EPISODE 21:
Bali Property Made Simple: The 9-Step Process Explained

00:34
Okay, yeah, Omri, here we are. Hi. Well done, another podcast, another week. And this is your last week in Bali, yeah? It is, moving to Dubai. I mean, I guess when this podcast is out, I’ll be already in Dubai. Yeah, yeah. So it’s been a bit busy, a bit stressful, moving, selling, all those kinds of things. I have so many things to sell Contact us if you need a dress or a bed or a vanity light or something. Or a land. So yeah, land. So we’re talking about land today. How to acquire property or

01:06
land, what are the steps? And then also the timeline of the steps because not a lot of people are aware of like the process and how it works and how things unfold really when you buy a property. So yeah, we got a little list and we’ll put it on the website. And over to you, Sam. Alright. Hi guys. So we’re gonna do the jingle first, maybe. Yeah, yeah, there you go. Hi everyone, I’ll talk after the jingle. Thank you. Hi, Gawain. Hello, Omri. Good to see you again. Once again, yes. All right, so today we’re

01:43
going to talk about something that I’m always asked by people that either come into Bali for the first time or acquiring a land for the first time or land or property, whatever it is. It can be a villa, it can be a shop, it can be whatever. The process is the same, whether you are buying a land or a villa or any other type of property. And there’s a legal process. There are nine points. We’ll talk about each one of them, some briefly, some more in depth. And so everyone understand what is the actual process

02:19
and how to do things the right way. So when does the process actually start after you’ve found So we’re only going to talk about what happens after the handshake, so to speak. Okay. Once you’ve, and that’s the first, thank you, Gawain. So the first point of this PDF here So the first point of this PDF here is the verbal agreement on terms with property owner or the lesser. So everything after that comes, this is the handshake, you say, okay, I agree with the terms. I’m going to buy your land at this price

02:52
for so many years with that extension and whatever. So typically it’s through an agent already, sales agent, you’ve seen the land that you like on their website, you reach out, you contact them, they put you in touch with them. All that is done. So it’s done, yeah? All that is done. Whether it’s an agent, whether it’s a direct owner, it doesn’t matter. We are not going to talk about that now. We’re not going to talk about, we’ve gone at lenghts through like extension,

03:15
how to deal with the best extension, the best extension deal and so on and so forth. We have podcasts on that, so you can go and check out on YouTube. But just once we are actually moving forward, what happens then? So number one, again, verbal agreement on terms with property owner and lesser. This is the handshake, yeah? Number two, you, the buyer, the buyer must engage a notary. Sellers might propose you a buyer. you can go with them. I know we do that as well, because a lot of our buyers don’t know any notary here,

03:53
but it’s ultimately the choice of the buyer to pick their own notary. Understand something quick, you know, word on, quick note on notaries. They are not lawyers. So lawyers pick sides. Notaries are impartial. So whether it’s a notary from the buyer, from the seller, from whoever, a notary hypothetically, but again, there are a lot of corruption in this country, unfortunately, and some notaries are corrupted and it’s a well-known fact, but hypothetically, notaries are impartial. So they are protecting the

04:33
best interests of all sides, not only the one that brought them to the table. Now, regarding payments, notaries are typically paid by the buyer, okay? The one, and it’s usually a fee of 1% of the total deal. So if you have a, I don’t know, let’s say 2 billion rupiah deal, then the notary will get 20 million. It’s 1% of the deal, okay? So engage a notary, point number two. Point number three, sign a Letter Of Intent, LOI. It can be also called MOU, Memorandum of Understanding. Or when it’s a freehold,

05:13
it’s called in Bahasa, PPJB. I forgot what it stands for. Yeah, I was about to ask you that. JB is, JB is “jual beli” JB is, JB is “jual beli” and sells and purchase, “jual beli” and sells and purchase, but I forgot the PP, what it means in Bahasa. So the notary would have to set that up. So the notary would have to set that up. So you engage the notary, then they draft a letter of agreement on the verbal handshake, yeah? So, all right, yeah, okay. So that’s where it becomes interesting.

