Do I really need one?
Yes, if you have investment business. May be not if the only property out of the marriage is an Indonesian property. The second part of the answer is counter intuitive. But we will try to explain.
When is it “may be not”?
The law forbid foreigners from taking any form of interest in Indonesian property. The fact that the foreigner is married to an Indonesian did not change this. Further, the mixed marriage may make it difficult for the Indonesian spouse to acquire property even if it is in her sole name. This is because the law deems that property is jointly owned by husband and wife, even if the property was acquired under one spouse sole name – article 35(1) 1974 Marriage Law. Article 35 paragraph 1 of the Marriage Law stipulates that property acquired during the marriage shall become joint matrimonial property of the husband and the wife.
As such, the way to get around this is to sign a prenuptial or post nuptial agreement in which the foreign spouse declares that he has no interest in the Indonesian property.
This is the reason why it is necessary to have pre or post nuptial agreement so as not to hold up that property acquisition in the case of mixed marriages.
This nuptial agreement is also important when the indonesian spouse is going to sell the property. The land deed officer is likely to want to be certain that there will not be any unsettled issue of the husband or ex husband coming back to unravel the transaction by claiming that he still has a joint interest in the property by reason of the marriage. In a sense, the nuptial agreement can be a double edge sword. The nuptial agreement might be just what the estranged wife needs to sell the property without clearance from the husband. This is the reason for “may be not” to the need for a nuptial agreement where the only significant property to the marriage is an indonesian property.
What if the foreign spouse contribute to the acquisition of the indonesian property?
If you the foreign spouse, chances are that you may have to contribute financially to acquiring that Bali dream house overlooking the terraced padi fields.
In a typical scenario – the foreign spouse make the financial contribution and the local spouse acquire that Bali property in her (not necessarily always a she) own name.
The foreign spouse probably have not thought too hard about legal protection since the property is going to be in Indonesian spouse name…. while things are still rosy and feelings are still strong….
At this point, your interest in the property will be entirely up to the goodwill of your Indonesian spouse. Otherwise, you have no legal protection at all.
The nuptial agreement is going to worsen your position because it will state that you confirm that you have no claim in all Indonesian properties – a necessary surrender in order for your Indonesian spouse to acquire Indonesian property.
See next section how best to get protection.
Would a loan agreement between husband and wife help?
Most people thought that a “legal” document such as a loan agreement will be sufficient to protect the foreign spouse. But this is not the case. The Indonesian spouse might have sold off all property and dissipated the proceeds or given the proceeds to another family member. The loan agreement is not going to help much in such a scenario. Suing an impecunious Indonesian ex-wife (or… husband) is not going to bring back those financial contribution or capital gains.
A loan agreement will not help the lender to latch on to the property that has changed hands from the Indonesian ex-wife to the new purchaser.
How does foreign spouse get protection for financial contribution made to Indonesian spouse for acquisition of Indonesian property?
It is necessary to consider taking a mortgage in respect of the loan to the spouse to enable to buy the property. This is what the banks do when they need to secure their loan to the property. Mortgages.
It is open to foreigners to be granted mortgages ie become mortgagees of an Indonesian property. Unlike ownership of properties, there is no restriction to properties being mortgaged to.
See this page on how to secure the loan with a mortgage.
Where there is investment business?
This would be where the pre nuptial agreement is important to ensure that the business that you have built up over the years is protected from the Indonesian spouse.
There would probably have to be some give and take – the give would be promise to regular spousal and child maintenance.