Preparing for Sale and Purchase Agreements
in Indonesian Property Transactions

A PPJB is an initial contract that binds the terms of sale before ownership can legally transfer. It is especially valuable in off-plan developments, phased payments, or when certain conditions (such as completion of construction or clearance of title) remain outstanding.

1. A civil contract that binds both parties to proceed under agreed terms but does not affect title transfer.
2. Executed before all transfer requirements are met.
3. Common Use Cases:
   1. Off-plan property: Developer begins selling units before project completion.
   2. Installment sales: Buyer pays in stages, with balance due later.
   3. Pending documentation: Title, permits, or auxiliary approvals are still in process.
4. Formality and Form:
   1. Underhand agreement: Can be drafted informally as a private contract between parties.
   2. Notarization recommended: Makes the agreement legally stronger and easier to enforce under the Indonesian Civil Code.
5. Essential Clauses:
   1. Payment Schedule: Clearly define amounts, due dates, and penalties for delay.
   2. Timeline for AJB: Set target date for final deed signing.
   3. Conditions Precedent: List requirements, such as clean title, permits, and completion milestones.
   4. Rights & Obligations: Specify each party’s commitments, including deposit refunds if conditions fail.

1. Flexibility to lock terms early.
2. Facilitates financing or pre-marketing for developers.

1. Buyer’s title security remains contingent.
2. A poorly drafted PPJB can lead to disputes or unenforceable commitments.
3. Insufficient for land registration at BPN.

A buyer reserves a house under construction in a development area. Since the developer cannot yet deliver a clean title, the parties sign a PPJB first, which will then be followed up with an AJB after construction and payment completion.