05:35
So that’s where it becomes interesting. There’s a twist. It’s usually the right way to do things is for the notary to do a pre-lease agreement, yeah? Which can be like a lease agreement, but one step before. Before, yeah. So just the terms, main terms. Now the thing is, common practice, usually if you go through an agent, the agent will make you sign the Letter Of Intent, okay? So it’s an agency letterhead paper with all the terms and conditions of the deal, and you sign it, and then

06:18
you transfer to the notary, for instance, the escrow notary, some down payment, we’re getting into that in a second. But there’s two ways of doing this. So point number three, either you have a Letter Of Intent, which is done by the agency, the real estate agency. It can be also done between the parties. So buyer or seller could do it. Yeah, I mean, you just say, okay, “I, Omri, agreed to acquire this land for this price at this date, blah, blah, blah” with like a summary of the conditions,

06:51
and I sign it, the other parties sign it, so the seller sign it, and we have this, and that’s legal, okay? So either this, or you go to a notary, and this is the right way, yeah? You go to a notary, and they start drafting the pre-lease agreement. Now, the reason why the Now, the reason why the Letter Of Intent is very used, as opposed to a pre-lease agreement, is a matter of, to draft the pre-lease agreement, all parties, it’s a very, very long document, so it’s basically a lease agreement, yeah?

07:28
With just the due diligence input in there, factured in here. Okay, so what happens? Yeah, yeah, what happens if, and what, so on and so forth. So it takes time, and sellers, Bali is a very liquid market, yeah? So it’s a risk that you take. The deal is not locked in until there is some money in the escrow, and some agreement is signed. So if you go down a rabbit hole on terms, you might lose the deal. So if you’re making a very, very large deal, you might, you want to do the proper way, okay?

08:03
do the proper way, okay? So you go to a notary, and they start a pre-lease agreement, or pre-sale agreement, if it’s a freehold, and then all parties agree, it takes a bit of time, but everything is done, you know, square and fair. By the book. I know for myself, for instance, most of the time, 90% of the time, even for a larger deal, because we know the market well, and we know the people, we just do a Letter Of Intent. Okay, so that Letter Of Intent is signed, all parties have signed, come to point number four,

08:32
which happens exactly at the same time, at signature, pay deposit into escrow to lock the deal. You have two ways of doing this, okay, there’s always other two ways. Multiple. The right way is to give a deposit what is agreed upon in the Letter Of Intent, it’s usually around 10%, between 10 and 30%, yeah? Usually 10%. Just, it’s a good faith, yeah? If your deal is 2 billion rupiah, then you would put 200 million rupiah into the notary escrow account. Your money is protected, your money stays there.

09:03
And if there is any issues down the road with the due diligence, or with some land documents, or the certificate, or any kind of issues, then the money goes back to you. So it’s a third party that ensure, with impartiality, that the money is saved, yeah? So you could go to a notary and say, “Oh, listen, the access is a little bit too small, “or too narrow, this is not what I want, “I don’t wanna do this deal anymore.” And the notary will go, “Okay, fine.” You can’t do that.

09:35
You can’t do that. Why? But in your example, you could not do that. Because that should be stated, if there is an issue with the access, for instance, if you don’t know if the access is valid or not, it should be stated in Letter Of Intent. So it would be stated, “Okay, we have this deal “with so many years, some what price, “and so on and so forth, and that deal is contingent “on us finding out the viability of the access, “for instance.” But you cannot come back and say,

10:07
“Oh, I changed my mind, I’m gonna buy you a bigger truck, “so that access is too small, “and I don’t like the color of the grass.” You can’t do that. A lot of gray areas in that whole thing. I can imagine some arguments. There are some arguments, but there aren’t that many but there aren’t that many gray areas, to be honest. It’s pretty straightforward. It’s either the documents are, okay, so now we’re talking about the due diligence, yeah? It’s another topic.

