DECEIVED BY A PRELIMINARY SALE AND PURCHASE AGREEMENT (PPJB) FOR AN APARTMENT OR HOUSE!
It has become a prevailing practice in the real estate sector that a developer markets various apartment units or houses merely through drawings or illustrations. Purchasers are required to remit purchase money, and a Preliminary Sale and Purchase Agreement (Perjanjian Pengikatan Jual Beli, “PPJB”) is executed. The delivery of possession of the unit, however, takes place at a later stage—sometimes in months or years, and in certain cases, the unit is never delivered at all. How, then, is the practice of PPJBs in house or apartment sales regulated?
WHAT IS A PPJB?
The practice of selling houses and/or apartments is governed under Law No. 1 of 2011 on Housing and Settlement Areas (“Housing Law”), as amended by Law No. 6 of 2023 on the Enactment of Government Regulation in Lieu of Law No. 2 of 2022 concerning Job Creation as Law (“Job Creation Law”). Implementation of these statutes is further regulated under Government Regulation No. 14 of 2016 on the Administration of Housing and Settlement Areas, as amended by Government Regulation No. 12 of 2021 (“PP 12/2021”).
Article 1 of PP 12/2021 defines a PPJB (Preliminary Sale and Purchase Agreement) as a contractual undertaking between a developer (real estate operator) and a purchaser (prospective buyer of a housing unit or condominium unit), which may be executed prior to the commencement of construction for a condominium, or during the construction process for landed houses or row houses, and which must be executed before a notary public.
From this statutory definition, several points are evident:
A PPJB constitutes a contractual undertaking between a developer and a prospective purchaser;
The construction of the unit subject to sale is not yet completed;
A PPJB does not constitute a transfer of title to land or building (unit), as the transfer of ownership may only be effectuated by a Deed of Sale and Purchase (Akta Jual Beli) pursuant to Article 37 of PP No. 24 of 1997 on Land Registration.
VALIDITY REQUIREMENTS OF A PPJB
As with any contract, the requisites for validity are governed by Article 1320 of the Indonesian Civil Code (KUHPerdata), namely:
- Mutual consent of the parties (meeting of the minds);
- Legal capacity of the parties to bind themselves;
- A definite subject matter;
- A lawful cause.
With respect to the lawful cause, issuance of a PPJB must not contravene statutory provisions. Article 43(2) of the Job Creation Law stipulates that a PPJB for a house or apartment must ensure:
- Certainty of land title;
- Building permit approval;
- Availability of infrastructure, facilities, and public utilities;
- Completion of at least 20% (twenty percent) of construction; and
- The agreed subject matter.
Should a PPJB fail to comply with these requirements, it is rendered null and void ab initio (batal demi hukum), meaning it is deemed never to have existed and possesses no legal force or effect.
LEGAL REMEDIES AGAINST AN UNLAWFUL PPJB
Prospective purchasers, before remitting purchase funds for a house or apartment, must ascertain whether the PPJB satisfies the requisites prescribed under Article 43(2) of the Job Creation Law. If these requirements are not met, execution of a PPJB should be avoided.
If a purchaser has already delivered funds and executed a PPJB, such agreement may be rescinded, entitling the purchaser to a refund of the purchase money and possibly damages. Moreover, the purchaser may lodge a police report alleging fraud and/or embezzlement pursuant to Article 372 of the Indonesian Penal Code (KUHP) in conjunction with Article 378 KUHP.
CONCLUSION
The execution or issuance of a PPJB for a house or apartment must conform to the requisites of a valid contract under Article 1320 of the Civil Code. Specifically, the object of the PPJB (house or apartment unit) must meet the requirements of legal certainty regarding land ownership status, building permit approval, provision of infrastructure and utilities, and completion of at least 20% of construction. Failure to meet these statutory conditions renders the PPJB null and void ab initio.
LEGAL BASIS
- Burgerlijk Wetboek (KUHPerdata);
- Law No. 5 of 1960 on Basic Agrarian Law;
- Law No. 1 of 2011 on Housing and Settlement Areas;
- Law No. 6 of 2023 on the Enactment of Government Regulation in Lieu of Law No. 2 of 2022 concerning Job Creation as Law;
- Government Regulation No. 14 of 2016 on the Administration of Housing and Settlement Areas;
- Government Regulation No. 12 of 2021 amending Government Regulation No. 14 of 2016 on the Administration of Housing and Settlement Areas.
Penulis :
Nicko Surya Airlangga, S.H.
Masta Pasaribu
Editor :
Muhammad Arief Ramadhan, S.H.