Indonesian law lets an off-plan developer hold 80% of the price before 20% of the project exists

A render, an invoice and a payment schedule arrive in the same email. The render has a pool and a date on it, the invoice has a bank account, the schedule has four or five transfers with month names beside them. What the email never carries is the other half of that schedule: what has to exist on the ground before each transfer falls due. Indonesian housing law has answered that since January 2011, and its answer is not the one the schedule assumes.

Two of its numbers matter more than the rest: the law lets most of the price be collected early and sets the physical checkpoint late.

What has to be certain before a developer can take your money?

Five things, and completion is the last of them. Article 42 of Law 1 of 2011 lets a house still under construction be marketed through the preliminary sale-and-purchase system, and allows that contract — the PPJB — only after certainty of five matters: land ownership status, the matter promised, the master building permit, the availability of infrastructure, facilities and public utilities, and completion of at least 20 per cent.^{Source: 1}JDIH Kementerian Perumahan dan Kawasan Permukiman, Last reviewed 10/10/2026Confidence: Verified

Then the statute does something the market rarely quotes. Article 45 forbids a legal entity building houses to carry out handover, or to draw more than 80 per cent of the price, before those five certainties are met.^{Source: 1}JDIH Kementerian Perumahan dan Kawasan Permukiman, Last reviewed 10/10/2026Confidence: Verified The two articles are one rule from both ends: the money runs ahead of the building, and the law decides by how far.

Government Regulation 14 of 2016 carried both rules at regulation level for single and row houses, with the master building licence as the third certainty.^{Source: 2}JDIH Kementerian Perumahan dan Kawasan Permukiman, Last reviewed 10/10/2026Confidence: Verified Government Regulation 12 of 2021 replaced that article and inserted thirteen new ones, 22A to 22M: the third certainty became the PBG, and completion of at least 20 per cent stayed where it was.^{Source: 3}JDIH Kementerian Perumahan dan Kawasan Permukiman, Last reviewed 10/10/2026Confidence: Verified The same amendment revoked the ministerial regulation that used to govern the PPJB, Public Works and Housing 11/PRT/M/2019^{Source: 3}JDIH Kementerian Perumahan dan Kawasan Permukiman, Last reviewed 10/10/2026Confidence: Verified — a checklist written against that document now points at nothing.

The inserted articles are where a buyer’s leverage lives. Before marketing at all, a developer must hold certainty of spatial allocation, of land rights and of the status of control over the house, the construction permit, and a construction guarantee from a guarantor institution, evidenced by a letter of support from a bank or non-bank institution.^{Source: 3}JDIH Kementerian Perumahan dan Kawasan Permukiman, Last reviewed 10/10/2026Confidence: Verified The marketing material must carry ten items, among them the planning-letter number, the land-certificate number, that letter of support, and the number and date of the PBG.^{Source: 3}JDIH Kementerian Perumahan dan Kawasan Permukiman, Last reviewed 10/10/2026Confidence: Verified The buyer gets at least seven working days to study the PPJB, and it is signed before a notary.^{Source: 3}JDIH Kementerian Perumahan dan Kawasan Permukiman, Last reviewed 10/10/2026Confidence: Verified

What does the completion test actually measure?

Not your villa. The elucidation of Article 42(2)(e) defines completion of at least 20 per cent as the building of at least 20 per cent of the total number of units, plus the availability of the infrastructure, facilities and utilities planned for the development.^{Source: 1}JDIH Kementerian Perumahan dan Kawasan Permukiman, Last reviewed 10/10/2026Confidence: Verified The 2021 regulation keeps that for landed houses and adds a different test for an apartment block — 20 per cent of the construction volume of the building being marketed.^{Source: 3}JDIH Kementerian Perumahan dan Kawasan Permukiman, Last reviewed 10/10/2026Confidence: Verified

On a development of ten villas, two finished units, a road, a drain and a letter about electricity and water satisfy the checkpoint while your own plot is still grass. The checkpoint the law sets is not a checkpoint on your villa.

One part of the same article is better than most private contracts, and nobody asks for it. The completion figure is taken from the report of the construction supervision consultant or the construction management consultant.^{Source: 3}JDIH Kementerian Perumahan dan Kawasan Permukiman, Last reviewed 10/10/2026Confidence: Verified The law already knows a developer should not certify its own progress: it names an independent professional and leaves the buyer to ask for the report.

How much of the price may be collected before that checkpoint?

