Many of us know all too well about the dangers of land ownership in Bali. We also know how important it is to find a competent notaris who can carry out a comprehensive “due diligence” investigation of the ownership and circumstances of a property before we get involved.
For those who are new to Bali it is a good idea to be certain of your situation before you part with any money and, incidentally, it is always wise to think of a deposit as something you may not get back. All too often surgery is required to retrieve the money from the hand of the person you gave it to.
The widespread use of nominees for Hak Milik (the nearest thing to freehold title) ownership of land in Indonesia is very dodgy at the best of times and my advice is not to do it. Sure, that smiling friend of yours may be trustworthy and honest at the moment but there are many possible problems that can occur. It may be that you have an argument with your nominee or his family in the future and what will happen then? Your nominee may die or disappear, who will you have to deal with then?
I knew of a man who bought land and built his home in his wife's name, she died and her family came and demanded the property. He lost the lot. Foreigners cannot own land and in the case of the foreigner inheriting it they have to sell it within 12 months. All very well as long as the inheritance is properly organised.
The hidden dangers of land ownership in Bali have been well covered by many commentators in the past but it is equally important to pay attention to the lesser considered issue of access to land.
Ideally land should have direct access from a public road. This needs to be checked out fully and it pays to inspect the land survey included with the land certificate to make sure that legal access does in fact exist. Such access should also be reasonable, a metre wide strip is not much use if you have a car. You also need to make sure that the public road is connected to other public roads, it may sound strange but I came across a case of a public road that was isolated in the middle of rice fields with no way in or out.
So let us look at access problems and some recent cases I have come across.
The first case was of a building being used as an office by an Indonesian man. The only access was from a main road via a strip of land which also belonged to the owner of the building.
One day a neighbour who owned the property next door barricaded the strip of land and demanded a payment of Rp20 million for use of the access. A bitter argument ensued between the owner of the land who had documents to prove he owned the strip of land and the neighbour who demanded payment. Eventually the police were called in and a settlement was negotiated, a payment of Rp2 million to the neighbour. It turned out that the local Klian assisted by some rather large local men was supporting the neighbour in his illegal demands.
The example shows that even well educated local people who are fully within their rights find themselves in situations that they cannot fight and a settlement has to be negotiated. It is wise to realise that such situations are usually dependent on power and money rather than who has the law on their side.
The second case was of an expatriate who leased a large piece of land under Hak Pakai (“right to use” - a land title which is legally available to foreigners). The plan was to subdivide the land into several plots, build several dwellings and sell all but one which would then be kept as a home for the expatriate.
The plan started to come unstuck when it was found that the expatriate hadn't done his homework properly. The land was zoned for agricultural use and could not be converted for use for house building. The next problem occurred when it was realised that to execute the plan it would be necessary to subdivide the land into several blocks. To do this an Ijin Kavling (permit to subdivide) is required which must ensure that each block has its own legal access. This is usually achieved by including a road access within the subdivision which must be declared as a public road.
The final problem came when the expatriate was told that foreigners are only allowed to “own” one piece of land, once subdivided the block would become several pieces of land.
Due diligence and a sharp notaris should have spotted these problems and warned the client at an early stage. Zoning is a very basic mistake and one that a notaris correctly representing you should never be expected to make. In such a circumstance perhaps the loyalty or competence of the notaris needs to be questioned.
The statement that a foreigner can only lease one block of land at a time is something I haven't come across before and certainly is not stated in the Agrarian law of 1967 which covers land ownership and titles. It may well be that this isn't the case at all, all too often in Bali it is difficult to get accurate statements of legal fact.
In all sorts of situations it is surprising how often one notaris, agent or government official will tell you one thing while another will have a different interpretation. Added to this is the confusion created by different Kabupatens having different bylaws and possibly their officers each having their own personal interpretation of the rules. Also be aware that individuals may make their own interpretation of the rules simply to create a difficulty and request an additional payment.
It pays to keep things simple, be willing to walk away if things start to get murky or complex. Hold back financial payments until things are very clear. If in doubt go and ask for a second opinion.
The third case was of an expatriate with a property which has access via a small road between a temple and a banjar. The access land belongs to the local banjar and is not a public road and early suggestions that this was a minor issue proved not to be the case. The banjar demanded a huge sum of money (hundreds of millions of Rupiah) to allow access across their land and an expensive house suddenly became a very expensive house.
Once you have paid the money for a property that requires access over someone else's land you are in a difficult position. It is quite understandable that if people see someone from overseas come and plonk themselves into their local community, with a house worth a fabulous amount of money the local community could only ever dream about, the newcomer cannot expect to get off without making a significant contribution. Local people tend to have a very fair sense that people should contribute to the community according to their ability to pay.
In many access situations it is advisable to take a measured approach and take a lesson from the way the locals handle things.
If things get difficult don't get angry, it will get you nowhere. Unlike in our European culture when someone starts shouting and being aggressive Indonesians have a clever way of simply ignoring you, you end up achieving nothing.
It is best to get some local advice and try to sort out problems the Balinese way. The key word in all this is respect. Find a high caste Balinese man (yes, I know, but unfortunately in this culture it should be a man) who is highly respected in the community. The more respected the better.
Get that person to mediate the situation on your behalf. I have come across a number of situations where banjar representatives have demanded money and the situation has been resolved by elders in the community who are highly respected for their wisdom and integrity.
You will probably have to compromise and pay some money. You need to be careful and very sensitive, it may well be that your high caste representative may be insulted if you offer him money directly conversely he may expect a “gift”. Address the issue of a gratuity indirectly to avoid embarrassment.
It goes without saying that doing things the Balinese way is not going to work if you yourself are not acting with integrity.
As a final comment it is wise to remember that Balinese society is not made up of a group of isolated individuals as we find in modern western life. It is sophisticated society with an age old hierarchical structure based on wisdom and respect. It's foundations and strength lie in the communities from which it is formed. While you may be buying a piece of land from an individual who badly wants your money you have to deal on an ongoing basis with the community you are moving into. They will expect you to treat them with dignity. If for some reason you upset them or they don't accept you life can get pretty difficult.