Property Sale Agreement in 2025: Master the PPJB Vs. AJB in Indonesia to Avoid Legal Risk

Buying property in Indonesia can be a rewarding investment, offering opportunities for both personal and financial growth. However, without a proper property sale agreement, buyers risk facing serious legal complications, unexpected financial losses, or even the possibility of losing ownership rights entirely. Many foreign investors and local buyers struggle to understand the legal framework governing property transactions, particularly the key differences between PPJB (Binding Sale & Purchase Agreement) and AJB (Deed of Sale & Purchase)—two essential documents that play a crucial role in securing property ownership in Indonesia.

A poorly structured property sale agreement can lead to delays, contractual disputes, or an invalid ownership transfer, leaving buyers vulnerable to fraud or legal pitfalls. Whether purchasing off-plan property from a developer or buying directly from an individual seller, understanding how these agreements work is essential for a smooth and legally compliant transaction.

This guide will help you master the property sale agreement process in 2025, providing you with the knowledge needed to make legally secure and well-informed property investments in Indonesia. By understanding the roles of PPJB and AJB, you can avoid common legal pitfalls, ensure compliance with Indonesian property laws, and protect your financial interests. Whether you are a first-time buyer or a seasoned investor, knowing how to navigate the property sale agreement process will give you the confidence to make smart, risk-free real estate decisions. With the right legal approach, you can secure your dream property while avoiding unnecessary complications and setbacks.

What is PPJB (Binding Sale & Purchase Agreement)?

A property sale agreement in Indonesia often starts with a PPJB (Perjanjian Pengikatan Jual Beli), or Binding Sale & Purchase Agreement. This is a preliminary contract between a buyer and seller that secures the transaction before the final legal transfer of ownership. It ensures both parties are committed to the deal under agreed-upon conditions before proceeding with the official property transfer.

This agreement is particularly useful when the property is still under development or when certain legal or financial conditions have not yet been met. It provides legal protection for both parties by outlining key terms, payment schedules, and obligations. Without it, buyers risk financial losses if the transaction falls through due to unforeseen circumstances.

Key Features of PPJB:

• Preliminary Agreement – It serves as an initial contract before executing the final property sale agreement (AJB). Buyers and sellers use this agreement to confirm their commitment before the legal ownership transfer.
• Conditional Binding – The transaction depends on specific conditions such as full payment, property completion, or document verification. If any of these conditions are not met, the agreement may be canceled or revised.
• Used for Off-Plan Properties – Often required for pre-sales when buyers purchase units in projects under construction. Developers use this agreement to secure buyers before the project is completed.
• Not Signed Before a Notary – Unlike AJB, a PPJB property sale agreement is a private document and does not directly transfer legal ownership. Ownership transfer only happens once the final property sale agreement is signed before a notary.

When Do You Need a PPJB?

• If the property is still under development and not yet eligible for an official property sale agreement. This is common in new housing projects where buyers commit before construction is finished.
• If the buyer and seller agree on an installment payment plan. A structured payment agreement allows buyers to secure a property while making payments over time.
• If certain legal conditions, such as permits or financing, are still pending. The agreement ensures the transaction will proceed once all necessary approvals are obtained.

A PPJB property sale agreement helps secure transactions but does not replace an AJB (Deed of Sale & Purchase), which is mandatory for legal ownership transfer. Buyers must carefully review all terms before signing to avoid legal risks and ensure a smooth property purchase process.

What is AJB (Deed of Sale & Purchase)?

The AJB (Akta Jual Beli), or Deed of Sale & Purchase, is the final property sale agreement that legally transfers ownership from the seller to the buyer. It is the most critical document in Indonesian property transactions, as it officially records the transfer before a notary. Without an AJB, a buyer cannot claim full legal ownership, even if they have made payments or signed other agreements.

This document serves as undeniable proof that the property has changed hands lawfully. It also protects both the buyer and seller from disputes over ownership in the future. Unlike a preliminary contract, such as a PPJB (Binding Sale & Purchase Agreement), the AJB finalizes the deal and makes the ownership transfer legally binding. The property sale agreement process must follow Indonesian legal procedures to ensure all parties comply with property regulations.

