What is transaction management, and why is it important?
One of Seven Stone’s main services is ‘transaction management’. In Bali, this term typically refers to property-related transactions.
Property investments are exhilarating, whether driven by pure investment intentions, lifestyle upgrades, or both. However, they can also be challenging and intimidating, especially if you’re a foreigner unfamiliar with Indonesia’s legal system. While Indonesia’s legal system has made significant progress in aligning with international standards, it still has distinct differences, such as a heavy reliance on a bureaucratic system that predominantly uses manual paperwork and filing.
While many competent legal advisors, lawyers, and notaries can assist, the multiple layers of transactions, agreements, and correspondence can be daunting. This often makes first-time investors apprehensive.
Time management can be challenging here, as deadlines in Indonesia are perceived differently. Long hours are spent waiting at notary’s, lawyer’s, or government official’s offices or even waiting for a simple email or message reply. While things and people may take their time, an agent providing regular updates can be invaluable.
Complications often depend on the property type you’re considering for investment.
For leases, it’s crucial to grasp the legal intricacies. Indonesian agrarian law isn’t always clear, especially with its various titles of ownership. Common questions include:
– How do you structure activities or businesses on a lease?
– How do permits function?
– How does an extension clause work beyond the initially agreed terms?
– Who handles which taxes?
And many more.
If you’re considering a freehold title to convert into a HGB title (Hak Guna Bangunan), there’s a multi-step procedure detailing how the transaction should be structured. This process involves downgrading the title and eventually transferring it to your entity’s name. Often, the specific zoning will dictate the allowable activities on the land. Questions arise like:
– Is the use solely residential, commercial, or both?
– What permits does the location have? What permits does your PMA possess?
– Should you lease or purchase the title in your personal name or through a company?
The regulations for each scenario differ and can significantly affect your investment.
At SSI, we’ve developed ‘transaction management’. Typically, this begins before or after due diligence – which we also offer. It remains relevant regardless of whether you’re using a formal agent or found the property through other means.
To avoid unnecessary costs, we ensure you either have, or we structure, what we call an OTP (offer to purchase). This is a preliminary agreement outlining price, size, payment terms, due diligence timeframe, and more.
Next, unless one has been conducted, we execute proper due diligence. While expat buyers might expect a straightforward due diligence process, notaries often vary in their depth of investigation. We always conduct comprehensive due diligence, especially since much of the data is manually filed. This process involves liaising with institutions like tax offices, BPN, village offices, permit offices, and others.
Once due diligence is completed, we proceed with actual contracts between buyer and seller. We, along with the chosen notary, provide all necessary documents. We ensure you fully understand and can access an English version, answering any questions promptly through online or offline meetings.
After all elements have been agreed upon and finalized, we usually manage the signing in our office within the stipulated times.
We then oversee processes like title downgrade and handle other necessary paperwork until completion.
Congratulations! You now own a property with a clear path to realize your dreams. Stay informed about any future requirements and communicate with our agency to ensure compliance, whether it’s a second home or a business investment.