The money has been paid, the receipt has been signed over a duty stamp, and you’ve lived on the land for years. But the certificate is still in the seller’s name.

This is an informal land sale, known in Indonesia as jual beli di bawah tangan. It usually happens between relatives, between neighbours, or for farmland, because it feels quicker and cheaper. The problems show up later, when the land is sold on, pledged or inherited.

This guide is for buyers who have already bought on a receipt, sellers who want to finish an old deal properly, and anyone being offered this kind of arrangement. It covers the legal position, the risks and how to fix it.

What an informal land sale is

An informal sale is a land sale recorded only by a receipt or an agreement the parties wrote themselves, with no deed from a PPAT (Pejabat Pembuat Akta Tanah, the official who draws up land deeds). Sometimes the head of the neighbourhood (RT) or a village official witnesses it, sometimes nobody does.

It comes in many forms: a stamped paid-in-full receipt, a sale agreement, or a statement releasing rights to the land. What they have in common is that there is no AJB (Akta Jual Beli, the deed of sale) from a PPAT.

Some agreements have their signatures legalised by a notary. That confirms who signed, but the document is still not a PPAT deed.

Valid as a contract, but it can’t be registered

Two questions need to be kept apart.

As a contract, the sale can be valid. Article 1320 of the Indonesian Civil Code (KUHPerdata) sets four conditions for a valid agreement:

  • Consent of the parties.
  • Capacity of the parties to make a contract.
  • A specific subject matter, meaning a clearly defined object.
  • A lawful cause, meaning a purpose that doesn’t break the law.

If all four are met, the seller is bound by the promise, and you have grounds to demand that it is carried out.

As a transfer of land rights, though, a receipt isn’t enough. Under PP No. 24 Tahun 1997, a transfer by sale can only be registered at the Kantor Pertanahan (the district land office) on the basis of a deed made by a PPAT. Without that deed, the land records still show the seller as the right holder.

So you may have paid for the land and be living on it, but as far as the land office is concerned, it still belongs to someone else.

The risks for the buyer

  • The land is sold again. If the seller still holds the original certificate, they can sell the same land to someone else through an AJB. That second buyer is the one who ends up registered as owner.
  • The land is pledged. With the certificate in hand, the seller can still pledge the land to someone else.
  • The seller dies. The heirs may not know about the sale, or may refuse to recognise it.
  • The heirs disagree. One heir agrees, another refuses to sign.
  • No home loan and no clean resale. A bank, and any future buyer, will want the certificate in your name.
  • Taxes are only postponed. The seller’s income tax and the buyer’s BPHTB (Bea Perolehan Hak atas Tanah dan Bangunan, the acquisition duty) are paid when the AJB is made, under the rules and values in force at that time.

The longer it is left, the harder it is to fix. The people who knew about the sale may move away, forget or die.

If you hold the original certificate or a power of attorney

Some buyers feel safe because the seller handed over the original certificate. It’s true that without it, the seller would struggle to sell or pledge the land again through official channels. But holding the certificate doesn’t make you the registered owner.

The same goes for a power of attorney to sell from the seller. A power of attorney generally ends when the person who gave it dies, and the PPAT will check whether its form can be used for an AJB.

So treat an original certificate or a power of attorney as a stopgap. The way out is still the same: an AJB before a PPAT, then the transfer into your name.

Fixing it while the seller can still be reached

This is the easiest route. The steps:

  1. Contact the seller and agree to make an AJB.
  2. Go to a PPAT in the area where the land lies, bringing the original certificate, the old receipt, the ID cards (KTP) and family cards (Kartu Keluarga) of both parties, the seller’s marriage certificate, and proof of PBB (annual land and building tax) payment.
  3. The PPAT checks the certificate at the land office.
  4. The seller pays the final income tax (PPh final) of 2.5% of the gross value, and you pay BPHTB under the local regulation.
  5. The seller and their spouse sign the AJB with you before the PPAT.
  6. The PPAT registers the transfer at the land office so the title moves into your name.

Who bears which costs can be negotiated, but put the agreement in writing. The value stated in the deed should be the real one.

If the land isn’t certified yet, a deed can still be made before a PPAT, or before a camat (district head) acting as a temporary PPAT, usually with a letter from the lurah or village head. The land is then registered for the first time. This is explained in our guide to SKT and segel land letters.

If the seller has died or can’t be found

The seller has died

The seller’s rights and obligations pass to their heirs. They are the ones who sign the AJB, usually after their status as heirs is established with a statement of heirs (surat keterangan waris). All the heirs need to take part.

  • Heirs who are minors need a court decision on guardianship.
  • Heirs living abroad can sign a power of attorney legalised at an Indonesian embassy or consulate.

Show the family the old receipt and any other proof of payment. Witnesses to the original sale, if they’re still around, can also help convince them.

The seller or the heirs can’t be found or refuse

If talks go nowhere, the last resort is the court. In general, the buyer files a claim asking the court to declare the sale valid. A final and binding judgment can then serve as the basis for registration at the land office.

This route takes time and money, and the outcome depends on the evidence you have. Talk to a lawyer before you start. Other ways to settle land disputes are covered in our guide on avoiding land disputes when you buy.

If you are about to buy

  • Check the certificate and the seller’s identity first. Make sure the name on the certificate matches the seller’s ID card, and ask a PPAT to check the certificate before you pay any deposit.
  • Don’t pay in full on a receipt. Large sums should change hands when the AJB is signed before a PPAT.
  • Use a PPJB if the AJB can’t happen yet. Make a PPJB (Perjanjian Pengikatan Jual Beli, a conditional sale agreement) before a notary, for example when the certificate is being split, the seller’s home loan isn’t paid off, or the inheritance transfer isn’t finished. The difference is explained in our guide on AJB and PPJB.
  • Write down the schedule and conditions. When the AJB will be signed, who pays for what, and what happens if the deal falls through.
  • Hold back part of the payment until the AJB is signed.
  • Pay by bank transfer to the account of the owner named on the certificate, and keep the proof.
  • Bring in a PPAT early. The PPAT’s role is explained in our guide to notaries and PPATs.

If you have questions about land you’re buying or selling, you can reach Vorneo on WhatsApp.