Prior to committing to land purchase, it is important to engage a PPAT to conduct a search of the land title at the Land Office to verify the owner of the law.
This is especially important where the seller does not have in hand a Land Office issued certificate of title.
It is important to distinguish between a Deed of Sale and Purchase (Akta Jual Beli) from a certificate of title (Sertifikat Hak Malik/SHM). The latter is the principal proof of title but not the former which is a document evidencing the transaction that the current owner made with the previous owner.
When a purchaser is interested in a property, he will pay a deposit and sign the binding sale and purchase agreement (PPJB). This is the contract to buy from the seller.
The follow-up document to be executed will be the deed of sale and purchase (AJB/Akta Jual Beli) at a later stage.
It is recommended that the initial deposit be held by an independent party such as the PPAT pending the completion of the deal (signing of the AJB).
The PPAT should inspect the certificate of land rights and Land and Building Tax (PBB). Another important check is the approval of the seller’s spouse (even if the property is in the sole name of seller, and the spouse is not named as co-owner). This is because the land becomes joint property under the Marriage Law and the transfer by the sole name owner may not effectively convey clean title to the buyer without the consent of the spouse.
Following the Sale and Purchase Agreement, the next step to effect the transfer in ownership is the entering into Deed of Sale and Purchase of land and buildings or abbreviated as AJB (Akta Jual Beli). The AJB is a necessary step to effect in the transfer of the title in the land. This is when the full or balance purchase price is to be paid.
The AJB is to be executed in the presence of the seller, buyer (or their authorized representative under a power of attorney) and must also be attended by two witnesses, as regulated in Article 38 paragraph (1) PP 24/1997.
Ownership certificate – The next major step is to record the AJB with the Land Office so that the land title certificate in the name of the buyer will be issued by the Land Office.
The certificate serves as proof of legal rights over the land (Article 32 paragraph (1) of PP 24/1997).
The right is further strengthen after 5 years (from certificate issuance) has expired. This precludes all third party from making adverse claim to the land.
See this page on the nature of property of rights that foreigner can own.