Is It Legal to Buy and Sell Land & Buildings If the Building Turns Out to Belong to a Third Party?

 Is It Legal to Buy and Sell Land & Buildings If the Building Turns Out to Belong to a Third Party?

Is It Legal to Buy and Sell Land & Buildings If the Building Turns Out to Belong to a Third Party?

Question

I would like to ask, in the contract to buy and sell land and buildings where the building is not owned by the landowner, and in the sale and purchase of the building that is stated expressly in this buying and selling contract covers everything contained above and embedded in the land, is this buying and selling legal? What's the legal basis? What is the resolution of the dispute if the party who owns the building sues?

Digest of Answers

circle with chevron up

Full Review

Horizontal Base and Land Buying and Selling

The transaction of buying and selling land and building objects are goods and prices. Referring to Article 1457 of the Civil Code ("Civil Code"), buying and selling is an agreement with which one party binds himself to hand over an item and the other party to pay the promised price. Price can be interpreted with a legitimate means of payment in the form of a certain amount of money. While the goods that become the object of buying and selling land and buildings are the rights to land and / or buildings.

Article 9 of Law No. 5 of 1960 on the Basic Rules of Agrarian Principals ("UUPA") states that only Indonesian citizens can have full contact with the earth, water and space. So, before the sale and purchase of land must be researched first about the type of land rights as the object of the buying and selling transaction, as well as the party who is the holder. To find out what are the types of land rights and parties who can become holders in Indonesia, see the article Types of Land Rights and Who Can Be The Holder.

Dr. Dhaniswara K. Harjono in his book Property Law (p. 160) mentions that in the transaction of buying and selling land, it must be ascertained that there are no buildings or plants on it given the principle of horizontal separation that asserts that the right to land that becomes the object of separate transactions or apart from the building or plants on it. Thus, based on this principle ownership of land does not itself bring ownership of buildings or plants that exist on that plot of land. However, the Civil Code does not recognize the principle of horizontal separation so that in the transaction of buying and selling on land usually many parties consider that an object stuck on a piece of land is an inseparable unity.

Thus, in the sale and purchase of land and buildings, against land and buildings that belong to the seller, he can choose to sell the building to the buyer as a union with the land or not. In addition, for land on which there is already a building, the seller must be able to show evidence of ownership of the land and the building.

In this case, for land that already has a certificate, then the right to the land and its location and boundaries can be known with certainty as stated in the measuring letter or picture of the situation contained in the land rights certificate. As for land whose ownership is based on customary law, if there is no known right, it can be known from the affirmation of the conversion of these rights by the National Land Agency (District / City Land Office) concerned.

Terms of Buying and Selling Land

If in the deed of sale and purchase of land ("AJB") that has been made and signed and in it clearly explains that the land and buildings are one entity, then the terms of the AJB agreement and procedures are also in accordance with the applicable rules, then the AJB is valid.

Regarding the terms of the agreement we mentioned above, the sale and purchase of land and buildings must meet the legal requirements of the agreement as stipulated in Article 1320 of the Civil Code, namely:

1. They agreed that they tied him up. The terms of this agreement mean that the legal subject conducting the transaction must exist and make an agreement between the owner and the prospective recipient of the goods;

2. The ability to make an engagement. The requirement of proficiency that the transacting party must be capable in carrying out legal acts, where the ability to act in law is the ability of a person to make a covenant, so that the engagement he makes becomes valid according to the law;

3. A certain thing. It means that there must be a definite legal object, which in this case is the right to land and buildings;

4. It's a halal reason. That is, the material of the covenant must be an act that is not prohibited by law, violating public order and decency.

In addition to the legal terms of the agreement that we outlined above, land and building transactions must be conducted in the presence of authorized officials, namely the Land Deed Maker ("PPAT"). [1] In this case, the transaction or sale must also meet material and formil requirements, as follows:

Material requirements, are the conditions that determine the validity of the sale and purchase of land and buildings, namely:

1. The buyer has the right to purchase the land in question.

     a. The buyer as the beneficiary of the rights must be qualified to be the holder of the rights to the land he will buy. To determine whether or not the buyer has the right to acquire the right to the land depends on what rights exist on the land, whether property rights, building rights, business use rights, or right to use.

      b. The seller reserves the right to sell the land and buildings in question.

The one who has the right to sell the land and buildings in question is the owner. If the owner of the plot of land in question is only one person, then he has the right to sell the plot himself. However, if the landowner is two people, the right to sell the land is the two men together. No one can act as a seller.

