With property prices climbing, a lot of people start thinking about pooling money. Two siblings buy a plot together, three colleagues buy a house to rent out, or an extended family puts money together for a shophouse. Capital that wasn’t enough on its own suddenly is.
Joint buying can work well, but it can also wreck relationships if the rules aren’t clear from the start. The trouble usually doesn’t come when you buy. It comes years later: when one person wants to sell, someone stops paying their share of costs, or one of the owners dies.
This guide covers what to agree on before anyone transfers money.
Whose name goes on the certificate?
This is the first question and the most important one. There are two common options.
Everyone’s name. A certificate can list several people as joint owners. This protects each person best, because no one can sell or mortgage the property without the others agreeing. The downside is that every big decision needs everyone’s signature, including spouses where the money comes from marital property.
One person’s name. It’s simpler, but the other owners are relying only on an agreement outside the certificate. If the named owner quietly sells, borrows against the certificate or dies, everyone else is in a much weaker position. This only makes sense with a strong written agreement and a relationship you genuinely trust.
One more point: only Indonesian citizens can hold a Sertifikat Hak Milik (SHM, freehold title). If one of the group is a foreign national, talk to a notary or Pejabat Pembuat Akta Tanah (PPAT, the land deed official) first, because there are limits on the rights a foreigner can hold.
The written agreement: what goes in it
Don’t rely on a verbal understanding, however close you are. Put the arrangement in writing, ideally in front of a notary. It should cover:
- Each person’s share, for example as a percentage, in line with what they put in.
- Who pays what after the purchase: the Pajak Bumi dan Bangunan (PBB, the annual land and building tax), upkeep, renovation and other costs.
- What happens if someone doesn’t pay their share, for example their stake shrinks, or the others cover it as a loan.
- How the property is used: rented out, lived in or left as is. Who manages it and whether they’re paid for that.
- How rental income is split and when it’s paid out.
- How decisions are made, for example day-to-day choices by majority, but a sale only with everyone’s agreement.
- How to exit, covered in the next section.
Every owner should keep a copy of the agreement along with proof of what they paid in.
Exit terms: the part people forget
People’s needs change. In five years one of you might need money for school fees, move to another city or simply want out. Without exit rules, the only option is to push everyone to sell, and that’s where the arguments start.
What to agree on:
- First right to buy. An owner who wants out offers their share to the other owners before anyone outside the group.
- How the price is set. For example an independent valuation, or an average of several comparable sales, so nobody argues over the number.
- A time limit. How long the others have to decide and raise the money.
- If nobody buys. Whether the whole property is then sold, and within what time.
If one of the owners dies
A deceased owner’s share passes to their heirs, not automatically to the other owners. So you could suddenly be sharing the property with your friend’s wife, children or siblings, who may have very different plans.
The agreement should touch on this, for example by giving the remaining owners the right to buy that share from the heirs at a fairly set price. Transferring title after an owner dies also needs complete inheritance documents. The process is outlined in selling inherited land.
Joint buying and mortgages
Pooling usually works more smoothly with cash. If you want a Kredit Pemilikan Rumah (KPR, a home mortgage), banks generally accept a married couple’s combined income, and some accept close family under certain conditions. A single mortgage shared between friends is rarely possible.
If the KPR is in one person’s name, the certificate is in that name too and is held by the bank until the loan is paid off. Everyone else is relying only on the agreement. Think that risk through carefully. Combined-income rules are covered in mortgages on combined income.
Spouses are involved too
For anyone who’s married, the money they put in may come from marital property. In many cases the spouse also has to consent to a sale or a mortgage. Bring spouses in from the start so there are no surprises later. This is explained in property as marital assets.
Keeping track of money in and out
Once the property is bought, money keeps moving: rent comes in, PBB gets paid, tradespeople get called. Without records, suspicion creeps in over time, even when nobody is cheating.
Open one bank account just for the property, or at least keep one cash book every owner can see. Record every payment in and out with its receipt, and share a summary regularly, for example once a year when the rent is paid. Being open like this costs almost nothing and saves a lot of relationships.
Warning signs to walk away from
- Someone refuses to sign a written agreement.
- One person holds all the money and documents with no records everyone can see.
- Goals are far apart: one wants long-term rental income, another wants to sell as soon as prices rise.
- Someone whose finances are already tight and who may not manage the running costs.
Summary
- Decide whose name goes on the certificate and understand what that means.
- Put a written agreement in place, ideally at a notary, covering shares, costs and decisions.
- Settle exit terms and how the price is set from the start.
- Plan for the possibility that one owner dies.
- Involve spouses, and check the bank’s rules if you’re using a KPR.
If you and your family or friends are looking for a property to buy together in or around Banjarmasin, the Vorneo Property team can help you find options that fit.
