Division of matrimonial property

The following discusses the division matrimonial property upon divorce.

Marriage entered into before 1974

All property acquired before or after marriage becomes jointly owned.
Article 119 of the Civil Code (KUHPerdata), namely:
‘From the moment the marriage takes place, according to the law there is a total joint property between husband and wife’.

Marriage entered into since 1974

Only assets acquired during marriage becomes joint property. Such joint assets are therefore up for division in the event of divorce.
Source – Article 35 of the Marriage Law:

Pasal 35
(1)Harta benda yang diperoleh selama perkawinan menjadi harta bersama.
(2)Harta bawaan dari masing-masing suami dan isteri dan harta benda yang diperoleh masing-masing sebagai hadiah atau warisan, adalah dibawah penguasaan masing-masing sepanjang para pihaktidak menentukan lain.
Translation
Article 35
(1) Assets acquired during the marriage become joint property.
(2) The innate property of each husband and wife and the property obtained by each as a gift or inheritance are under the control of each as long as the parties do not determine otherwise.
In other words:
• Property acquired during the marriage that becomes “common property”; and
• Inherited property of each husband and wife, whether the property was acquired before marriage or in marriage which was obtained by each as personal property, for example, a gift or inheritance. Personal property is entirely under the control of each as long as the parties do not specify otherwise.
The above stipulation can be superseded by pre nuptial agreement which is becoming popular in Indonesia. Indonesian courts have to give effect to such agreements under the freedom of contract principle.

In the event of divorce, joint property will be divided between the couple on a 50/50 basis, unless this is superseded by a pre-nuptial or post-nuptial agreement.

Legal basis : MA RI Jurisprudence Number 1448 K/Sip/1974 :

“Since the enactment of Law of the Republic of Indonesia No. 1 of 1974 on Marriage, property acquired during the marriage becomes joint property, so that in the event of divorce the joint property must be divided equally between the ex-husband and wife.”

Pasal 97 KHI : “Divorced spouses are each entitled to one-half of the common property as long as it is not otherwise specified in the marriage agreement.”

Distribution after divorce verdict is issued

Distribution of assets by the court can be dealt with after the order for divorce has been made. Unless am amicable solution is reached (as formalized by a notarial deed of distribution), it may be necessary to file a case in court for the division of the assets.
Order for distribution by the court will have to be dealt with subsequent to the order for divorce is made. In other words, they should be subject of two separate law suits.

In the case of muslim marriage, it is possible to combine the division of assets along with the divorce petition filed in the Religious Courts. This is provided in Article 86 paragraph (1) of the Law on Religious Courts which states:

” A lawsuit regarding child custody , child support, wife support and property with the husband and wife can be filed together with a divorce lawsuit or after the divorce decision obtains permanent legal force.”

Muslim Law position

The position is largely the same as the civil law position.

Article 85 – Article 97 of the Compilation of Islamic Law , this is the position on property ownership of the spouses:
• Husband’s inherited property, that is, property brought by the husband since before marriage – remains with the husband;
• The wife’s innate property, namely the property she brought before the marriage – remains with the wife;
• Joint assets of husband and wife, namely property acquired during marriage which becomes joint property of husband and wife;
• Property resulting from gifts, grants, heirs, and shadaqah of the husband, that is, property obtained as a gift or inheritance – remains with the husband;
• Assets resulting from gifts, grants, inheritance, and wife’s shadaqah , namely assets obtained as gifts or inheritance – remains with the wife.

Joint Assets in a Mixed Marriage

An implication from the application of the Agrarian Law and the Marriage Law – following the marriage of Indonesian citizen (WNI) and a foreign citizen(foreigners) (WNA), the Indonesian citizen spouse is not permitted to have rights over land in the form of full ownership rights (hak milik), cultivation rights or building use rights.

This is based on the application of Article 35 of the Marriage Law which states that property acquired during the marriage become joint property between the spouses.

Therefore, the foreign souse inevitably becomes a joint owner of the land even if the property is in the sole name of the Indonesian spouse; and foreign ownership of full ownership right (hak milik) is not permitted under Law Number 5 of 1960 concerning Basic Regulations on Agrarian Principles, Citizens Foreigners (foreigners) – foreigners may not have Ownership Rights, Cultivation Rights or Use Rights Building.

There is a grace period of One year under Article 21 Paragraph 3 of the Basic Agrarian Law Number 5 of 1960 : “Foreigners who, after the enactment of this Law, have the right to property due to inheritance without a will or mixing of assets due to marriage, as well as Indonesian citizens who have the right to property and after the enactment of this Law loses citizenship, must relinquish that right within one year since the acquisition of these rights or the loss of citizenship.”

Consequences of breach of the above may result in forfeiture of ownership rights of both spouses although there is no ready report of actual instances where such forfeiture action taken by the state.

Measures to address such restrictions are entering into pre or post nuptial agreements. It is always safest to enter into one before marriage.

The agreement should provide that the local spouse will be the sole owner of any land or property purchased during marraige. In cases where the foreign spouse contributes financially towards the purchase of the land, the pre-nuptial agreement should provide that the amount becomes a loan to the local spouse. The agreement may also provide that the spouse to repay the capital as well as a portion of the capital appreciation in the event that the property is sold. It is unclear whether the latter (the foreign spouse to be paid a portion of the capital appreciation) will be enforceable but it is worth including this so that the foreign spouse is able to participate in any upside of the property value appreciation.

If possible, it is also recommended that the foreign spouse who contributed to the purchase have the land mortgaged to him. This is likely to secure his contribution (under the character of a loan) and being able to participate when the land is to be sold since the purchaser will need to have the mortgage discharged in order to obtain clean title from the sole owner wife.
The above should not be considered as legal advice and you should consult a qualified lawyer on our specific situation.

Can the local spouse sell behind the foreign spouse back? Strictly speaking, such a spouse will not be able to sell without the foreign spouse knowing. This is because the land officer PPAT handling the transaction will technically check the marriage status of the owner. The PPAT will check with the DUCAKPIL (Directorate of Population and Civil Registration) to verify the status of the seller. If it is shown that the seller is married and the property was acquired during the time of the marriage, the PPAT will require the consent of the non-owner spouse.

Therefore, the above requirement gives protection to the spouse whose name is not on the property. However, this protection cannot be always present. A sale transaction may still slip through if the spouse conspire with a rouge PPAT.

Tracing bank account in name of one spouse sole name

The following Supreme Court decision suggest that there is some basis to request the bank to provide detail of bank account in the name of a spouse sole name.

Constitutional Court Decision No. 64/PUU-X/2012 mentions: ” Therefore, according to the Court, to protect the rights of the husband and/or wife to the common property kept in the bank, the Court needs to provide certainty and fair legal protection. The provisions of Article 40 paragraph (1) of the Banking Law shall be interpreted as “Banks shall keep confidential information about their depositors and depositors, except in the case as referred to in Article 41, Article 41A, Article 42, Article 43, Article 44, and Article 44A and for judicial purposes regarding common property in divorce matters. ”

However, it may not be easy to implement this decision in practice.

Marriage agreement (pre nuptial agreement)

Indonesian court generally give recognition to pre nuptial agreement which provides on division of property on divorce.
It is common for parties to provide for the overriding of joint property so that each party retain ownership obey property that is registered to his/her name.