Owner Financing Promissory Note Template for Indonesia

The Owner Financing Promissory Note is a crucial document in Indonesian property transactions where traditional bank financing is either unavailable or undesirable. This arrangement, governed by Indonesian law, particularly the Civil Code (KUHPer) and relevant financial regulations, allows property sellers to act as lenders, creating a direct financial relationship with buyers. The document is typically used when buyers may not qualify for conventional mortgages, need faster transaction completion, or when sellers seek to generate steady income through interest payments. The promissory note must be carefully structured to comply with Indonesian secured transaction laws, including proper registration of security interests and clear default remedies. It should detail payment terms, interest calculations, and enforcement mechanisms while considering local property laws and financial regulations.

1. Parties: Identification of the Note Holder (Seller/Lender) and the Maker (Buyer/Borrower) with complete legal names and addresses

2. Background: Context of the owner financing arrangement, including reference to the main purchase agreement

3. Definitions: Key terms used throughout the document including Payment Terms, Interest Rate, Principal Amount, Maturity Date

4. Promise to Pay: Core obligation stating the principal amount, interest rate, and promise to repay

5. Payment Terms: Detailed payment schedule, including monthly payment amount, due dates, and payment methods

6. Interest Calculation: Method of calculating interest, whether simple or compound, and frequency of compounding

7. Security Interest: Description of any collateral securing the note, typically the property being financed

8. Default Provisions: Circumstances constituting default and consequences thereof

9. Remedies: Rights and remedies of the Note Holder in case of default

10. Notice Requirements: How and where notices must be delivered between parties