stipulates as follows: “A foreigner who, following the entry into force of this Act, acquires a hak milik by way of inheritance without a will or by way of joint ownership of property resulting from marriage and an Indonesian citizen holding a hak milik who, following the entry into force of this Act, loses Indonesian citizenship is obliged to relinquish that right within one year following the date the hak milik is acquired in the case of the former or following the date upon which Indonesian citizenship is lost in the case of the latter. If following the expiry of the said timr periods, the right is not relinquished, then the siad right is nullified for the sake of law and the land falls to the State with the proviso that the rights of other parties which encumber the lands remain in existence.”

As for the Art. 21 (4) imposed as follows:  “As long as one with Indonesian citizenship concurrently holds foreign citizenship, he/she cannot have land with the status of a hak milik, and to him/her the provision as meant in paragraph 3 of this article shall apply."

Those are the legal grounds why you need to have a prenuptial agreement in the first place. The prenup is to separate your property acquired before and during the course of your marriage. This is the legal way to get around the issues of property ownership in mixed-marriage couples in Indonesia. 

Legal Ground from Banking Sector 

Some other legal ground comes from the banking sector. A prevailing regulations that apply to a bank imposed that a loan applicant must possesses a marital agreement for mix-marriage couples. The regulation of Bank Indonesia number 7/14/PBI 2005 regarding  Rupiah transactions and providing foreign currency credit by the bank for foreigners. The foreigners here are citizens who are licensed or permitted to stay Indonesia. For mixed-marriage couples, the Indonesian spouse will be precluded in applying for credit or a loan to the bank in the event she/he does not have any marital agreement governing the separation of their properties.

In the event no prenuptial agreement exists in your mixed-marriage, the Indonesian spouse will be considered to have join property with her/his foreign spouse. Therefore, the bank will not be able offer loans to the Indonesian spouse. This is because that she/he may require a consent from her/his foreign spouse to execute a property transaction. It is something that the foreigner will not be able to provide as he/she is not in the legal position to own any property in the first place. So, you are hitting a dead-end. 

  1. The regulation of Bank Indonesia number 7/14/PBI 2005 stipulates:  Banks are prohibited from conducting certain transactions with Foreign Parties as follows:
  2. Provision of Credit in rupiahs and/or foreign currencies;
  3. Placements in rupiahs;
  4. Purchase of rupiah-denominated Securities issued by Foreign Parties;
  5. Inter-Office Accounts in rupiahs;
  6. Inter-Office Accounts in foreign currency for provision of Credit outside Indonesia;
  7. Equity Participation in rupiahs;
  8. Rupiah Transfer to an account held by Foreign Parties and/or joint account held by a Foreign Party and non-Foreign Party at a domestic Bank;
  9. Rupiah Transfer to an account held by a Foreign Party and/or joint account held by a Foreign Party and non-Foreign Party at an overseas Bank.

Documents You Need

This is not a personal attack on you. This is the ruling from our legal system to protect the land in Indonesia only for Indonesian. No offence. Should you interested in moving forward with your own prenuptial agreement, have these documents ready so we can review them and provide the best possible terms and conditions for your situation:

  1. ID Card (KTP), for Indonesian; 
  2. Family Card or Kartu Keluarga, for Indonesian; 
  3. Copy of birth certificate, for Indonesian;
  4. Copy of passport and Kitas, for foreign spouse.

Your prenuptial agreement will be going places. They must be recognized by government institutions. Your supporting documents are the credentials to lodge the prenuptial agreement in the right database. The government is getting organized these days, which is good for you. All you've got to do is to comply. Cheers!

My name is Asep Wijaya. Thank you for reading my blogs!

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