10:32
We can do podcasts on that. I think we have, kind of. We did with. Notary, yeah. Ibu Semilir, the notary, yeah. But yeah, it’s pretty straightforward. They, in the due diligence, okay, in a nutshell, they take the notary document, she checks the zoning, she checks the, if the land is used as collateral at the bank, for instance, for a loan, checks if the paperwork is in order. If you don’t lose it. All kinds of legalities around the land. But if the access is accessible, if there’s an actual access,

11:04
who does the access belong to? Is there a right of access, or is the access part of the land, and so on and so forth. And once all is checked, and then the deal can go through, you know? You can’t change your mind and say, Make something up. You know, there’s not enough sun on the land. Yeah, yeah, yeah, okay, yeah. All right, okay, so you’ve paid the deposit into the escrow, the deal is locked in for you now. Number five, so that’s the due diligence, okay? So we just talked about that.

11:35
But usually it takes between one to three weeks, I would say in most cases, one week, when it’s simple. Sometimes it’s complicated. Complicated means, I’ll give you an example. A lot of the lands in Bali anyway, the name on the certificate, on the deed on the certificate of the land, okay, is the father or the grandfather, and who have passed away. And the land is sold by the heirs, okay? And so in many, many cases, and it happened to me many, many times, I bought lands to a family, okay?

12:28
But the name on the certificate, the dude is dead. It’s normal, it’s okay, it’s not a problem. But you just need more paperwork for that. You need heritage documents from the government, whatever. And those documents that are usually issued in a couple of weeks. So sometimes the family doesn’t have it because they didn’t think about it or whatever. So that can be a “complication.” But then they have to That makes the due diligence a bit more They have to transfer, there has to be a transfer

12:55
of that property from the grandfather’s deceased to the children, right? Yeah, absolutely. So tax liabilities and all that kind of thing. So change on the certificate is not decidedly done right away, but at least in a heritage paper that says the heirs of this land are this guy, this guy, this guy. But yeah, usually it takes about one week to get the due diligence done in Bali. And it’s pretty straightforward, yeah. So point number six, as we are doing this, so point number six happened actually

13:29
as we started the due diligence, the draft of the lease agreement for Leasehold and for Freehold is called AJB. And I know what it means. It means “Akta Jual Beli”, the act of for selling and buying, yeah. We go back to point number three, remember you can do either a Letter Of Intent or a pre-lease agreement. So point number six, the draft of the lease agreement will be basically that pre-lease agreement from which will be removed, all the due diligence contingency and so on and so forth because it’s already done.

14:04
It’s solved, yeah. Yeah, okay. So this is a document in Bahasa. What will happen for our foreigner viewers here is that the notary will show it to you in Bahasa, but also in English. Sometimes there’s two columns with English and Bahasa, but ultimately the official document is only in Bahasa Indonesia. So what you see from the notary is a translation done by the notary, so it’s “notorized”, so to speak, it’s official, so you can trust it. And you have all the information about the land,

14:42
about who the first party is, second party, third, fourth, fifth party, whatever, how many they are. And all the condition, basically what’s written in the LOI, but a little bit more developed, yeah. And that’s if you’ve done a LOI. If you have done a pre-lease agreement, it’s basically a copycat of the pre-lease agreement from which you have removed what happened from which you have removed what happened in case of the due diligence goes wrong or whatever, yeah. So that’s number six.

15:10
So how does it work? It works on WhatsApp usually. You need WhatsApp in Indonesia. Notary sends you the drafts of the lease agreement. She or he sends it also to the other party, the seller. And both parties must agree to the same version, of course. So a lot of time there are small modifications. And when everyone agrees, then we go to the signing, okay. Which is number seven. If you are subleasing a land from a party that is different from someone that’s different from the owner of the land.

