Property Title Search in Bali

Property title searches in Bali, what you need to know

A property title search is an essential step when purchasing real estate in Bali, ensuring that the property is free from legal disputes, encumbrances, or ownership issues. In Indonesia, land and property transactions are regulated by the Badan Pertanahan Nasional (BPN), or National Land Agency, which is responsible for land registration, title issuance, and maintaining property records.

​

The primary goal of a title search is to verify the legal status of the land or property, confirm the current owner as registered with BPN, and ensure the property has no outstanding liens, mortgages, or other claims. This is especially important in Bali, where foreign ownership is restricted, and specific property titles like Hak Pakai (Right to Use) and Hak Guna Bangunan (Right to Build) are used to structure property purchases for non-Indonesian nationals.

​

To conduct a title search, many buyers engage a licensed Notaris/PPAT (Notary and Land Deed Official), a legal professional authorized to handle property transactions and review land records. The notary will liaise with the BPN to obtain the property's legal documentation, including the Sertifikat Hak Milik (SHM), which is the highest form of land ownership in Indonesia, and check for any restrictions or third-party claims on the land. In addition to reviewing ownership, a title search also examines IMB (Izin Mendirikan Bangunan) or building permits, and zoning laws, ensuring the property complies with local regulations.

​

By conducting a thorough title search through official channels, such as BPN and licensed notaries, buyers in Bali can safeguard their investment and avoid potential legal complications.

How to conduct a property title search in Indonesia

Conducting a property title search in Bali is a vital step in ensuring that a real estate transaction is legally sound and free from disputes. Given the complex regulations surrounding property ownership in Indonesia, especially for foreigners, the title search process helps confirm that the property has a clear legal standing. Here’s a step-by-step guide to conducting a title search on a property in Bali:

​

​

1. Engage a Licensed Notaris/PPAT (Notary and Land Deed Official)

​

In Indonesia, licensed notaries (known as Notaris or PPAT) are legally authorized to handle property transactions and verify land ownership. Engaging a qualified notary is crucial, as they will liaise with government agencies and ensure the legitimacy of all documentation. The notary's role is to assist with title searches, handle the due diligence process, and review legal documents with the Badan Pertanahan Nasional (BPN), the National Land Agency responsible for land registration.

​

​

2. Obtain a Copy of the Land Title Certificate (Sertifikat Hak Milik)

​

The first step in the title search is obtaining a copy of the land title certificate, known as the Sertifikat Hak Milik (SHM), which is the strongest form of land ownership in Indonesia, or another applicable title (such as Hak Pakai or Hak Guna Bangunan for foreign buyers). The certificate will detail the legal owner of the property and any encumbrances or liens attached to it. Your notary will verify the authenticity of this certificate with the BPN.

​​

​

3. Check Property Zoning and Land Use (Tata Ruang)

​

Ensure that the property is zoned correctly for your intended use. This involves checking with local government agencies for zoning regulations (known as Tata Ruang) and land use approvals. Some areas in Bali may be zoned for agricultural use, while others are designated for residential or commercial purposes. Verifying this ensures that your plans for the property (e.g., building a house or a business) comply with local zoning laws.

​

​

4. Request a Land History Report (Riwayat Tanah)

​

Your notary will also request a Riwayat Tanah, or land history report, from the BPN. This document provides a detailed history of the property's ownership, including any past transfers, transactions, or disputes. The report will also reveal whether the land has any unresolved legal claims or if there are ongoing legal disputes that could affect your ownership.

​

​

5. Verify Encumbrances and Liens (Cek Beban dan Hak Tanggungan)

​

A key part of the title search is ensuring that the property is free from any encumbrances or legal restrictions. Your notary will work with BPN to verify that there are no outstanding liens (Hak Tanggungan) or mortgages attached to the property, as these could transfer to the new owner and become a financial burden.

​

​

6. Check for Outstanding Taxes (PBB – Pajak Bumi dan Bangunan)

​

Ensure that all property taxes have been paid up to date. The notary will review the PBB (Pajak Bumi dan Bangunan), or land and building tax records, to confirm there are no outstanding taxes owed on the property. This step is critical, as unpaid taxes can result in legal complications and penalties.

​

​

7. Confirm Building Permits (IMB – Izin Mendirikan Bangunan)

​

If the property includes a structure (such as a villa or house), check that the building has the necessary permits, known as IMB (Izin Mendirikan Bangunan). This permit verifies that the construction was done legally and in compliance with local regulations. Your notary will obtain the IMB from local authorities to ensure that the building was constructed according to approved plans and regulations.

​

​

8. Obtain Official Documents from Badan Pertanahan Nasional (BPN)

​

Your notary will submit an official request to Badan Pertanahan Nasional (BPN) for an authenticated copy of the property’s title and to confirm that the ownership and legal status of the land are accurate. The BPN will check its records for any inconsistencies and confirm whether the property is free from legal issues.

