Safe Structuring of Deals with Bali Developers: A Guide for Overseas Agents
If you are selling an off-plan property to a client, you are essentially selling a “future asset.” The quality of the deal is 80% determined by the quality of the contract. Let’s break down what must be included in a contract with a developer.
1. Parties and subject of the deal
Full developer details — PT (company name), registration number, legal address, names of directors. If you work through a PT PMA, SIUP and NIB numbers must be specified.
Subject of the deal: a specific unit in a specific project, with area, floor, orientation, and a clear reference to the plan.
2. Payment schedule
A typical off-plan structure:
— 10–30% — reservation and signing of the Master Agreement.
— Subsequent installments are tied to construction stages: excavation, foundation, structure, finishing.
— Final 10–20% — upon completion and signing of the Acceptance Protocol.
If the developer requires more than 50% upfront, that is a red flag. The money goes into construction, and if problems arise, it is difficult to recover.
3. Deadlines and delay
A clear completion deadline: “no later than 30 September 2027.”
Penalty for delay — the standard is 0.1–0.3% of the unit price per day, but no more than 10% of the total amount. Without a penalty clause in the contract, the developer bears no real responsibility.
Also: the client’s right to terminate the contract and receive a 100% refund if the delay exceeds 6–12 months.
4. Protection against an unfinished project
This is the most important point and is often overlooked. Mechanisms:
— Escrow account: the client’s payments go to a bank account and are released by stages.
— Bank guarantee — the bank guarantees a refund if obligations are not fulfilled.
— Pledge of the land plot in favor of the investor pool.
— Personal guarantee from the developer’s founder.
At least one of these mechanisms is mandatory. Without them, you are selling a “promise.”
5. Compliance with RDTR and PBG
The developer guarantees that:
— The land plot complies with RDTR for the type of development (villa, apartments, hotel).
— It will obtain PBG (building permit) by a specified date.
— It will obtain SLF (certificate of compliance) upon completion.
If any of these are not obtained, the client has the right to exit the deal.
6. Contract documents (types)
Standard package:
— Reservation Agreement / Master Agreement — records the unit reservation.
— Investment Agreement / SPA (Sale and Purchase Agreement) — the main contract with terms and conditions.
— Lease Agreement (for leasehold) or a construction agreement + land lease agreement (for long leasehold through a PT).
— Sublease Agreement — if applicable (for rental through a management company).
— Construction Agreement — if you are building under an individual design.
Each document must be legally reviewed, in two languages (English/Indonesian + Russian for a Russian-speaking client), and notarized.
7. Checklist for reviewing a young developer
If you work with a developer with less than 5 years of experience:
— Request the project financial plan.
— Request the PBG before signing.
— Request a founder’s guarantee.
— Agree on interim financial reports from the developer.
— Obtain recommendations from 2–3 previous investors.
8. If the developer “collects the money and disappears”
How to address this in the contract:
— Personal financial liability of the founder.
— Escrow accounts not controlled by the developer.
— The legal advisor handling the deal must be independent (not the developer’s in-house lawyer).
— Agreement on court jurisdiction (Indonesia or Singapore — both options work).
How an agent should work:
— Never close a deal without a full document package.
— Engage an independent lawyer for the client, not the developer’s in-house lawyer.
— Discuss all key deal points in writing.
— Keep copies of all documents for 7+ years — this is the warranty period and the period for possible legal claims.
A good contract is the client’s insurance policy and your protection against reputational losses. Do not rush to sign it for the sake of a quick commission.