Most of it. On this publication’s reference object, a two-bedroom villa in Canggu at USD 400,000, the statutory ceiling is USD 320,000.Estimate That is what may sit with a developer before the land certificate is shown, a copy of the PBG handed over, the utilities evidenced and a consultant’s report produced. We surveyed no market schedule; this is the ceiling’s arithmetic.

What that money is worth if the project stops depends on who stopped it. If the developer misses the construction schedule or the schedule for signing the PPJB, the buyer may cancel and the whole payment must be returned in full.^{Source: 3}JDIH Kementerian Perumahan dan Kawasan Permukiman, Last reviewed 10/10/2026Confidence: Verified Those schedules are not optional: a developer taking money at the marketing stage must disclose the construction schedule, the PPJB signing schedule and the deed-and-handover schedule.^{Source: 3}JDIH Kementerian Perumahan dan Kawasan Permukiman, Last reviewed 10/10/2026Confidence: Verified A contract that names no dates has removed the trigger for the one remedy that returns everything.

Walking away for your own reasons costs more than buyers expect. Where a prospective buyer cancels at the marketing stage for a reason other than the developer’s negligence, the developer may deduct at the lowest 20 per cent of what was paid, plus tax — the Indonesian wording is a floor, and the article sets no ceiling.^{Source: 3}JDIH Kementerian Perumahan dan Kawasan Permukiman, Last reviewed 10/10/2026Confidence: Verified The neighbouring paragraph allows a deduction of 10 per cent where it is the buyer’s mortgage that is refused.^{Source: 3}JDIH Kementerian Perumahan dan Kawasan Permukiman, Last reviewed 10/10/2026Confidence: Verified

A refund owed runs on a clock — thirty calendar days from the cancellation letter, then one per mille of the sum for every day late.^{Source: 3}JDIH Kementerian Perumahan dan Kawasan Permukiman, Last reviewed 10/10/2026Confidence: Verified On USD 320,000 that is USD 320 a day, about USD 9,600 over a thirty-day month.Estimate It is the regime’s only interest rate, and it runs only in the buyer’s favour.

What did the Gianyar court actually decide?

We cannot tell you, and the reason is worth recording. The Supreme Court’s decision directory and the Gianyar court’s own site each met us with a bot challenge, HTTP 403, on 10 October 2026, in a browser as well as a fetcher. Everything below is a press account carrying the status to match, and we name no person and no company: the reports name both, and we have not read the document that would let us check them.

What transfers to any payment schedule is in the hearing, not the sentence. The contractor is reported to have received about Rp 9 billion through personal as well as company accounts, while an audit put progress at 22.5 per cent and the money actually spent on building at about Rp 3 billion.^{Source: 6}Fajar BaliUnverified An invoice, a personal account and a progress figure nobody had been shown: three ordinary facts, one story.

Two corrections to the version of this case that circulates. We found no record of a kickback of 15 per cent on each tranche: asked in court whether commission flowed to the co-defendant, the contractor said there was none.^{Source: 6}Fajar BaliUnverified And this was not a PPJB sale. A company commissioned the build on land it held, so what governed it was a construction contract, where the sixteen items Law 2 of 2017 requires are the floor — not the housing regime above.

What is a promise to buy the villa back worth?

Nothing that either instrument recognises. Searching the full extracted texts of the statute and the 2021 regulation for the Indonesian phrases for buying back returns zero hits in each; the word for guarantee appears in the marketing and PPJB articles, where it means the construction guarantee and the developer’s own warranty, never a promise to repurchase.^{Source: 3}JDIH Kementerian Perumahan dan Kawasan Permukiman, Last reviewed 10/10/2026Confidence: Verified

That does not make a buyback void. It makes it an ordinary promise, enforceable only against whatever the promising company still owns when you call it — the problem the exit also creates for a nominee arrangement that turns out to be void, where the statute decides who keeps the money and the answer is not the foreigner. The guarantee the regulation does require points the other way: a letter supporting construction, taken before marketing, in favour of the project rather than of your resale.