15:50
Let’s say I lease a land from some local person, local owner, and then you Gawain, like my land or half my land or a partial part of my land, and I’m subleasing to you a piece of my land, yeah. I was about to ask you this exact question. In that very case, you are going to inherit the conditions, the terms and conditions from the master lease, we call it the master lease then, that I have with my owner, okay. I’m doing one this week actually. I’m subleasing a land to someone, and he’s inheriting the conditions

16:26
from the master lease I have with the original owner of the land. And there’s no nego there. There’s no, “Omri can you do one more year?” No, I can’t. I don’t have the ability to do it because I already signed something. So you just buy in whatever I’ve signed previously with the owner, yeah. with the owner, yeah. Could you get the original lessor to go back to the owner and try and negotiate an extension? Absolutely. Yeah, okay. You could get to the lessee or me, in my case, for example,

16:59
I could go to the owner and say, look, you know, I have a client. He wants to buy, like, okay, the land I’m selling right, I’m subleasing now is 41.5 years. I can go back to the, lessee, lessor, sorry so the owner and say, look, I need 50 years. Just give me nine more years, 8.5 more years. But that’s either I would change my master lease or I would make an addendum. Yeah, like, but directly with the original land owner. So master lease for me, addendum with the original land owner and the lessee, my lessee, the

17:35
person I’m subleasing land to would sign a one contract with both those things inside. So now number seven. So once everyone has agreed to the terms and conditions of the lease agreement, so buyer and seller, all parties, then you sign the lease agreement in front of a notary. The seller and buyer cannot be in the same room at the same time, it can be done within the same day. Notary can go to the seller, can go to the buyer as long as it’s on the same day, it’s done. Okay, same time.

18:04
Yeah. And how does it usually work? Do the seller and buyer go to the notary’s office or the notary comes to the usual? Usually go to the notary office. Yeah, now it’s a problem. You have a notary, you’re rocking up every few days. She has a desk here. Yeah. Okay, so we sign the lease agreement or the AJB, Akta Jual Beli in front of a notary. Then at the same time, it’s number eight, but at the same time, it’s usually on the same day. You do the balance payments. Not into it.

18:35
So at that time. Oh, I forgot something. I forgot something! Oh, there you go. We forgot to write number five due diligence by notary. We forgot, okay, to write number six and a half. Okay. 6.1. 6.1. You sign the lease agreement, of course, when the due diligence is green-lighted. Sure. And at that time, whatever is in escrow can be released to the seller. Okay. And then afterward, you sign. And at the time of the signature, you pay the balance payments, whatever, so the 90% balance, directly to the seller,

19:18
not to the notary, the seller. It doesn’t have to be 90%. It can be a payment term of a year or whatever. It can be anything. Whatever hasn’t been paid or whatever is agreed upon. In what terms, yeah. Number eight, balance payments. Usually, there is flexibility. There is a, it’s called grace period. So you don’t have to do the payments, right away, as soon as the document is signed. Usually, you have seven working days, or 14 working days, or whatever is agreed upon as a grace period.

19:51
It’s called grace period. And you have to do the payment within that timeframe. Otherwise, everything you’ve paid before can be lost, and you lose your money. The deal is canceled, yeah. And then number nine, so it’s finished. The deal is sealed, it’s signed. Everybody is happy with their money. Obtain the final official lease agreement, or in the case of freehold, the certificate. It takes a few days, or a couple of weeks, or one week, whatever, to get the, so the document that you

20:25
sign usually have small, sometimes have small amendments on the spot, and the notary, just write them with a pencil, and you sign on every single amendment. So, if you agree. And then there’s a final document, which is in a carton cover, notary sealed, and a lot of fluff, and that’s your official lease agreement, and you get it usually a couple of weeks later, or something like that. And the notary keeps that, is it lodged anywhere else? Well, the notary can keep it, but of course, they razzle

21:03
for the client to take it. But usually, notary let you know when it’s ready, and you can come to notary office and pick it up. You cannot sign someone, it has to be you, you know? And you pick it up, and then you have your lease agreement. You put it wherever you want, in the bank, I don’t know. And it’s, in the case of a freehold, that’s when the certificate name change starts. And depending where you do it, can take a couple of months, three months, depends if it’s in Bali,

21:36
if it’s in Lembongan, in Sumba, in Jakarta, and so on and so forth, yeah. Okay, so let’s go back, we finished all those points. Any questions? No, I think we covered it all off, yeah. Let’s go on the remote thing, okay? So the big question is, can I sign a So the big question is, can I sign a document if I’m abroad? Yes, it’s possible. It’s possible if both parties are abroad or if one of the parties are abroad, is abroad. So it’s possible. It’s possible. So I mean two parties.

