Sale And Leaseback Agreement Template for Indonesia

A Sale And Leaseback Agreement allows you to sell your property while simultaneously securing the right to lease it back from the buyer. This financial strategy helps you unlock the capital value of your real estate assets while maintaining operational control and use of the property. In Indonesia, these agreements are governed by strict legal requirements under the Civil Code and must comply with specific land ownership and transfer regulations.

When do you need this document?

You need a Sale And Leaseback Agreement when your business requires immediate capital injection but cannot afford to lose operational use of critical property assets. This arrangement is particularly common in commercial real estate where companies need to improve their balance sheet structure or fund expansion while retaining their operational base. Manufacturing companies often use these agreements to free up working capital tied in factory properties, while retail businesses may employ them to maintain prime location access after selling valuable commercial properties. The document is also essential during corporate restructuring, debt refinancing, or when transitioning from property ownership to operational leasing models.

Key legal considerations

Your agreement must clearly separate the sale and lease components to ensure both transactions are legally enforceable under Indonesian law. The sale portion requires proper property valuation, clear title warranties, and compliance with transfer tax obligations under Law No. 42 of 2009. The leaseback component must specify rental terms, maintenance responsibilities, insurance requirements, and renewal options. You should include provisions for property condition assessments, default remedies, and termination procedures. Consider including clauses addressing currency fluctuation, inflation adjustments, and dispute resolution mechanisms. The agreement should also address what happens if either party breaches their obligations, including rights of first refusal and property condition standards.

Legal requirements in Indonesia

Under Indonesian law, your Sale And Leaseback Agreement must comply with the Civil Code (KUH Perdata) for contract formation and enforcement. The property sale component must follow Basic Agrarian Law No. 5 of 1960 and Government Regulation No. 40 of 1996, which govern land rights and property transfers. You must engage a Land Deed Official (PPAT) for the sale transaction and ensure proper registration with the National Land Agency. Foreign investment aspects require compliance with Law No. 25 of 2007, particularly if foreign parties are involved. VAT implications under Law No. 42 of 2009 and income tax considerations under Government Regulation No. 34 of 2016 must be addressed. The agreement requires notarization and may need additional approvals depending on the property type and transaction value.