Indonesia’s real estate market attracts thousands of foreign investors every year—but strict land ownership laws mean that any illegal land purchase exposes foreigners to serious legal, financial, and criminal consequences. Understanding these risks is essential before making any decision involving land acquisition.
Illegal Land Purchase Leads to Immediate Legal Invalidity
If a foreigner buys freehold land (Hak Milik) under their personal name or through nominee arrangements, the transaction is considered legally void. It does not matter if:
The foreigner has lived in Indonesia for years
Payments were completed
Contracts were signed privately
The local nominee “agrees” to the setup
The law overrides the agreement and treats the purchase as invalid from the start.
Government Seizure of the Property
In an illegal land purchase, the government has the legal right to:
Cancel the ownership certificate
Seize the property
Transfer the land back to the Indonesian state
Foreigners have no legal standing to defend the property because they are not legally allowed to own it in the first place.
Losing 100% of Your Investment
When a foreigner attempts to purchase land illegally, especially using a nominee, they risk losing:
All money used to buy the land
All development costs on the property
All improvements or buildings constructed
All future rental income
Courts typically side with the Indonesian nominee because the foreigner had no legal right to the land at all.
Criminal Liability and Immigration Violations
In severe cases, illegal land purchase can lead to:
Criminal investigation
Fines
Immediate deportation
Blacklisting from re-entering Indonesia
Authorities are increasing enforcement, especially in Bali and Lombok, where nominee misuse has grown.
Permanent Loss of Business Operating Rights
If a foreigner illegally buys land and runs a business on it (villa rentals, resorts, cafés), they may also lose:
PT PMA operating licenses
IMB/PBG building approvals
Tourism permits
Bank accounts linked to the business
The entire operation becomes non-compliant.
Safe Legal Alternatives for Foreigners
To avoid illegal land purchase issues, foreigners should use legal pathways:
PT PMA → allows business ownership of land through HGB
HGB (Right to Build) → long-term, renewable, commercially valid
Hak Pakai (Right of Use) → for foreigners living in Indonesia
Leasehold (Hak Sewa) → safest and most flexible option
These structures protect your investment and ensure long-term security.
Conclusion
Buying land illegally in Indonesia is a high-risk mistake with serious consequences—loss of money, loss of rights, deportation, and legal penalties. But with the correct legal structure, foreign investors can own, operate, and profit safely.
Need help choosing the safest structure for your investment? Request a free consultation with Indoned Consultancy.
Disclaimer
The information provided here is based on our long experience. The process or requirement may vary depending on the specific facts and conditions. Besides, the law and regulations in Indonesia subject to frequent changes. Please contact us as your consultant to get an up to date information and accurate advice. More Information click here and You can also follow our social media accounts to see the latest information posts. please click on the following links: Facebook, Instagram, Linkedin, and Twitter.
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