Legal Literacy - Learn all about Land Ownership Rights in Indonesia! Discover the definition, characteristics, entitled legal subjects, and how ownership rights can be terminated. Includes information about legal entities and limited liability companies.
Definition of Ownership Rights
In Article 20 paragraphs (1) and (2) Law Number 5 of 1960 Concerning Basic Regulations on Agrarian Principles (UUPA) explains that ownership is a hereditary right, the strongest and most complete, and is the core of other land rights, a right that a person can have over land and a right that can be transferred and assigned to another party.
Hereditary means that ownership does not only last during the lifetime of the person who has the right, but can be continued by his heirs when he dies.
Strongest means that the term of ownership is unlimited, the owner has the widest and freest authority in using his land.
Complete means that ownership gives the person who has it the widest authority compared to other rights. Ownership can be the parent of other rights and ownership is the parent of other land rights. Judging from its designation, ownership is also unlimited.
The occurrence of ownership as referred to in Article 22 of the Basic Agrarian Law (UUPA): ownership according to customary law is regulated by Government Regulation. In addition, ownership also occurs due to government stipulations and statutory provisions.
Characteristics of Ownership Rights
- Can be used as collateral for debt by being burdened with mortgage rights;
- Can be pawned;
- Ownership can be transferred to another person, namely a legal act that is intentionally carried out to transfer ownership from the owner to another person, for example: buying and selling, grants, wills and ownership can be transferred due to a legal event;
- Can be released voluntarily;
- Can be endowed.
Legal Subjects Who Can Obtain Land Ownership Rights
Indonesian Citizens (WNI)
Based on Article 9 paragraph (1) juncto Article 21 paragraph (1) of the Basic Agrarian Law (UUPA), it is explained that only Indonesian citizens can have a full relationship with land. This is because the Basic Agrarian Law (UUPA) prohibits foreigners from owning land in Indonesia. This is also explained in the Supreme Court Jurisprudence Number Register 1025 K/Sip/1980 dated March 13, 1982, the legal principle of which states:Foreigners according to the Basic Agrarian Law (UUPA) cannot have ownership rights to land”.
This provision is the principle of nationality, namely that only Indonesian citizens can have ownership rights, while foreign citizens (WNA) may not have ownership rights to land.
Exceptions contained in Article 21 paragraph (3) of the UUPA
However, children who become foreign citizens (after the enactment of the Basic Agrarian Law (UUPA)) can still obtain a share of inheritance in the form of land from an Indonesian citizen testator by providing compensation to heirs who are foreign citizens in the form of cash or money from the sale of the land in accordance with the portion of the inheritance rights of the child who is a foreign citizen. This can be done because basically the inheritance rights of heirs as foreign citizens do not directly become null and void, even though the child has become a foreign citizen, it does not mean that the blood relationship is lost.
Apart from inheritance without a will as mentioned above, foreigners can also acquire land ownership if there is a mixture of assets due to marriage (Article 21 paragraph (3) of the Basic Agrarian Law (UUPA)).
If an Indonesian citizen who has ownership rights loses their citizenship after the enactment of the Basic Agrarian Law (UUPA), they are obliged to relinquish those rights within a period of 1 (one) year from the acquisition of said rights or from the loss of citizenship. If the ownership rights are relinquished after this period has elapsed, the rights are extinguished by law and the land falls to the State, with the provision that the rights of other parties encumbering it remain in effect.
Legal Entities Designated by the Government
Article 21 paragraph (2) of the UUPA explains that ownership rights can also be acquired by legal entities determined by the government. In the article, a quo it is implied that legal entities can have ownership rights over land with the requirement that there is a stipulation by the government. This confirms that there is a prerogative right of the government in determining legal entities to have ownership rights over land.
The legal entities in question are regulated in Article 1 of Government Regulation Number 38 of 1963 concerning the Designation of Legal Entities That Can Have Ownership Rights Over Land (PP No. 38 of 1963), which states that legal entities that can hold ownership rights over land are:
- Banks established by the state (State Banks);
- Agricultural Cooperative Associations established based on Law Number 79 of 1958 (State Gazette of 1958 Number 139);
- Religious bodies, appointed by the Minister of Agriculture/Agrarian Affairs, after hearing the Minister of Religious Affairs;
- Social bodies, appointed by the Minister of Agriculture/Agrarian Affairs, after hearing the Minister of Social Welfare.
Apart from the legal entities mentioned above, there is no opportunity to have ownership rights over land and they may only have Right to Cultivate (HGU), Right to Build (HGB) and Right to Use if referring to Government Regulation Number 40 of 1996 concerning Right to Cultivate, Right to Build and Rights Over Land. There is also a right that can be owned by companies, namely management rights based on the Regulation of the Minister of Home Affairs Number 5 of 1974 concerning Provisions Regarding the Provision and Granting of Land for Company Needs.
Limited Liability Companies Cannot Own Land with Ownership Rights
A Limited Liability Company (Perseroan Terbatas) cannot hold ownership rights over land, but in reality, a Limited Liability Company may still have ownership rights over land owned by its commissioners or shareholders or cooperative founders.
This can be done by making a lease agreement between the Limited Liability Company and the commissioner or shareholder who has ownership rights over the land, then the Limited Liability Company can apply for and erect a building with HGB status. HGB can be granted on land with ownership rights, but if the term has expired, the right cannot be extended or renewed.
In the case of a cooperative legal entity, the founders of the cooperative have ownership rights over land that can be given to the cooperative as the beneficiary.
Termination of Ownership Rights (Article 27 of the UUPA)
- The land falls to the State: due to revocation of rights based on Article 18, due to voluntary surrender by the owner, due to abandonment, due to the provisions of Article 21 paragraph (3) and Article 26 paragraph (2) of the UUPA;
- The land is destroyed.
References
Sudaryat. “The Meaning of Legal Entities in Article 21 Paragraph 2 of the Basic Agrarian Law in the Perspective of Corporate Law”. Jurnal Hukum Dan Bisnis (Selisik), Vol. 6, Number 2, (December 2020)
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