22:10
Yeah, let me explain why. There’s a differentiation between the seller and the buyer. In Indonesian law, the one that has the most to lose is the seller, okay, because he’s losing his land, yeah? The one that is the most “scammable,” so to speak, yeah? Is the seller, because he’s selling, he has something physical to lose, yeah? The seller always need to be physically present at any signature. Now, if he cannot be present at the time of the final signature, he can do what we call a POA,

22:47
Power Of Attorney So it basically gives his power to someone else, to a friend, a relative. Anybody. Anybody, yeah. And to do that, in order to do that, he needs to be present to do the Power Of Attorney. Okay, so he has to be present sometimes. Either you’re present during the signature, or you’re present, physically present, with the notary, same room, at the time of the Power Of Attorney, okay? For the buyer, everything can be done online. Doesn’t have to be present. Okay. Okay? Because the buyer is giving money, right?

23:29
So he’s losing something, like he’s, you know, you cannot scam someone and give them $200,000. Now, what happens if a buyer can really not be present, if the buyer is abroad? if the buyer is abroad? In Alaska. In Alaska, it’s possible. In Alaska, it’s possible. In that case, the buyer, so there’s the Power Of Attorney, okay, it’s a document, so one, two-page document that says “I, Omri Ben-Canaan give my Power Of Attorney to Gawain Blizzard in order to do that specific action

24:05
for on my behalf and sell that plan to that person.” Well, you can do it long-term, I presume, years or multiple property deals. For land deals, it’s more complicated. So it’s just one deal. Yeah, it’s a special deal. It’s a, yeah, a particular deal. So if you are, for example, if I have to go to Alaska, where I go often, as we all know, then, or if I’m in Alaska, or in France or wherever, I can still do that deal remotely, but I have to go to a notary in Alaska, okay, what do you say, Alaska?

24:39
I say France, I’m French, yeah? I have to go to a notary in France and get that Power Of Attorney legalized with apostille. Apostille is a little stamp thing, yeah? Sent by FedEx or by whatever, to the notary in Bali. And once, as a paper, the deal can go through. Okay. Okay. So possible. Yeah. Headache but possible. Headache but possible. That’s it. I think we’ve covered everything. Yeah, that was interesting. Yeah, it was a quick one. I think it’s important. I’ve been asked the questions all the time.

25:17
Now it’s great. I can say, “Hey, just click on that link.” No, I mean, the idea came from the meetings you had the other day and you went through these exact things and it was informative for everybody. So, yeah, good podcast idea. All right, well. Yeah, please, if you got any more ideas or any information or anything, just let us know. Questions. Questions, yeah. Otherwise, we’ll see you next time, yeah? All right, click on the links, subscribe. We just hit 25,000 subscribers, so yeah, thanks for that.

25:45
And we’re on with an up to 35 or 50 or whatever. We are, yeah, we just, yeah, just 25, I think two days ago or something. If you’re interested in The Kedungu Fund, which is the real estate fund we’re running in Kedungu, feel free to reach out. We’ll gladly sit down and have a coffee with you guys or on the phone, you know? We just opened, the new, big news, we just opened the school in Kedungu We opened the school called Grow In Kedungu, so you can go on growinkedungu.com, and it’s a K to 6th,

26:20
kindergarten to sixth grade school. It was very, very, very complicated. It’s a one and a half year effort, team effort. And we just, the year just started last week, August 11. Very proud, very happy. Yeah, it looks great. The school looks great, little kids running around, all colorful, with goats and all kinds of things. It’s great, go and look at the socials. There’s a farm. There’s a farm. Hey, you want your kid to run on goats, come! Enroll in Grow Yeah, but you know what I mean.

26:49
But it’s looking great, so congratulations, I think. Great job. Yeah, I think about that. Yeah, I’m happy about that. All right, thank you guys. See you next time. Thanks guys. Gawain, thank you. Cheers, yeah.