INDONESIA Law and Practice Contributed by: Yogi Sudrajat Marsono, Heru Pamungkas, Agnes Maria Wardhana and Andin Aditya Rahman, Assegaf Hamzah & Partners
6.20 Registration Requirements A lease is not required to comply with registra - tion requirements or specific execution formali - ties, as it is based on a contractual arrangement between the lessor and the lessee. However, it can be registered with the land office for admin - istrative purposes, although this is not manda - tory. This registration records the lease on the land certificate, clarifying the status of the land as a leased object for both parties involved in the lease and/or any third-party stakeholders. 6.21 Forced Eviction If a lessee defaults before the end of the lease term, the lessor can only evict them based on a court decision seeking the lessee’s immediate vacation from the properties. To obtain this deci - sion, the lessor must first issue a warning letter to the lessee. If the lessee ignores the warning letter, the lessor can then file a civil lawsuit in court to request the eviction decision. Generally, the court will take months to issue a decision for eviction, or longer if the dispute is taken to a higher court. 6.22 Termination by a Third Party Neither the government nor any other third party can terminate a lease. A lease can only be termi - nated by its own terms, by mutual agreement of the parties, or if declared void by a court deci - sion. 6.23 Remedies/Damages for Breach In cases of breach of an agreement, the non- defaulting party may seek compensation for losses and/or damages resulting from the breach. Such compensation can be sought by way of filing a lawsuit against the default - ing party. Indonesian courts recognise material losses (ie, actual losses caused by such breach) and punitive damages (non-material, typically for potential losses or damage to reputation).
If stipulated in the lease agreement, a penalty may be imposed. Security deposits are typically non-refundable, and are instead fully retained by the lessor. Conversely, if the lease fee has been paid upfront by the lessee, the remaining lease fee may not be refunded to the lessor. Although not legally mandated, lessors commonly request a secu - rity deposit for the lease, typically amounting to three months’ lease and service charges. 7. Construction 7.1 Common Structures Used to Price Construction Projects Based on Law No 2 of 2017 on Construction, as most recently amended by the Job Creation Law (“Construction Law”), and Government Regula - tion No 22 of 2020 on Implementing Regulation of Construction Law, as most recently amended by Government Regulation No 14 of 2021 on Amendment to Government Regulation No 22 of 2020 (“Construction Service Regulation”), payment structures for construction projects include: • advance/upfront payment; • payment based on time progress (typically monthly); • payment based on project milestone (pro - gress payment); and • turnkey/payment upon completion of works (lump-sum). In integrated engineering-procurement-con - struction-commissioning (EPCC) agreements, payment arrangements for the procurement of tools and equipment can be structured as unit price payments, wherein the project owner pays for each unit of tools or equipment procured.
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