Indonesia Real Estate Law – Decision of the Review by the Constitutional Court on Law Number 20 of 2011 on Condominium

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On 10 May 2016, the Constitutional Court of the Republic of Indonesia (“MK”) has decided, on the request for a review over the norms of Law No. 20 of 2011 on Condominium (“Condominium Law”) against the Constitution of the Republic of Indonesia Year 1945 (“UUD 1945”).

The parties submitting the review petition were the Indonesia’s society, owner of a condominium unit.

Reviewed Clause

The reviewed clauses are related to the establishment of the Association of Owners and Tenants of Condominium Unit (“PPPSRS”). The claimant requested review on Article 75 paragraph (1) of Condominium Law, which states:

“The developer is obliged to facilitate the  establishment of the PPPSRS no later than the transition period set forth in Article 59 paragraph (2) expired”

The claimant considers that Article 75 (1) is violating Article 28H (4) and Article 28D (1) of UUD 1945.

Article 28H paragraph (4) UUD 1945 states:

“Every person is entitled to own personal property, and such property shall not be taken over arbitrarily by anyone”

Article 28D paragraph (1) of the UUD 1945 states:

“Every person is entitled to the recognition, guarantee, protection and legal certainty of just laws as well as equal treatment before the law”.

Considerations by Judge

MK’s judges consider that problems occurred on the PPPSRS establishment is the condominium owners encountering difficulties to establish PPPSRS because of disputes or dissenting opinion between the condominium owners and developer on the interpretation and implementation of Article 75 paragraph (1) of Condominium Law that states:

“The developer is obliged to facilitate the  establishment of the PPPSRS no later than the transition period set forth in Article 59 paragraph (2) expired”.

In practice, “to facilitate” no longer solely meant to provide all facilities and assistance necessary for the establishment of PPPSRS. The developer, however,  intervenes so far in the management election process of PPPSRS, even frequently leads to conflict.

Article 59 Paragraph (1) of Condominium Law mentions that the developer is obliged to manage the condominium as stipulated in Article 56 paragraph (1) of Condominium Law comprising operational, maintenance, common facilities, common equipment, common land where for all those activities the management is entitled to receive the management service charges charged proportionally to the condominium owner, as set forth in Article 57 paragraph (1) and (2) Condominium Law.

The above reason is allegedly used as an excuse by developer to intervene with PPPSRS establishment, because of the economic benefits obtained by developer in managing the condominium, where its benefits will be stopped if the PPPSRS is established and all the building management will proceed to PPPSRS. Even though, based on Article 74 paragraph (1) in Condominium Law, it is clear that the establishment of PPPSRS is an obligation to condominium owners.

Furthermore, MK’s judges submit that there are 2 (two) conditions that cause intervention by the developer in the establishment of PPPSRS:

a. First, the absence of administrative sanction towards the developer who fails to perform its obligation to facilitate the establishment of PPPSRS as stipulated in article 75 paragraph (1) of Condominium Law.

b. Second, the uncertainties caused by the different provision of Article 59 paragraph (2) of Condominium Law with the elucidation that states “the transition period as stipulated in paragraph (1) is determined not later than 1 (one) year since the first delivery of condominium unit to the owner.”

The elucidation of Article 59 paragraph (2) of Condominium Law states, “transition period means a period when condominium units have not been wholly sold.” There is a difference, even conflict, between the content of Article 59 paragraph (2) of Condominium Law and its elucidation in defining “transition period” that can be rationalized by the developer to act as management even though the one-year period has been lapsed.

Article 59 Paragraph (1) explained that the developer is obliged to become temporary building management during the transition period.

Decision

MK’s judges adjudicated and decided that Article 75 paragraph (1) of Condominium Law with regards to the phrase “Article 59 paragraph (2)” is violating UUD 1945 and does not have legal binding force as long as it is not construed that “transition period” in elucidation of Article 59 paragraph (1) is not interpreted as 1 (one) year without relating the condition of non-sale over the whole of condominium units.

Conclusion

It can be concluded that the developer must facilitate the establishment of PPPSRS no later than 1 (one) year since the first delivery of condominium unit to the owner, even though all the condominiums are not yet sold

Erinda Resti Goesyen

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Indonesia Real Estate Law – Decision of the Review by the Constitutional Court on Law Number 20 of 2011 on Condominium
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