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Thread: What is SHM - Sertifikat Hak Milik?

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    Default What is SHM - Sertifikat Hak Milik?

    What is SHM - Sertifikat Hak Milik? And why is it relevant to rental properties?

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    Freehold Title (SHM or Sertifikat Milik, Article 20-27)
    Freehold title is the strongest and fullest title that can be obtained. However such rights are not absolute as the UUPA (Undang Undang Pokok Agraria) recognises the "social functions" of land, however infers a right of "peaceful occupation" of land by the titleholder. Freehold title may only be held by Indonesian citizens, or by Indonesian legal entities that are stipulated by government. It is therefore impossible for a foreign individual to have direct freehold ownership of land in Indonesia.

    All Indonesian companies, no matter if they are PMA (foreign investment companies) or not, cannot possess freehold title over land and are compelled to use other titles such as Hak Guna Usaha and Hak Guna Bangunan.

    According to the UUPA, land that is titled Hak Milik can be used as security for debt. However, foreign companies and individuals must take care in accepting freehold land as security, and should consult with competent advisors beforehand.

    Land Cultivation Rights Title (HGU or Hak Guna Usaha, Article 28-34)
    The Land Cultivation Title (HGU) gives the right to use a state-owned land for the purpose of agriculture, in particular plantations, fishing or cattle-raising. Such title is granted for periods of 25 or 35 years, and may be extended for another 25 years if the land is deemed to be managed and utilised properly. This title of right is given to Indonesian citizens or legal entities (including PMA companies). A HGU title can be used as collateral, or, with the approval of the government, transferred to a third party.

    Building Rights Title (HGB or Hak Guna Bangunan, Article 35-40)
    A Building Rights Title (HGB) gives the right to construct and own buildings on a piece of land that someone else owns. Such title is granted for a maximum period of 30 years, and can be extended for another 20 years. HGB title is granted to Indonesian citizens or legal entities (including PMA companies), and can also be used as collateral or transferred to a third party.

    Right to Use Title (HP or Hak Pakai, Article 41-43)
    The Right of Use on Land (HP) is the right to use land for any purpose for a period of 25 years, and can be extended for another 20 years. This type of title should not be confused with a lease contract or sharecropping agreement.

    Foreign residents of Indonesia and Indonesian legal entities (including PMA companies) may hold HP titles. HP title has no collateral value to the owners and is not transferable.

    SHM is relevant to rental properties, because as a tenant, one needs to know whether the property one rents belongs to the right owner. Before tenants sign the contract, they need to make sure that the owner has SHM or at least HGB to avoid any possible future problem.
    Last edited by nickie; 30-01-11 at 09:14.
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  3. #3

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    I recently got land as hak milik using my indonesian wifes name. Dont know how the hek it was possible being married to a foreigner but it was done and we have the certificate to proove it. cost quite a packet though.

  4. #4

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    Quote Originally Posted by beebop View Post
    I recently got land as hak milik using my indonesian wifes name. Dont know how the hek it was possible being married to a foreigner but it was done and we have the certificate to proove it. cost quite a packet though.
    As you said beebop " in your wifes name " , meaning its her land ( hak milik )

    I have 2 questions .... In the case of divorce ...., where apparently ? you each get 50% of assets ,

    Question 1 ; what happens to the Hak milik titled land , as the foreigner officially has no right to it . I am not sure in this case if the Indonesian spouse needs to re-pay you 50% of its value (supposing that the foregner originally raised the money to purchace the land ) , would she then be forced to sell the land and repay the 50% value if she could not raise the money - or is the foreigner forced to wave goodby to any money invested in this hak milik land which is in the spouses name .

    Question 2 ; what happens to the divorce settlement regarding the lands improved value due to additional land improvements like landscaping and buildings etc ?

    sorry to sidetrack from the thread .

  5. #5
    Member Sky Garden's Avatar
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    Davo if there is no prenup signed before they were married then technically she cannot own the land, there is a good thread here which describes this.

  6. #6

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    Quote Originally Posted by beebop View Post
    I recently got land as hak milik using my indonesian wifes name. Dont know how the hek it was possible being married to a foreigner but it was done and we have the certificate to proove it. cost quite a packet though.
    If you have a prenup stating that your wife entitles a full right to the property that belongs to her, then it is fine.

    As I stated earlier on this thread post #59:
    http://www.livinginindonesiaforum.or...equences/page6

    that buyer doesn't need an agreement letter from husband/wife to purchase a property, but seller does. Problems would not come up when a mix marriage couple is buying a property, it is more likely when they are trying to sell a property.

    You might want to read this thread for your references.
    http://www.livinginindonesiaforum.or...p-consequences

    And this, please refer to Atlantis' statement Post #42
    http://www.livinginindonesiaforum.or...riage+property

    It is stated in there that a foreigner who, following the entry into force of this Act, acquires a hak milik by way of inheritance without a will or by way of joint ownership of property resulting from marriage and an Indonesian citizen holding a hak milik who, following the entry into force of this Act, loses Indonesian citizenship is obliged to relinquish that right within one year following the date the hak milik is acquired in the case of the former or following the date upon which Indonesian citizenship is lost in the case of the latter. If following the expiry of the said time periods, the right is not relinquished, then the said right is nullified for the sake of law and the land falls to the State with the proviso that the rights of other parties which encumber the lands remain in existence.
    Last edited by nickie; 30-01-11 at 13:37.
    Leave the gun, take the cannoli - The Godfather

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