​

​

9. Cross-Check Ownership with Local Banjar and Village Office (Desa Adat)

​

In Bali, it is also common practice to verify the ownership status of the property with the local Banjar (traditional community council) and Desa Adat (village office). This ensures that there are no local disputes or claims over the property that may not be registered with the BPN. The notary will assist in cross-checking these details to avoid any future community-related disputes.

​

​

10. Final Review and Due Diligence Report

​

Once all the necessary documents and verifications have been completed, your notary will provide you with a Due Diligence Report summarizing the results of the title search. This report will confirm the legal standing of the property, whether it has any encumbrances, and whether it complies with local laws and regulations. This step gives you peace of mind before proceeding with the purchase.

What are some common issues that can be found on title searches?

If issues are found during a property title search in Bali, they can often be resolved, but the specific approach depends on the nature of the problem. Here's an overview of common title issues and how they can be fixed:

​

​

Unpaid Taxes (Pajak Bumi dan Bangunan - PBB)

​

Problem: If the previous owner has unpaid land and building taxes, this can create legal complications for the new owner.

Solution: The unpaid taxes can typically be settled before completing the transaction. Your Notaris/PPAT will work with the seller to ensure that all outstanding taxes are paid before the property transfer. If the seller refuses or is unable to pay, you may negotiate a price adjustment to cover the tax liability.

​

​

Encumbrances and Liens (Hak Tanggungan)

​

Problem: The property may have a lien, mortgage, or other financial encumbrances registered with Badan Pertanahan Nasional (BPN). These could prevent the legal transfer of ownership.

Solution: Liens and mortgages must be cleared before the property can be legally transferred to a new owner. Your notary will work with the seller and any financial institutions involved to ensure that the debts are settled. If necessary, the proceeds from the sale can be used to pay off these obligations before the final transfer of title.

​

​

Disputed Ownership

​

Problem: In some cases, multiple parties may claim ownership of a property, or there could be disputes about inheritance rights. This often happens with Sertifikat Hak Milik (SHM) land or customary land (Tanah Adat).

Solution: Resolving ownership disputes typically requires legal action. Your notary or lawyer will need to investigate the claims and, if necessary, bring the matter to an Indonesian court for resolution. The transaction should be paused until the ownership is confirmed and cleared of disputes.

​

​

Incorrect or Missing Documentation

​

Problem: The title or other essential documents, such as the IMB (Izin Mendirikan Bangunan) or zoning permits, may be missing or incorrectly registered with BPN.

Solution: If there are clerical errors or missing documents, the notary can help correct the records by liaising with BPN and local authorities. This can involve submitting additional paperwork, obtaining approvals from local government offices, or re-registering the land.

​

​

Zoning Issues (Tata Ruang)

​

Problem: The property may be incorrectly zoned for its intended use, such as residential land being used for commercial purposes, or agricultural land not being suitable for building.

Solution: Zoning issues can sometimes be corrected by applying for a zoning change through the local government. Your notary or legal representative can assist in this process, but it may involve delays and costs. In some cases, the change may not be approved, and you would need to reconsider your investment.

​

​

Boundary Disputes

​

Problem: The legal boundaries of the property may not match the actual physical boundaries on the ground, leading to disputes with neighbors.

Solution: A surveyor can be hired to officially map the boundaries and correct the records at BPN. This is typically handled by your notary in cooperation with local authorities. If the boundary issues involve neighboring properties, negotiations or legal action may be required to resolve the dispute.

​

​

Foreign Ownership Restrictions

​

Problem: Foreign buyers are restricted from owning land under Sertifikat Hak Milik (SHM) but can hold other forms of titles such as Hak Pakai (Right of Use) or Hak Guna Bangunan (Right to Build). If the title search reveals that the property is held under an SHM title and cannot be transferred to a foreigner directly, this poses a problem.

Solution: Foreign buyers can resolve this by converting the title to a suitable structure like Hak Pakai or using an Indonesian nominee or company structure (PT PMA) to hold the property. This process requires the assistance of a notary and legal experts to ensure the conversion or structuring is done correctly according to Indonesian law.

​

​

Inheritance or Customary Land Issues (Tanah Adat)

​

Problem: Property that is inherited or part of Tanah Adat (customary land) may not have been formally registered with BPN or may have unresolved inheritance claims.

Solution: If the land has not been registered with BPN, the heirs or current occupants must formally register it. This can involve negotiations between family members or a legal process to clarify ownership. Once ownership is resolved, the land can be registered under the appropriate title.

​

​

Fraudulent Titles or Forged Documents

​

Problem: In rare cases, title documents may be forged, or the seller may not be the legitimate owner.

Solution: If fraud is suspected, legal action must be taken immediately. A thorough investigation by a notary and legal team will be needed to expose the fraud, and the transaction should not proceed. Engaging a reputable notary and performing due diligence is the best way to avoid this issue.

​

​

Most issues that arise during a property title search in Bali are fixable, but the resolution process depends on the complexity of the problem. Working with an experienced Notaris/PPAT, in cooperation with BPN and local authorities, is crucial in resolving these issues and ensuring a smooth transaction. In more severe cases, legal action may be necessary to clear disputes before proceeding with the purchase.