Since this document is crucial for property registration, both buyers and sellers must ensure that all required documents—such as land certificates, proof of payment, and tax clearances—are complete before signing. The involvement of a notary helps verify these aspects and prevents fraudulent transactions.

Key Features of AJB:

• Final Legal Transfer – The AJB marks the official handover of ownership rights from the seller to the buyer. Once this document is signed, the buyer gains full legal ownership, making it a critical step in any property sale agreement.
• Signed Before a Notary – A licensed public notary ensures that the transaction is legally binding and meets Indonesian property law requirements. This step prevents fraudulent sales, unauthorized property transfers, and future legal disputes.
• Mandatory for Property Registration – Without an AJB, the buyer cannot register the property under their name with the National Land Agency (BPN). Registration is essential to secure ownership rights and protect against claims from third parties.
• Full Payment Required – Before signing an AJB, the buyer must complete all financial obligations, including purchase payments, taxes, and administrative fees. Sellers are not obligated to transfer ownership without full payment.

When Do You Need an AJB?

• When the property is fully built and ready for transfer. Unlike a preliminary property sale agreement, an AJB is only signed when the property is legally and physically ready for handover. Buyers should confirm that the property has no outstanding disputes or ownership claims before proceeding.
• When full payment has been made. The seller will only sign the AJB once they have received the agreed purchase amount in full. This ensures that the transaction is completed without financial risks for the seller.
• When all legal conditions, such as permits, certificates, and financing, are fulfilled. Ensuring these requirements are met before signing prevents complications that could delay the registration process.

A transaction without an AJB property sale agreement may be invalid, leaving the buyer without legal ownership protection. Buyers should always verify that their AJB is properly executed before a notary and registered with the relevant authorities to fully secure their property rights. Consulting a legal expert can help ensure a smooth and legally compliant property transaction.

Key Differences Between PPJB and AJB

A well-structured property sale agreement ensures a smooth transition from PPJB to AJB, protecting both buyer and seller interests.

How to Secure a Legally Safe Property Sale Agreement in Indonesia

Buying property in Indonesia can be a complex process, especially for foreign investors unfamiliar with local regulations. A legally secure property sale agreement is crucial to protecting your investment and ensuring a smooth transaction. Whether purchasing a ready property or an off-plan development, following these key steps will help you avoid legal pitfalls and secure rightful ownership.

1. Verify the Property Status

Before signing any property sale agreement, verify the legal standing of the property to prevent potential ownership disputes. Ensure that the property:

• Has a valid land certificate (SHM or HGB) registered under the correct owner’s name.
• Is free from disputes, encumbrances, or liens that could affect future ownership.
• Complies with zoning and land-use regulations to avoid future restrictions on development or usage.
• Has a clean transaction history, with no pending legal claims.

Skipping this step could result in purchasing a problematic property, making it difficult to secure ownership under Indonesian law.

2. Conduct Due Diligence

Due diligence is essential before signing a property sale agreement, ensuring that all legal and financial obligations are met. Always check:

• Seller’s Ownership Legitimacy – Verify the seller’s legal authority to sell the property, ensuring they have full rights over it.
• Developer Permits (for Off-Plan Properties) – If buying an off-plan property, confirm that the developer has proper building permits and land rights.
• Tax Obligations – Ensure that relevant taxes such as Income Tax (PPh), Land and Building Transfer Tax (BPHTB), and VAT are settled before completing the purchase.

Failure to conduct proper due diligence can lead to financial losses or legal complications in claiming ownership.

3. Ensure Legal Assistance

Engaging a notary or legal consultant is crucial in securing a legally valid property sale agreement. A professional will:

• Draft and review all agreements to ensure compliance with Indonesian real estate laws.
• Verify documentation to confirm that land certificates, permits, and tax documents are legitimate.
• Oversee the signing process for AJB, ensuring both parties meet legal obligations before ownership transfer.

A property transaction without legal assistance increases the risk of errors, fraudulent sales, or contract breaches that could jeopardize ownership rights.

4. Understand Payment Terms

Payment terms differ between PPJB (Binding Sale & Purchase Agreement) and AJB (Deed of Sale & Purchase), so it’s essential to clarify:

• For PPJB – Review installment schedules, penalties for missed payments, and refund policies in case of cancellation.
• For AJB – Ensure full payment is completed before signing, as property ownership will not transfer without it.

