Lease To Purchase Contract Template for Indonesia

This document is a comprehensive legal agreement governed by Indonesian law that combines elements of both a lease agreement and a purchase agreement. It allows a tenant to lease a property for a specified period with the option or obligation to purchase the property at a predetermined price, typically with lease payments contributing to the purchase price. The agreement must comply with Indonesian Civil Code (KUHPerdata) requirements and Basic Agrarian Law (UUPA), particularly regarding property rights and transfer of ownership. The document includes detailed provisions for both the lease period and the eventual purchase, including payment terms, maintenance responsibilities, and conditions for exercising the purchase option.

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What is a Lease To Purchase Contract?

The Lease To Purchase Contract is a specialized agreement used in Indonesian property transactions where parties wish to combine a lease period with a future property purchase. This document is particularly useful when buyers need time to arrange financing or want to occupy the property before completing the purchase, while sellers seek commitment from potential buyers. The agreement must comply with Indonesian property laws, including the Basic Agrarian Law (UUPA) and relevant regional regulations. It typically includes detailed provisions about the property, lease terms, purchase price, payment schedule, and conditions for transitioning from lease to ownership. This type of contract is commonly used in both residential and commercial property transactions, providing flexibility while ensuring legal protection for all parties under Indonesian law.

What sections should be included in a Lease To Purchase Contract?

1. Parties: Identification of the lessor/seller and lessee/buyer, including complete legal names, addresses, and any relevant registration numbers

2. Background: Context of the agreement, including property details and parties' intentions regarding the lease-to-purchase arrangement

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

4. Property Details: Comprehensive description of the property, including address, land certificate details, and building specifications

5. Lease Terms: Duration of lease, rental amount, payment schedule, and maintenance responsibilities during lease period

6. Purchase Option: Terms and conditions for exercising the purchase option, including purchase price and how rental payments contribute to the purchase

7. Payment Terms: Detailed payment structure for both lease and purchase phases, including deposit requirements and payment methods

8. Property Handover: Conditions and process for initial property handover for lease and final transfer of ownership

9. Rights and Obligations: Detailed responsibilities of both parties during lease period and purchase process

10. Insurance and Maintenance: Requirements for property insurance and maintenance responsibilities

11. Default and Remedies: Consequences of default by either party and available remedies

12. Governing Law: Specification of Indonesian law as governing law and relevant jurisdictional matters

13. Termination: Conditions and process for termination of the agreement

14. Notices: Process and requirements for formal communications between parties

15. Entire Agreement: Standard clause confirming this document as the complete agreement between parties

What sections are optional to include in a Lease To Purchase Contract?

1. Foreign Ownership Provisions: Required when either party is a foreign national, detailing compliance with Indonesian foreign ownership restrictions

2. Property Management: Include when the property is part of a managed complex or requires specific management arrangements

3. Mortgage or Financing: Include when the purchase will involve bank financing or mortgage arrangements

4. Tenant Improvements: Include when the lessee is permitted to make improvements to the property during the lease period

5. Common Areas: Include for properties in apartment complexes or shared facilities

6. Assignment and Subletting: Include when transfer of rights or subletting might be permitted

7. Force Majeure: Include specific force majeure provisions relevant to the property location

8. Broker Provisions: Include when real estate brokers are involved in the transaction

What schedules should be included in a Lease To Purchase Contract?

1. Property Description Schedule: Detailed technical description of the property, including floor plans and specifications

2. Payment Schedule: Detailed breakdown of lease payments, purchase price, and payment milestones

3. Property Condition Report: Documentation of property condition at the start of lease period

4. Land Certificate Details: Copies and details of land certificates and property ownership documents

5. Building Permits: Copies of relevant building permits and certificates

6. Maintenance Schedule: Detailed maintenance responsibilities and schedules

7. Insurance Requirements: Specific insurance requirements and coverage details

8. Property Rules and Regulations: If applicable, rules and regulations of the property complex or development

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

Cost

Free to use

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