What is PPJB
Pengikatan Perjanjian Jual Beli literally means Binding Sale and Purchase Agreement.
It is the legal instrument used to sell apartmeny that are still under development and the title certificate not yet issued.
Contrast with buying an existing unit or a landed property where the legal instrument will be AJB or v Akta Jual Beli (Deed of Sale and Purchase).
Is the PPJB regulated by any specific law?
Yes, under Decree of the State Minister for Public Housing No. 9 of 1995.
Although it is all nice that the Regulation stipulates the obligation of the developer, but the Regulation does not go far enough to protect the buyer in the event of default. In other countries, there is the requirement for buyers’ payment to be deposited into specific project account, purpose of which is to protect the buyers in the event of developer’s financial demise. In Indonesia, buyers can be left on the lurch in the event of bankruptcy of the developer because the land title system does not protect interest under PPJB. In other words, the PPJB does not create any interest in the land but merely a contractual obligation between the developer and the buyer. Such right does not attach to the land.
Payment obligations
The payment can be in installments as stipulated in the agreement.
Where the buyer is late in paying the installments, penalty can be charged in accordance with in the Decree of the State Minister for Public Housing No. 9 of 1995 which states that the amount of late installment penalties is equal to 2/1000 per day of delay from the amount of installments.
Risk of fraud
There have been reports of fraud syndicates in the sale of apartments in Ciputat, South Tangerang. This syndicate allegedly cheated numerous victims amounting to Rp 30 billion.
The scam was allegedly carried out by setting up shell company touting the sale of apartment units that were never intended to be built. The sale was promoted on social media luring purchasers with attractively priced unit namely at Rp. 150,000,000 (One Hundred and Fifty Million Rupiah).
Many bought apartment units with full cash payment or deposit followed by installments. In the end, the victims did not get the promised apartments and could never recover payments made to the fraudsters. These defrauding companies never intended to deliver on the obligations to deliver the statement.
Weak bargaining position of the purchasers
Quite often, buyers are also helpless in cases where the developer hand over the unit of much lesser size than promised or the unit is of interior quality. The contract does not protect the purchaser who may not have the resources to file court claim for fear of repercussions from the developers because they would still have ongoing dealing with in the future. In many cases, the developers continue to control management of apartments and the common owners’ associations long after completion and handing over of the units to the purchasers.
Given the above challenges, the only protection is to contract with reliable developers having a strong track record of delivering on projects.