We get a lot of questions from clients and those who just need some honest, spin-free advice about mixed nationality marriage couples and their rights regarding property under Indonesian law, so I sat down with Andy Gray, from Seven Stones Indonesia to get his take on how he deals with this sort of question.
AB: So, Andy, let’s get straight to the meat of this … what are the legal implications of mixed nationality marriages and property ownership in Indonesia?
AG: Let me begin by saying that I’m not a lawyer and I don’t pretend to be one! We advise everyone who asks anything regarding the law to consult a professional lawyer or notary. All we can do is to give our opinions based on our knowledge and understanding. We do keep as up-to-date as we can and hold regular meetings and discussions with those professionals we see as being the most fair, honest and up to date. Having said that, the problem in the case of mixed nationality marriages and property ownership is that once an Indonesian citizen marries a foreigner they can lose the right to buy or sell Freehold land.
AB: So does an Indonesian have the same legal status as a foreigner when it comes to property transactions?
AG: Not exactly. Initially, this comes from a regulation dating back to Article 35 of the 1974 Marriage Law which states that a person cannot retain all assets obtained prior to marriage or assets inherited during marriage, unless the couple makes a prenuptial agreement. The definition of assets here covers land and property.
Meanwhile, articles 29 and 36 of the Marriage Law require Indonesian who marry foreigners to make prenuptial agreements in order to buy and own property if they wish to do so after they marry.
This is somewhat antiquated and a lot of the regulations in this act of 1974 have been changed and updated by various other acts, most notably in 2006, 2011 and 2015. An example of this can be seen in the fact that any land the person held before marriage is unaffected by the marriage, also a citizen is able to inherit land during the time of the marriage.
There are lots of people in this situation right now who don’t even know it’s a problem and the real problem will arise not when the Indonesian citizen buys a property, but when they come to sell, because the spouse has to sign off on all documentation relating to the sale. You don’t need your partner’s permission to buy. I’ve seen cases where the fact the spouse is foreign has been missed or overlooked by a Notary, but I don’t think this an ideal scenario and it really isn’t a position you want to put yourself in.
AB: So, what’s the solution?
AG: The first thing to make a note of is where was the couple married? If they weren’t married in Indonesia was the marriage registered here?
AB: What difference would that make?
AG: Because if the marriage wasn’t actually in Indonesia and wasn’t registered in Indonesia, Indonesian law won’t recognize it.
AB: OK, so let’s assume the couple were either married here or have had their marriage officially recognized. What’s the solution to this issue?
AG: As I said, by law the easiest way is to have a Prenuptial Agreement. If the couple have this they just need to show a copy of the Prenup to the Notary at the time of sale. The Prenup basically needs to say that the foreigner has no claims or rights over any property the Indonesian owns. A Prenup can be prepared and signed by a Notary for a relatively small amount of money.
AB: What if they didn’t sign a Prenup?
AG: Interestingly enough this applies to a lot of people who either married before the Prenup regulation came into play in 1974 or who married after but just didn’t know about it. Up until fairly recently there wasn’t a straight forward solution, I have heard of couples getting divorced then re-married, applying for KTP’s that stated they were single, (neither of which I would recommend by the way), or changing the title from Hak Milik to Hak Pakai and putting it in the name of the foreign spouse.
AB: Is there anything you would recommend that these couples can do?
AG: The only really legal option is by going to court and asking the court for a reversal of the joint ownership regulation, this is known as a Perjanjian Pisah Harta. It’s important to emphasize here that this is NOT a Postnup and it’s not something a Notary can do on their own. To achieve this at court both partners have to show that they have their own incomes and they’re both financially secure.
They then need to argue that the reason for modifying the rule concerning assets is because it could be detrimental to one or both partners if it isn’t. This would cover all assets not just property, for example something not related to property like if they wanted to start a company.
It could be argued that one partner doesn’t want the other partner to be liable for any debt the company may incur because that would be detrimental to one or other of the partners. They should then ask the court to modify the matrimonial rule concerning assets before they create the company. This is a relatively new solution to the problem for us, I first heard about it being used in Jakarta with mixed couples who didn’t have a Prenup and we used it in Bali for the first time around 3 months ago.
AB: Are there any other options?
AG: Not really, however PerCap, (the mixed race marriage lobbying group) have been pushing for a change in this regulation for a number of years, especially since the introduction of the updated regulation in December 2015. There’s a bill having its second reading in Parliament right now, addressing, among other things, this very issue. So, hopefully this somewhat outdated regulation will be changed or even abolished soon … watch this space!
AB: Many thanks for your time and insights Andy.