Before You Buy Land in Bali: 7-Step Due Diligence Guide

Due diligence must be done before signing anything, as the results will undoubtedly influence the negotiation, mainly the asking price. Ultimately, it will clarify whether you want to move forward with the investment into a specific plot of land or if you need to look elsewhere. 

Proper due diligence before you buy land in Bali should include:

• Validation of the authenticity of the title held by the landowner.
• Possible disputes, mortgages, etc.
• A search of public records at BPN (Land Office)
• Taxes
• Location zoning
• Building permit
• Land infrastructure

Typically, a notary and a lawyer can help you with due diligence. Make sure to hire someone you can trust. The Ilot Property team has over 20 years of experience buying and validating land for clients. It is the first step in our process to build you the luxury turnkey investment property of your dreams. 

Process of Due Diligence for Bali Land Before Buying

The process of all necessary checks may take from a few hours to several weeks. The Ilot Property team meticulously follows every step and digs deep to discover all the details about the Bali land you are about to buy.

1. Validate the Legal ownership
   It is ideal when the land seller is the sole owner, yet it is common for local families to share ownership. This case is not beneficial for us, as family members often create obstacles and disagreements. To check whether the seller is the only legal owner, we ask to show the valid original land certificate and inheritance documents, if needed. We will search for public records in the regional Land Office to confirm the information.
   
   It is also worth digging a little further to trace the hierarchy of the land documents. It may reveal some disparities that will affect your rights. Additionally, we will check if the land was leased to anyone else or subleased.
   
   
2. Taxes Paid or Not
   One of the most significant issues involved to buy land in Bali is unpaid taxes. The buyer should not sign contracts unless the owner pays the due taxes. Delinquent taxes are not only a financial burden but also will not allow you to get a building permit.
   
   Another important tax for such transactions is the PBB tax payment, called SPPT PBB. This document will determine the tax applicable for both seller and buyer. Yes, buying land means paying taxes from both sides: the owner pays around 2,5% of the value, while the buyer should produce about 5% of the land value. The exact amount is calculated for each transaction individually.
   
   However, you’re covered when you buy land in Bali with Ilot Property. Our International team can help with this entire process, so you will know exactly how much you will have to pay after signing the contract and building on the land.
   
   
   

3. Mortgage
   For Indonesian citizens, it is possible to get a bank loan for land. It is crucial to find out if there is any mortgage attached to the ground during preliminary checks.
   
   
   

4. Location Zoning
   Zoning validation is as important as confirming ownership. In Indonesia, land use follows the City Planning Act’s strict urban and rural planning. Simply put, there are 3 significant zonings: agriculture, residential, and business.
   
   Each zoning establishes rights to use the land. To buy land in Bali and build a villa, you must have residential zoning. You need business zoning if you’re planning to rent a villa and have a profit or build a shopping centre. As you may guess, with agriculture, or green zoning, you won’t be able to build, live and do business on the land.
   
   The Indonesian government prosecutes zoning violations. At Ilot Property, we dedicate a great deal of time to hunting for perfect land in Bali for our development projects: we found small to large-sized land parcels with appropriate zoning certificates. We sorted this question with the local government and community.
   
   
   

5. Building Permit
   If your land meets zoning requirements and has transparent ownership, your next step is to check the existing building permit or IMB. Without such permission, you’re not legally allowed to build. Yet, not all land, especially unserviced land, will have IMB. In this case, you can apply for a permit once you have architectural drawings.

   The critical consideration is the price of the IMB. You may use it during price negotiation if the land doesn’t have active permits.

   Without a building permit, the government has full right to demolish all buildings on site. You don’t have to worry about IMB; Ilot Property services cover everything, from land hunting to adding finishing touches to your villa. 

6. Land Infrastructure
   If you’re looking to buy land in Bali, you will have to check the actual size of the plot, confirm its borders and identify existing infrastructure. All of it will influence the value of the land.

   Buying directly from a local landowner often means not having the exact land measurements. Most old land certificates do not include this information. You will have to invite land office officials, let them measure the land, and set the borders. It will also help determine if the land overlaps any neighbouring properties. Even a few meters overlap can cause severe risks for the transaction integrity.

   Additionally, check access roads, water supply, and power grid. Sometimes property access lies on someone else’s land, and some roads are even owned privately or publicly by the town.

   At Ilot Property, we have established a network of contacts at the government and village levels to ensure that any plot we source will be ready to build your dream home or investment property.

7. Sales and Purchase Agreement (SPA) Validation
   Most individual sellers use standard contracts. We recommend having your legal team review and adjust it to your specific transaction, including precise renewal conditions, mentioning all discovered risks or particularities, and the exact property value.
   

   After signing the contract, the notary should lodge it at the land registry office to transfer the ownership title from the seller to you. When Ilot Property buys land for you, you have access to an entire legal team ready to customize an agreement for your needs.

The Ilot Property team is ready to provide any additional information to help you make your final decision on Bali investments. Want to see the exclusive turnkey villa layouts that we can build and manage on your land in Bali? Contact us for first-hand insights and selected land plots meeting your requirements.

Read less