]

       c. The land in question may be traded and not in dispute. The right to land that can be traded/transferred has been specified in the UUPA i.e., property rights,[2] the right to build,[3] the right to business,[4] the right to use. [5]

2. Formil Terms

PPAT will create AJB after all material requirements are met. PPAT is a general official appointed by the Head of the National Land Agency ("BPN")/Minister of Agrarian affairs and Spatial Planning, who has the authority to create AJB. [6] Buying and selling carried out not in front of PPAT remains valid according to the provisions of Article 5 of uupa. However, to show the existence of legal certainty in any transfer of land rights, Article 37 paragraph (1) of Government Regulation No. 24 of 1997 on Land Registration which is the implementing rule of the UUPA, determines that any agreement intending to transfer land rights can only be registered if evidenced by a deed made by the competent PPAT.

In addition, in practice, before AJB is made the parties are obliged to submit the necessary letters to the PPAT, namely:

1. If the land is certified, the original land certificate and proof of registration fee;

2. If the land has not been certified then it takes a certificate that the land has not been certified, existing land letters that require strengthening by the Village Head or Camat are equipped with letters proving the identity of the seller and buyer needed for the interpretation of the land after the sale and purchase;

3. PPAT will also conduct an examination of the status of ownership of the certificate and will check the authenticity of the certificate to the Land Office. Sellers must also pay income tax (PPh) while buyers are required to pay Land and Building Rights Acquisition Duty (BPHTB).

4. Husband / wife approval to be able to sign AJB if the land and building are joint property.

In addition, at the stage of making and signing AJB, sellers, buyers, witnesses and PPAT will sign AJB if the seller and buyer have agreed to the contents of the AJB. It is then given copies to buyers and sellers as their respective documents.

If the building for sale belongs to a third 

Connecting your question, based on the explanation above, if it is proven that the building that is sold belongs to a third party, then one of the material conditions is not met, because the seller is not a person who has the right to sell the building, then the sale and purchase of the building is not valid. In accordance with the provisions of Article 1471 of the Civil Code, the sale and purchase of other people's goods is void and can provide a basis to the buyer to demand reimbursement of costs, losses and interest, if he does not know that the item belongs to someone else. It should be noted, because what does not belong to the seller is the building only, then what is not valid is the sale and purchase of the building only, while the sale and purchase of land remains valid.

In addition, according to our frugality, before signing the AJB, it is important for buyers to check, for example, whether on the land to be purchased is land rights for buildings on which there are management rights, because in this case the seller and buyer must first get permission to the holder of the management rights. It is also necessary to ascertain whether the house or building to be purchased has ever been a credit guarantee and has not been removed (roya) or not. If ever, you must be asked for a roya letter or repayment from the seller so that later it can do the name back.

What if all of the above stages have been passed and still happen as you ask?

Errors/ errors, compulsions and even fraud may lie with sellers and/or PPAT who provide or contain incorrect data information at the time of creation of AJB. However, if you have not checked the data to the BPN in accordance with the certificate of land rights in question, it should be done first to adjust the data as mentioned above. 

If it is proven that there are stages in the manufacture of AJB not in accordance with the procedure then legally AJB is legally flawed. This means that the AJB can be cancelled.

Then, the aggrieved buyer can file a lawsuit with the court that is authorized to cancel the AJB because it is proven to be legally flawed and / or not fulfilled material conditions, while demanding damages.

That's our answer, I hope it's helpful.

Legal Basis:

1. The Civil Code;

2. Law No. 5 of 1960 on The Basic Rules of Agrarian Trees;

3. Government Regulation No. 24 of 1997 on Land Registration;

4. Government Regulation No. 37 of 1998 concerning The Regulation of The Office of Land Deed Making Officials as amended by Government Regulation No. 24 of 2016 on Changes to Government Regulation No. 37 of 1998 concerning The Regulation of The Office of Land Deed Making Officials.

[1] Article 2 of Government Regulation No. 37 of 1998 concerning The Office Regulation of Land Deed Officials ("PP 37/1998")

[2] Article 20 paragraph (2) of UUPA

[3] Article 35 paragraph (3) of UUPA

[4] Article 28 paragraph (3) of UUPA

[5] Article 43 letter b uupa

[6] Article 5 paragraph (1) jo. 2 PP 37/1998