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Real estate due diligence in Bali

real estate due diligence in bali

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Real estate due diligence in Bali is essential to those considering buying real estate in Bali. The real estate laws in Indonesia are complex, and the buying process looks different than in many other countries. As a result, foreigners are more likely to make a mistake. Therefore, it is important to conduct due diligence to carefully review all the licenses, documents, permits, and agreements.

What is property due diligence in Bali?

Due diligence in Bali is the steps taken to ensure you’re safe making a business deal. It is to authenticate and verify all the information needed to make a legal deal and reduce possible risks. Regarding property due diligence in Bali, it means checking the land ownership, all licenses, and any permits connected to the real estate property.

Why is real estate due diligence in Bali so necessary?

Real estate due diligence in Bali is crucial to protect investments and ensure the buying process goes smoothly. Bali’s legal system and control structures are complicated, so it’s essential to check a property’s legal standing and ensure it follows zoning laws. Through due research, owners can also evaluate risks like land battles and fake paperwork, get a clear picture of their finances to avoid liabilities, and analyze the market to make smart decisions.

Because Bali has a lot of cultural history and a fragile ecosystem, it’s important to consider environmental studies and cultural sensitivity to ensure the property doesn’t hurt the environment or violate cultural rules. In a way, due diligence is like a shield, as it helps buyers manage the complexities of the real estate market in Bali and make sure their investment is safe and legal.

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5 steps to conduct property due diligence in Bali

Go through these five steps when conducting property due diligence in Bali:

Step 1: Visit the property in Bali

During a site visit, you must examine the property’s physical features and decide whether it would fit your vision for your investment. You should also hire inspectors to ensure the property’s dimensions match the measurements on the title. Before signing the contract, you must visit the property to determine if it fits your investment and potential.

Step 2: Verify land ownership and confirm the seller’s authority

The next step is to determine the other party’s right to sell. Most of the time, property owners sell their property through a broker or an agent. The due diligence involves verifying that the party you are dealing with is the actual owner reflected in government records and that their broker or agent has a notarized authority to sell. One part is checking the land titles and permits of the property. By taking these steps, you can protect yourself from any potential fraud or scam.

Step 3: Validate all licenses

Once you have verified the seller’s authority, you must also investigate whether the property has the required licenses. Bali has zoning requirements, so you must confirm that local authorities cleared the property and the seller has the proper permits. One of the permits to check is the Building Approval (PGB).

Step 4: Check the documents

Verify other documents before buying a property in Bali besides zoning permits and land titles. For example, check the tax records and ensure the seller has no pending obligation to avoid being liable for it. Bali also has environmental laws, so verify with your lawyers that the property complies with regulations. 

Step 5: Review the contract

Finally, go over your contract with your lawyers. Reviewing the contract involves examining the terms and conditions of the agreement thoroughly, including the sale price, payment terms, closing costs, and any possible changes. By carefully reading the contract, you can ensure all deals are legal and meet your needs. This will protect your interests and keep you from getting into a fight.

Get help with due diligence in Bali

As you can see, buying a property in Bali is challenging. It requires a complete real estate due diligence plan and a deep understanding of Indonesian real estate law. So, if you want to conduct property due diligence in Bali, we suggest hiring a good lawyer specializing in real estate for foreigners in Bali. By doing this, you can be sure that the deal is legal and avoid any problems that could come up.

Own Property Abroad researched over 40 legal agents and lawyers in Bali, and we’ve found the best one for your property due diligence. For further information, kindly drop your details below or email us at [email protected]. Let’s start working on your property success story today!

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Never invest your money in Bali real estate without conducting due diligence in Bali first. Not doing research can lead to significant problems, like hidden costs or legal issues that could be expensive and take a long time to fix. Putting time and effort into something can give you peace of mind and help you in the long run. So, doing due diligence and research may be challenging, but it is important to protect your interests before you buy a house in Bali.

Frequently Asked Questions (FAQs)

Can I buy a house in Bali as a foreigner? 

Yes, foreigners can buy a house in Bali, but with certain restrictions. Foreigners cannot directly own freehold property but can go for a leasehold agreement, which grants them the right to use the property for a specified period. Additionally, through establishing a PT PMA, foreigners can buy freehold property under the Hak Guna Bangunan (HGB) title (which means Right to Build), allowing them to hold property under specific conditions on leased land.

Is buying property in Bali a good investment?

Buying property in Bali can be a good investment if done wisely. The island’s popularity as a tourist destination often translates to high demand for rental properties. Furthermore, the property market in Bali has historically seen substantial growth. However, it’s crucial to conduct thorough research and due diligence, understand the legal aspects, and consider market trends to make an informed decision.

Are there due diligence service providers in Bali?

Yes, there are due diligence service providers in Bali who help investors buy property. These service providers do thorough checks to ensure that laws are followed, check documents, evaluate risks, and conduct financial and market studies. Hiring a due diligence service provider in Bali will protect your property and help you understand the complicated local real estate market.

Your guide to buying property in Bali

Written by Matt Timmermans

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Your guide to buying property in Bali

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