due diligence bali indonesia

Due Diligence to Conduct before Buying Land in Bali & Lombok

  • InCorp Editorial Team
  • 20 January 2020
  • 4 minute reading time

Before jumping into buying a piece of land in Bali, Lombok, or anywhere else in Indonesia for that matter, you must conduct land due diligence to at least determine that the land seller is the legal owner and has the sole selling rights. We tell you why.

Bali and Lombok have long been desirable destinations for many foreigners to buy land and settle down for good in Indonesia. However, buying a piece of land in Bali means that you will also have to face certain legal risks. Many unforeseen issues can arise and may turn your dream of land acquisition in Bali and Lombok into an ordeal.

Most foreigners encounter some common problems while buying land in Bali and Lombok: land-use restrictions, eviction issues, legal owner issues, unnecessary hidden fees, etc.

In this article, you will read more about the things you need to validate in your due diligence before closing a land acquisition deal in Bali and Lombok.

Buying Land in Bali and Lombok: What to Validate

1. Rightful Owner with Valid Certificate

First, you must ensure that the person selling you the land is the correct landowner.

Then, you need to identify their truthfulness by asking the landowner to show the updated and valid land certificate; or you can also check the inheritance documents.

2. Tax Payments

One of the most critical parts of land acquisition in Bali is to know whether the former owner has paid their land taxes before you finish the transaction.

Unpaid taxes mean you will not be able to proceed with anything e.g. acquisition and building permit.

3. Zoning Verification

Under Bali’s zoning regulations, commercial activities are actually prohibited in some areas of the island. Therefore, your land could be useless if you have the wrong zoning for your business activities.

4. Building Permit

If there is a building on the land you are going to buy, you must also make sure that you possess the building permit IMB. To avoid any litigations, the building’s classification and function must all be in compliance with the zoning laws in Bali.

Buildings that do not meet the zoning requirements or do not have an IMB will be demolished by the government.

5. Land Infrastructure and Land Border

It is important to determine the land’s actual size as well as whether there are any overlapping property boundaries with due diligence. This gives you a confirmation regarding your land transaction integrity. A tiny overlapping unit can eventually give rise to disputes between the two parties: the landowners and their neighbors.

In addition to that, ex-pats are encouraged to check the legality of an access road because some access roads may be privately owned or publicly owned by the local community. This condition can also affect the value of your purchased property.

6. Limited Property Access

In Bali and Lombok, it is common that foreigners who purchase a villa will also get usage permission for road access from the previous owner who possesses the land linked to the foreigner’s purchased villa.

However, after some time, the landowner may change their mind and would want to collect fees from foreigners for using their land as road access. This can quickly lead to disputes and maybe costly court cases. Thus, foreigners need to know beforehand that road access comes as “free” and is not actually free.

Due Diligence with Cekindo

It is essential to have a clear understanding of your land acquisitions in Bali and Lombok. Cekindo offers quality due diligence that will help you gain insights into the land value and potential issues, giving you confidence in making a final decision for closing a deal.

As a leading land due diligence service provider in Indonesia, Cekindo’s due diligence team is made up of highly-trained examiners to provide you with a detailed analysis of all pertinent aspects of land transaction and ownership. Let our experienced team assist you in buying your prospective land in Bali before making a huge commitment.

Reach out to discuss your due diligence needs by filling in the form below.

Pandu Biasramadhan

Senior Consulting Manager at InCorp Indonesia

An expert for more than 10 years, Pandu Biasramadhan, has an extensive background in providing top-quality and comprehensive business solutions for enterprises in Indonesia and managing regional partnership channels across Southeast Asia.

Get in touch with us.

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Frequent Asked Questions

When a foreigner or their heir move to another country and have not stayed in Indonesia within one year, they must relinquish or transfer ownership rights to someone that meets Indonesian land or property ownership requirements in Indonesia.