There is a possibility to make a contract with an Indonesian local, who becomes the registered owner of the land or house, you want to invest in. This contract can be done with the help of a notary. But first, let’s have a look at the benefits and drawbacks of a nominee contract.
Benefits of Buying Property Through a Nominee
- Freehold instead of leasehold
- The Land or house can be sold again at any time,
- or it will be inherited by your kids.
- A better tax situation (2% instead of 10% of the sales price)
Drawbacks of Buying Property Through a Nominee
- The land or house will not be registered in your name
- Additional risks
- The relationship with the nominee may get disturbed.
- The nominee may go bankrupt and a bank takes over the ownership rights. In order for investors to feel comfortable, this contract can include a certificate, that both parties cannot pawn the land without the consent of the other party.
- The nominee dies and the community of heirs is not willing, nor able, neither competent enough, to continue the agreement.
- A little administrative extra effort and cost due to the nominee contract
- Fees for the nominee’s effort, or sharing profits.
Is it safe, buying land through a nominee?
This is depending on whom you ask. A notary will say: “Yes” because he wants to create the contract for you. But a lawyer will answer: “No”. Because the lawyer only gets to see the cases in which it went wrong. So, it is a very individual decision if you want to take the risk. And an additional risk is definitely there.
To understand the individual steps, get your
Real estate investing Checklist
GUIDE: How to buy land in Bail?
and a draft for a Nominee Contract
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