Buyers should also confirm that all payments are documented and comply with banking regulations to avoid disputes later.

5. Register the Property

After signing the AJB property sale agreement, the final step is registering ownership with the National Land Agency (BPN). This ensures that:

• The buyer’s name is officially recorded as the legal owner.
• The transaction is recognized under Indonesian land law.
• Future property transfers can be conducted smoothly without legal challenges.

Failing to follow these steps can result in an invalid property sale agreement, legal disputes, or loss of ownership rights. By conducting thorough due diligence, securing legal assistance, and ensuring proper documentation, buyers can confidently invest in Indonesian real estate while protecting their assets.

Common Mistakes in Property Sale Agreements (And How to Avoid Them)

A property sale agreement is a crucial document in Indonesian real estate transactions, but many buyers make costly mistakes that put their investments at risk. From skipping legal verification to misunderstanding contract terms, these errors can lead to financial losses, ownership disputes, and even invalid transactions. Here are some of the most common mistakes buyers make and how to avoid them.

1. Skipping Legal Verification

One of the biggest mistakes buyers make is signing a PPJB property sale agreement without thoroughly checking the property’s legal status. Without verifying land certificates and ownership records, buyers may unknowingly purchase disputed land or properties without proper permits.

✔ Solution: Always verify the land certificate (SHM or HGB), check for encumbrances, and confirm that the seller has legal ownership rights before signing any contract. Conducting due diligence prevents future ownership complications.

2. Not Using a Notary for AJB

Many buyers believe that a PPJB property sale agreement is enough to secure ownership, but this is incorrect. A notarized AJB property sale agreement is legally required to finalize the ownership transfer. If the AJB is not signed before a notary, the transaction is not recognized under Indonesian law.

✔ Solution: Always complete the final sale with an AJB signed before a certified notary to ensure the transaction is legally binding. This step guarantees that ownership is officially transferred to the buyer.

3. Delaying Property Registration

Some buyers assume that once they sign the AJB, they automatically become the legal owner of the property. However, ownership is not legally secured until the transaction is registered with the National Land Agency (BPN).

✔ Solution: Immediately after signing the AJB, proceed with registering the property under the buyer’s name at BPN. Without proper registration, ownership disputes may arise in the future.

4. Misunderstanding Payment Terms

A poorly structured PPJB property sale agreement can lead to financial disputes between buyers and sellers. Issues such as unclear installment schedules, penalties, or refund policies often cause conflicts, especially in off-plan property transactions.

✔ Solution: Carefully review the payment terms in the agreement, including penalties for late payments and refund conditions. Ensure all financial obligations are documented to avoid future disagreements.

5. Assuming PPJB Guarantees Ownership

Many buyers mistakenly believe that a PPJB property sale agreement grants them full legal ownership. In reality, the PPJB is a preliminary contract that outlines the terms of the sale, but ownership is only transferred through an AJB.

✔ Solution: Always follow through with the signing of an AJB and register the property with BPN to ensure full legal ownership. Relying solely on a PPJB without completing the AJB process leaves buyers vulnerable to ownership disputes.

Final Thoughts: Secure Your Property Investment with Confidence

A well-structured property sale agreement is the foundation of a secure and successful real estate investment in Indonesia. Understanding the role of both PPJB and AJB is crucial to avoiding legal pitfalls. The PPJB serves as an initial commitment, providing security for buyers—especially in off-plan property transactions—while the AJB is the final step that legally transfers ownership and ensures full legal protection.

Without an AJB property sale agreement, buyers may face ownership disputes, financial losses, or even the risk of having their transaction deemed invalid. Many property buyers make the mistake of assuming that a PPJB is enough, but failing to complete the AJB process leaves ownership status uncertain and legally unrecognized.

Lastly, don’t forget to register the property with the National Land Agency (BPN) after completing the AJB process. Proper registration is the final step in securing legal ownership and protecting your property rights. By taking these precautions and mastering the property sale agreement process in 2025, investors can confidently navigate Indonesia’s real estate market and ensure a safe and profitable property purchase.