Buying Land When the Land Certificate Is Still Under Someone Else’s Name: What Every Buyer Needs to Know
Finding out that a land title (SHM – Freehold Certificate) is still registered under the previous owner’s name after you’ve paid a deposit can be alarming. Is the transaction still safe? Can you legally delay the next payment? Here’s what every land buyer should understand before proceeding with the purchase.
When purchasing land, most buyers focus on the price and location. However, one of the most important things to verify is whose name appears on the Freehold Certificate (SHM).
In practice, it is not uncommon for a seller to offer land while the certificate is still registered under the previous owner. The seller may have purchased the land but never completed the title transfer before deciding to sell it again. Sometimes, the buyer only discovers this after making the first payment.
So, is this type of transaction safe?
The Land Certificate Matters
In Indonesia, the person whose name appears on the SHM is the legally recognized holder of the land rights from an administrative perspective.
If the certificate is still under someone else’s name, it does not automatically mean the transaction is invalid. However, the buyer should ensure that the seller has a clear legal basis to transfer the land.
This may include:
- A Sale and Purchase Binding Agreement (PPJB)
- A Power of Attorney to Sell
- A Transfer of Rights Agreement
- Other legal documents proving the seller’s authority
The more complete the documentation, the lower the potential risk.
Risks Buyers Should Consider
Purchasing land when the certificate has not yet been transferred into the seller’s name may involve several risks:
- The Sale and Purchase Deed (AJB) and title transfer process may become more complicated.
- The transaction still depends on the person whose name appears on the certificate.
- Incomplete documentation may increase the risk of future disputes.
- The transaction could be delayed if one of the required parties is unavailable or unwilling to participate.
Can the Buyer Delay the Second Payment?
If the seller initially created the impression that the land certificate was already in their name, but the buyer later discovers that it is still registered under someone else, it is reasonable for the buyer to request clarification before making the next payment.
Delaying the second payment does not necessarily mean the buyer is acting in bad faith. It can simply be a prudent step until all legal documents and facts are verified.
Before Proceeding with the Transaction
Before making any further payments, buyers should:
- Verify the authenticity of the land certificate through a licensed PPAT or the Land Office.
- Request all legal documents supporting the seller’s authority.
- Confirm that the AJB and title transfer can be completed.
- Ensure the land is free from disputes, liens, or legal restrictions.
A land certificate that is still under the previous owner’s name does not automatically make the transaction illegal, but it does require greater due diligence.
Transparency is essential. Sellers should clearly disclose the certificate’s status from the beginning, while buyers should carefully verify all legal documents before making any additional payments. A well-documented and transparent transaction protects both parties and significantly reduces the risk of future disputes.
