The right of a land can be upgraded or downgraded. This can be done in accordance with the interest of the right’s holder of that particular land. A right of land is downgraded to fulfill the needs of the right of land’s holder which might not qualify to hold a particular right of land it has just acquired. This happens, for example, when a legal entity won a land with Right of Ownership (Hak Milik) through a public auction, while it is not allowed for legal entity to hold an Right of Ownership over land. However, the right of land is able to be upgraded in order to acquire Right of Ownershipfor residential purposes.
Downgrading the Right of Land
According to State Agrarian Minister/Head of National Land Office Decision Number 16 of 1997 on the Change of Right of Ownership to Right to Build (Hak Guna Bangunan) or Right of Use (Hak Pakai), and Right to Build to become Right of Use (“Downgrading Right of Land Decision”), there are 2 (two) types of right of land that can be downgraded, which are:
- Right of Ownership à can be downgraded to Right to Build or Right of Use, each for the time period of 30 (thirty) years and 25 (twenty five) years.
- Right to Build over State Land or Right of Management (Hak Pengelolaan) owned by an Indonesian Citizen or Indonesian legal entity à downgraded to Right of Use by the request of the right’s holder or its attorney with the time period of of 25 (twenty five) years.
The proposal to convert the right of land from Right of Ownership to become Right to Build or Right of Use and from Right to Build to become Right of Use is submitted to the Head of the local Land Offices (Kepala Kantor Pertanahan) by attaching:
- Certificate of Right of Ownership or Right to Build of the proposed land, or evidence of ownership of the land in case the land is still unregistered.
- Copy of the minutes of auction issued by the Auction Official, if the land was won in public auction by legal entity.
- Letter of Approval from the holder of Mortgage Right (Hak Tanggungan), if the right of land is pledged with Mortgage Right.
- Evidence of applicant’s identification.
If the proposed Right of Ownership has not been registered, then the proposal of conversion of right is conducted at the same time with the registration of Right of Ownership, and the conversion of right shall be conducted after the Right of Ownership is registered in accordance with the prevailing regulations.
If the Right of Ownership which is proposed for the conversion of right is won in public auction by legal entity, then the proposal of conversion of right shall be performed by the legal entity concurrently with the proposal of transfer of right, and both of the requests shall be completed together by firstly registering the conversion of right, and then registering its transfer of right, provided that the conditions of unregistered land as mentioned above will prevail.
Upgrading the Right of Land
According to the State Agrarian Minister/Head of National Land Office Number 6 of 1998 on the Granting of Ownership Right for Residential Houses (“Upgrading Right of Land Decision”), there are 2 (two) ways to upgrade the right of land to Right of Ownership:
- The Right to Build or Right tof Use for residential pupose owned by Indonesian individual, with an area of 600m2 or less, by his/her request is revoked and given back to the previous right holder as Right of Ownership.
- A land with a Right to Build or Right of Use for the residential purpose owned by an Indonesian individual, with an area of 600m2 or less, which is already expired and still owned by the previous right’s holder, by the request of him/her, is granted with the Right of Ownership.
For the granting of Right of Ownership, the receiver of right shall have to pay certain fees to the State in accordance with the regulations.
The proposal to register the Right of Ownership is submitted to the local District/City (Kabupaten/Kotamadya) Head Land Office by attaching the required letter as stipulated in Appendix 1 of the Upgrading Right of Land Decision, along with:
- Certificate of the related land.
- Evidence of the usage of the land for residential purposes, in the form of:
1) A copy of Building Construction Permit (Izin Mendirikan Bangunan - IMB) which states that the building is used for residential purposes, or
2) A statement letter from the Head of the local Village/Sub-District that states that the building is used as residential purposes, if the Building Construction Permit has not been issued by the authorized institution.
- A copy of the last Land and Building Tax Owed Notification Letter (SPPT PBB) for land with the area of 200 m2 or more.
- Evidence of applicant’s identification.
- A statement from the applicant, which states that by obtaining the Right of Ownership as requested for registration, the applicant will have Right of Ownership of a land for residential puposes of not more than 5 (five) plots, which all of them do not cover more than 5.000 (five thousand) m2, by using the format as stipulated in Appendix II of the Upgrading Right of Land Decision.
Theresia C Pasaribu
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