The enforcement side is narrower than the drafting, not thinner. A draw above 80 per cent before the PPJB conditions are met brings written warnings, licence suspension for up to a year, loss of incentives and an administrative fine between Rp 100,000,000 and Rp 1,000,000,000.^{Source: 3}JDIH Kementerian Perumahan dan Kawasan Permukiman, Last reviewed 10/10/2026Confidence: Verified Building something other than what was promised carries a criminal fine of up to Rp 5,000,000,000, aggravated threefold for a legal entity.^{Source: 1}JDIH Kementerian Perumahan dan Kawasan Permukiman, Last reviewed 10/10/2026Confidence: Verified But no sanction article refers to the marketing prerequisites or to the completion test: the only inserted article a sanction points at is the 80 per cent ceiling.^{Source: 3}JDIH Kementerian Perumahan dan Kawasan Permukiman, Last reviewed 10/10/2026Confidence: Verified

The housing law itself does carry the ceiling twice over: one article forbids a legal entity to take more than 80 per cent before the conditions are met, and another makes doing so deliberately punishable by up to a year or Rp 1,000,000,000.^{Source: 1}JDIH Kementerian Perumahan dan Kawasan Permukiman, Last reviewed 10/10/2026Confidence: Verified The gap is not in the sanction but in its reach: nothing in either instrument attaches a penalty to the marketing prerequisites or to the completion test themselves. The Gianyar file sits in that gap — what reached a courtroom was ordinary fraud, not a housing offence.

The case against this reading

Four limits, and the first is the largest.

The regime may not cover the villa you are buying. It addresses housing development and a developer selling units, and much of what sells in Canggu and Uluwatu is one villa built to order on leased land, a share in a company, or a right that never produces a certificate in the buyer’s name. The marketing article assumes a certificate of ownership, of building-use right or of use right issued in the house owner’s name.^{Source: 3}JDIH Kementerian Perumahan dan Kawasan Permukiman, Last reviewed 10/10/2026Confidence: Verified A buyer taking the structure described in where the leasehold extension figure comes from is often outside that assumption, and a contract outside the regime keeps none of these protections by operation of law. It has to import them by drafting.

The ceiling reaches an individual developer; the prison sentence does not. The regulation defines a developer as an individual and/or a legal entity, and its prohibition on drawing more than 80 per cent is addressed to the developer, not to companies alone.^{Source: 3}JDIH Kementerian Perumahan dan Kawasan Permukiman, Last reviewed 10/10/2026Confidence: Verified The administrative ladder reaches both as well: its procedure names a legal entity or an individual as developer at every rung, from written warning through licence freeze to the fine.^{Source: 3}JDIH Kementerian Perumahan dan Kawasan Permukiman, Last reviewed 10/10/2026Confidence: Verified Only the criminal provision in the housing law narrows: it addresses a legal entity that deliberately takes more than 80 per cent, and carries up to a year or a fine of Rp 1,000,000,000.^{Source: 1}JDIH Kementerian Perumahan dan Kawasan Permukiman, Last reviewed 10/10/2026Confidence: Verified

So an individual seller is bound by the same ceiling and faces the same money, and is the one person on the list who cannot be imprisoned for ignoring it.

We read texts, not practice. Whether a Bali regency supervises marketing under these articles, and what it does on finding a breach, is not in the documents, and the missing sanction is a reason to expect little. The pattern repeats from land that cannot lawfully be built on at all, where the instrument is clear and the practice is the question.

The money figures are ours. The ceiling above is a statutory limit applied to a reference price, not a schedule we collected, and the deduction examples assume a reservation of a tenth. A buyer should also run the numbers that arrive after completion, where the yield printed on the cover of a deck and the only official price index, which measures Denpasar do more damage to a plan than any clause in a PPJB.

What to do before signing

Ask for the PBG number and date and the planning-letter number in writing, then check them at the regency one-stop licensing office — DPMPTSP in Badung or Gianyar — and through OSS rather than through the seller. A developer that holds them loses nothing by giving them; one that does not cannot.

Ask who the construction supervision or construction management consultant is, and make each tranche conditional on that consultant’s progress report rather than on an invoice. This is the clause that turns the law’s checkpoint into yours, and it is cheap before signing, impossible after.

Ask for the three schedules — construction, PPJB signing, deed and handover — as dates inside the contract. The full-refund remedy keys on those dates, so a contract without them has removed it.

Pay the company named in the contract, into an account in that company’s name, never a person. Put that in the payment clause and refuse invoices that contradict it. The Gianyar hearing is the cheapest lesson available in what a personal account does to money meant to become a building.

Take the seven working days, have the PPJB notarised, ask for the letter of support by name. Then ask for the buyback in writing, with the account it would be paid from and what happens if it is not — the law gives that promise no standing, and the answer tells you about the seller whatever it says.

We read all three instruments in the copies the housing ministry’s own legal-documentation portal publishes, as they stood on 10 October 2026. Two of those text layers are damaged by font mapping — the 2021 amendment renders its own completion threshold as “2Ao/o” — so every figure here was read in both the digits and the Indonesian words printed beside them. The acquisition tax on a later transfer is a separate question, treated in whether BPHTB applies when you buy someone else’s lease.