II. Summary of the Basic Steps to Buying Land in Lombok

This discussion focuses on the most popular method for buying land in Lombok, commonly called the Nominee Method. Specifically, the foreign investor provides funds to buy the land and Indonesian citizen (commonly referred to as a partner or 'nominee') retains 100% ownership of property as a freehold (or fee simple) title. A signed and recorded Partnership Agreement specificies the rights and obligations of both the investor and nominee.

Other options are used by foreigners to acquire real estate in Indonesia. In prime areas where quality real estate in limited supply (such as Bali) land is sold using the Lease Method. The advantages and disadvantages of each method are discussed in "Legal Issues".

The following is a description of the basic steps involved in purchasing property, listed roughtly in chronological order.

A. Get familiar with all of Lombok.

Lombok has many different areas with different vegetation, terrain, and degree of development. Some very nice areas are off the beaten trail and completely overlooked by many buyers. Thus, the "perfect property" can go unnoticed. Spending a few weeks getting familiar with all of Lombok can pay dividends.

B. Choosing a Partner (or "Nominee") and other Trusted Local Residents.

Finding an honest, competent and independent partner is the most important and difficult step in the process. In time, your partner will become a close friend, advisor and confidant. He can help you avoid many of the common pitfalls in the property purchasing process. You may also need one or more local people who are experienced in special areas of buying and selling land.

C. Find a parcel of land.

   >Real Estate Office & Internet Sites - These are the easiest way to find land, but necessarily the cheapest. They generally offer quick, comprehensive service, but prices are usually higher.

   >Local Guides - Young men, frequently found in the vicinity of restaurants and hotels, who normally function as tour and surf guides, also are familiar with local property for sale.

   >The Local Rumor Mill - Once you let it be known that you are in the market to by land, the gossip mill will attract local residents who wish to sell their land.

   >Other Sources - Expats who live in the area have gone through the process of purchasing land previously and often know about land currently for sale. "Property for Sale" advertisements in tourist newspapers, and signs by the side of the road, are alternative ways to find property.

None of these methods is the perfect way to shop for real estate. All five of these methods have their advantages and disadvantages depending on your particular situation.

D. When You Find a Parcel of Land that Interests You.

Before you get too attached to a piece of property, make sure it does not have any glaring problems. A few important items worth mentioning are: be certain the land has clear title, availability of water and electricity, public access road, and the cost to make the property suitable for construction.

E. Negotiate the price of the land.

The negotiation process can be a drawn out process, with family and neighbors offering advice. Often, foreigners are both unfamiliar and uncomfortable in this situation. It is vital that you have someone you trust (preferably your partner) take control of the conversation while still keeping the power to reject the price, counteroffer, or make some changes to the deal.

F. Conduct Comprehensive Due Diligence.

Due Diligence simply means doing research to make certain the property does not have any hidden ownership problems which would make it impossible to successfully process a land certificate. There are two parts to conducting due diligence: 1) reviewing the public records for problems plus conducting a land survey to verify the boundaries; and 2)talking extensively with neighbors and family, and anybody else that may have knowledge of issues that could cloud the ownership rights. Only someone who is familiar with both the process of purchasing real estate, and knows the people and customs of the area can only handle this step.

G. Go to the Notaris to Initiate Title Transfer.

When the purchasing process has progressed to the point where you are ready and willing to transfer the land into your partner's name, your partner will bring the relevant purchasing details to Public Notary (i.e., Notaris) office. The Notaris will prepare all of the relevant documents to be signed by the landowner and your partner.

The Notaris will draw up the legal papers to form your partnership in accordance with your instructions. When everyone goes to the Notaris office to sign the papers that initiate title transfer, you can also sign your partnership agreement.

H. Recordation and Issuance of the Land Certificate. (BPN)

Finally, the land must be recorded at the local land office (called the BPN). This process can take from 4 months to 8 months, depending on many factors (primarily money). When you are finished with BPN, you will receive a Certificate that makes the sales final.

"No one promised this would be easy!"

I.Important Facts to Consider

A.Is ownership risky?

B.Lombok: A Different Culture

C.Living on Lombok

II.Summary Steps to Buying Land

A. Get familiar with Lombok

B. Choosing a Partner("Nominee")

C. Find a parcel of Land

D. When You Find a Parcel

E. Negotiate the Price

F. Comprehensive Due Diligence.

G. Initiate Title Transfer.

H. Issuance Land Certificate

III. Visit All Lombok First

A. From Tourist to Resident

B. Explore the Hidden Lombok

C. Starting a Checklist

IV. Legal Issues

A. The Issue of Ownership

B. Foreigners Solve the Problem

C. The Nominee Method

D. Foreign Direct Investment(PMA)

E. One Final Option

V. Choose Partner and Team

A. Start Looking Early

B. Wide Variety of Skills

C. Other Trustworthy People

D. Check if Trustworthy

VI. Places that Sell Land

A. General Warnings

B. Real Estate Companies and Websites

C. The Local Tour Guide

E. The Local Gossip Mill

F. Miscellaneous Sources

VII. When You Find a a Parcel

A. Initiate Early Discussions

B. The history of the land

C. Get to know the Players

D. Slowly Get to the Price

VIII. Through an Engineer's Eyes

A. Clear access

B. Public facilities

C. Everything Belongs to you?

D. Check the Drainage

E. Check the Stability

F. Double Check Everything

IX. Settle Price and Terms

A. Necessary Preparations

B. Establish Proper Atmosphere

C. Conduct the Negotiations

D. The Issue of Parcel Size

E. Money is Not the Only Issue

F. Giving a Deposit?

X. The Written Agreement

A. How do I Pay Money?

XI. Due Diligence and Research

A. Risk versus Benefit

B. Due Diligence

C. Checking Public Records

D. Digging for the Unwritten Truth

XII.The Notaris Office

A. Settling the Final Terms

B. Notaris - Initiate Title Transfer

C. Sign the Nominee Agreement

XIII. Finally a Certificate