Construction Lease Agreement Template for Indonesia

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Key Requirements PROMPT example:

Construction Lease Agreement

"I need a Construction Lease Agreement for a retail development project in Jakarta, Indonesia, where my company will lease a 3-story commercial building for 15 years and construct additional retail spaces and a rooftop restaurant, with construction to begin in March 2025."

Document background
The Construction Lease Agreement is a specialized legal instrument used in Indonesia when a tenant requires both property lease rights and construction authorization. This document is particularly relevant when businesses need to modify, develop, or construct on leased property, whether for commercial, industrial, or retail purposes. The agreement must comply with Indonesian property law, construction regulations, and local building codes, including the Basic Agrarian Law (UUPA) and Building Law (UU Bangunan Gedung). It's commonly used in development projects, retail fit-outs, industrial facility construction, and commercial property improvements. The Construction Lease Agreement includes detailed provisions for construction specifications, timelines, regulatory compliance, and standard lease terms, making it essential for projects requiring significant property modifications under a lease arrangement.
Suggested Sections

1. Parties: Identification of the lessor and lessee, including their legal status and authority to enter into the agreement

2. Background: Context of the agreement, including property details and intended construction purpose

3. Definitions: Definitions of key terms used throughout the agreement

4. Lease Terms: Duration, rent amount, payment terms, and renewal options

5. Construction Rights and Obligations: Scope of permitted construction works, responsibilities of each party

6. Permits and Approvals: Requirements for obtaining necessary construction permits and approvals

7. Construction Timeline: Construction schedule, completion dates, and milestones

8. Property Access and Use: Rights of access during construction and subsequent use

9. Construction Standards: Required building standards and quality requirements

10. Insurance and Liability: Insurance requirements and allocation of risks

11. Maintenance and Repairs: Responsibilities for maintenance during and after construction

12. Compliance with Laws: Obligations to comply with relevant Indonesian laws and regulations

13. Default and Remedies: Events of default and available remedies

14. Termination: Grounds and procedures for termination

15. Dispute Resolution: Procedures for resolving disputes, including jurisdiction and governing law

16. General Provisions: Standard boilerplate clauses including notices, amendments, and entire agreement

Optional Sections

1. Environmental Requirements: Required when the construction has significant environmental impact or requires environmental permits

2. Foreign Investment Provisions: Required when either party is a foreign entity, addressing investment laws and restrictions

3. Special Use Requirements: Required when the construction is for specific purposes (e.g., industrial, commercial) with special regulatory requirements

4. Financing Arrangements: Required when construction involves external financing or specific payment structures

5. Force Majeure: Detailed force majeure provisions when required by specific circumstances or location

6. Security Arrangements: Required when additional security or guarantees are needed

7. Subletting and Assignment: Required when parties want to allow or restrict subletting rights

8. Green Building Requirements: Required when the construction must meet specific environmental or sustainability standards

Suggested Schedules

1. Schedule 1 - Property Details: Detailed description of the property including land certificates and boundaries

2. Schedule 2 - Construction Plans: Architectural and engineering drawings approved for construction

3. Schedule 3 - Technical Specifications: Detailed technical requirements and building specifications

4. Schedule 4 - Construction Timeline: Detailed construction schedule with milestones and completion dates

5. Schedule 5 - Rent Schedule: Detailed breakdown of rent payments and escalation terms

6. Schedule 6 - Required Permits: List of required permits and approvals with responsible parties

7. Schedule 7 - Insurance Requirements: Detailed insurance requirements and coverage levels

8. Appendix A - Form of Bank Guarantee: Template for any required bank guarantees or security deposits

9. Appendix B - Environmental Impact Assessment: Environmental impact analysis and mitigation measures

10. Appendix C - Building Permits: Copies of obtained building permits and approvals

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions
Clauses
Relevant Industries

Real Estate

Construction

Property Development

Infrastructure

Commercial Property

Industrial Development

Retail Development

Hospitality

Manufacturing

Logistics

Relevant Teams

Legal

Real Estate

Construction

Property Development

Operations

Facilities Management

Risk & Compliance

Finance

Project Management

Commercial

Procurement

Design & Architecture

Relevant Roles

Real Estate Director

Construction Manager

Property Development Manager

Legal Counsel

Facilities Manager

Project Manager

Commercial Director

Operations Director

Risk Manager

Compliance Officer

Chief Financial Officer

Development Director

Asset Manager

Property Manager

Construction Site Supervisor

Architect

Contract Administrator

Industries
Indonesian Civil Code (KUHPerdata): Fundamental law governing contracts, lease agreements, and general civil matters in Indonesia. Particularly Book III on Contracts and Book II on Property.
Law No. 28 of 2002 on Buildings (UU Bangunan Gedung): Regulates building requirements, technical standards, permits, and safety requirements for construction projects.
Law No. 5 of 1960 on Basic Agrarian Law (UUPA): Fundamental law governing land rights and property ownership in Indonesia, including rights to build and lease.
Government Regulation No. 36 of 2005: Implementing regulation for the Building Law, providing detailed technical requirements and building standards.
Law No. 25 of 2007 on Investment: Regulates investment activities including foreign investment in construction and property development.
Minister of Public Works Regulation No. 29/PRT/M/2006: Technical guidelines for building permits and construction requirements.
Law No. 32 of 2009 on Environmental Protection and Management: Environmental requirements and impact assessments for construction projects.
Regional Building Regulations (Perda): Local government regulations specific to construction and building requirements in different regions of Indonesia.
Law No. 2 of 2017 on Construction Services: Regulates construction services, including rights and obligations of parties involved in construction projects.
Government Regulation No. 16 of 2021: Implementation regulation for Construction Services Law, detailing requirements for construction activities.
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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