Buying from a developer: PPJB, AJB and the risks in between

A house bought from a developer changes hands in two steps. The preliminary sale agreement (Perjanjian Pendahuluan Jual Beli, PPJB) binds you and the developer while the house is built and the title prepared. The deed of sale (Akta Jual Beli, AJB) is what moves the title to you.

Most of the money is usually paid between the two, while you hold a contract rather than a land right. Your protection is what the regulation and the PPJB say.

Two documents with different jobs

Government Regulation 12 of 2021 on housing defines the PPJB as an agreement between a developer and a buyer for a house or an apartment unit, made before a notary. For landed houses and row houses it can be signed while they’re being built. For apartments it can come before construction starts.

A PPJB gives you a claim against the developer. Only a deed made by a land deed official (Pejabat Pembuat Akta Tanah, PPAT) lets the land office register a sale, under Government Regulation 24 of 1997 on land registration. The PPAT has seven working days from signing to send the AJB to the land office, which then records you as the holder.

For an apartment, the Flats Law (Law 20 of 2011) allows the AJB only once the building is finished, meaning its certificate of fitness for use (Sertifikat Laik Fungsi, SLF) and the strata title certificates have been issued.

What the developer must have first

To market houses that aren’t finished, the developer needs at least a planning statement from the city or district on the land’s designated use, a land certificate in its own name or a partner landowner’s, a clear statement of which title you’ll receive, a building approval (Persetujuan Bangunan Gedung, PBG) and a support letter from a bank or another institution backing the construction. The brochure has to give the numbers of these documents. The developer answers for what its sales agents tell you, and the city or district housing office supervises these conditions.

The PPJB itself can only be signed once the developer has met five conditions:

• ownership of the land, proven by the certificate shown to you at signing
• the matters agreed, including the condition of the house and whether the land is collateral for a loan
• the PBG, with a certified copy given to you at signing
• infrastructure: at least roads and drainage built, and the developer’s statement on power and water
• at least 20% built, meaning 20% of all units on an estate or of the construction volume of an apartment building, confirmed by the supervising consultant’s report

You can study the draft PPJB for at least seven working days before signing.

What the rules say about your money

Anything you pay during marketing counts towards the price, and the developer must then give you three schedules: construction, the PPJB signing and the AJB with handover. If it misses the construction or PPJB date, you can cancel and get all of it back. If you cancel when the developer isn’t at fault, it refunds you less a deduction the regulation sets at no less than 20% of what you’ve paid, plus tax already counted. That makes 20% a floor, so read the cancellation clause before you pay a booking fee. The deduction is 10% if a bank turns down your mortgage. Refunds are due within 30 calendar days of the signed cancellation letter, with a fine of 0.1% of the amount for each day of delay.

The developer may not collect more than 80% of the price before the PPJB conditions are met. After the PPJB, a cancellation caused by the developer means your payments come back. One caused by you costs everything you’ve paid if that’s 10% of the price or less, and 10% of the price if you’ve paid more.

From the master certificate to your title

On an estate the developer usually holds one certificate over the whole site, often a right to build (Hak Guna Bangunan, HGB). Before your plot can be sold by deed, that master certificate has to be split, and each plot gets its own survey letter, land book entry and certificate. If the master certificate is mortgaged (Hak Tanggungan) to the developer’s bank, the split needs the bank’s written consent. Under the Mortgage Law (Law 4 of 1996), plots can be released from the mortgage one at a time only if the mortgage deed allows it, so ask to see that clause.

At handover, ask for the SLF, which the regional government issues under Government Regulation 16 of 2021 to confirm a building is fit to be used. Then the taxes set out in the costs of buying property are paid, the AJB is signed and the land office registers the title in your name. A foreign buyer ends up with a right of use (Hak Pakai) instead, as buying property as a foreigner explains.

When a developer stalls

A stall usually means building slows, the PPJB date passes or the house is finished but the master certificate isn’t split, so there’s no AJB. You can live in a finished house on a PPJB, but you can’t sell it by deed or mortgage it until the title is yours.

Your remedies start with the PPJB, which must cover the handover date, cancellation and dispute resolution. Beyond that, you can claim in the district court or at a consumer dispute settlement body (Badan Penyelesaian Sengketa Konsumen, BPSK). If the developer goes into a court debt restructuring (PKPU) or bankruptcy under Law 37 of 2004, a buyer with only a PPJB usually ranks as an unsecured creditor, and a bank with a mortgage over the land is paid from it first.

Before you sign

• Have the PPAT check the master certificate at the land office, mortgage included, as set out in how to check a land certificate, and match the brochure’s document numbers against the originals.
• Ask the notary to have the PPJB recorded at the land office, as Government Regulation 18 of 2021 allows.
• Tie each payment to a stage you can see: the PPJB, milestones in the consultant’s reports, handover with the SLF and a last payment at the AJB.
• Pay only into the developer company’s account, never to an agent, and keep every receipt.
• Get the title type and a date for the plot certificate into the PPJB, with a penalty if either slips.