Before you sign a Bali lease: the checklist

Most foreigners on Bali hold their villa on a lease, Hak Sewa. A lease is not listed among the land rights the land office registers, so there is no certificate in your name. What protects you is the contract and who signed it. That makes the details below worth an afternoon with a lawyer before any money moves.

1. The right people sign

Start with the land certificate, checked at the land office, not a copy from the seller. The lessor must be the person named on it. If several people are named, all of them sign. If the owner has died and the land has not been transferred, every heir signs. If the owner is married and the land is marital property, the spouse consents in writing: under article 36 of the Marriage Law either spouse needs the other’s consent, and in case 1111 K/Pdt/2018 the Supreme Court treated a lease signed without it as void.

Village land is a separate case. On Bali some plots belong to the customary village, desa adat, even where a family uses them. Such land cannot be leased on one person’s signature. Check whose name is on the certificate and, where the village is involved, get its written consent.

2. The term and the extension

An extension is only what the contract says. The landowner has no general duty to renew. A useful clause gives you the option to extend for a stated number of years, at a price fixed now or set by an independent valuation, with a deadline for giving notice. “To be discussed in good faith” is not an option. Ask also for a right of first refusal if the owner later sells.

3. A sale, a death, a transfer

Indonesian civil law helps here. A lease does not end when either party dies (article 1575 of the Civil Code), and it survives a sale of the land unless the contract says otherwise (article 1576). Check that the contract does not say otherwise, and that the extension option binds heirs and new owners too.

Your own exit matters as much. Without the owner’s permission a lessee may not sublet or assign the lease (article 1559). If you want to rent the villa out or sell your remaining term, the contract must allow both, without a fresh consent each time.

4. The building at the end

Indonesian law can treat land and building separately, so the end of the lease does not decide the building by itself. The contract should: whether it passes to the landowner, is bought out at a stated price, or must be removed. The same goes for improvements you make during the term.

5. Tax and payment

Lease income from land and buildings carries a 10% final income tax on the gross amount, owed by the landowner (Government Regulation 34/2017). When the lessee is an Indonesian company, it must withhold the tax. When the lessee is a private person, the owner pays it. Bali leases are usually paid up front for decades, so the amount is large. The contract should say who pays, and you should receive proof. Pay the party named in the deed, through the notary’s process, never to an intermediary’s personal account.

A lease on land in the wrong zone is a valid contract for a villa you may not be allowed to rent out. Check the zoning and the building approval as well; see our article on the 2026 rules.

The checklist

• The land certificate checked at the land office: holder, size, encumbrances.
• Every named owner, every heir and the spouse sign or consent in writing.
• Customary village land identified, with the village’s written consent where needed.
• Term, start date and an extension option with a price mechanism and a notice deadline.
• The lease binds heirs and new owners; a right of first refusal on a sale.
• The right to sublet, rent out and assign the lease without new consent.
• What happens to the building and improvements at the end.
• Who pays the 10% tax, and proof that it was paid.
• A notarial deed, and payment only to the party named in it.
• The zoning and the building approval match what you plan to do.

EM Villas is sold on a lease of 30 + 30 years. On a call we go through its contract against this list, point by point.

This article is general information, not legal, tax or investment advice. Rules in Indonesia change, sometimes by administrative decision. Confirm your own position with a qualified adviser before you commit.