Bali Nominee Arrangements: What Foreign Buyers Must Know

A nominee arrangement is when an Indonesian citizen holds property title in their own name on behalf of a foreign buyer who provides the purchase funds. This structure is explicitly prohibited under Indonesian law, and courts will not protect a foreign buyer who loses out when a nominee acts against their interests.

The prohibition rests on two statutes. The Basic Agrarian Law (UUPA, Law No. 5 of 1960) reserves Hak Milik (freehold title) exclusively for Indonesian citizens. Article 26(2) states that any act intended, directly or indirectly, to transfer Hak Milik to a foreign national is null and void, and the land may revert to the state. The Investment Law (Law No. 25 of 2007) adds a second layer: Article 33 explicitly prohibits any agreement in which shares in an Indonesian company are held for and on behalf of another person. Both arrangements are declared void from the outset.

Because the arrangement is void, courts cannot award restitution. Indonesian Supreme Court Decision No. 3020 K/Pdt/2014 confirmed this directly. An Indonesian nominee sold a Bali plot to a third party without the foreign buyer's consent. The court found both parties had committed an unlawful act under Civil Code Article 1365, and the foreign buyer recovered nothing. Supreme Court Circular No. 10 of 2020 (SEMA 10/2020) reinforced this position by instructing all courts to treat the registered certificate holder as the legal owner, regardless of any private agreement about who provided the funds.

Two further risks compound the core problem. If the nominee dies, the property passes automatically to their statutory heirs under Indonesian succession law, and those heirs have no obligation to honor an unenforceable private arrangement. A nominee can also mortgage the land without the buyer's knowledge, because they hold the registered title and the private nominee agreement grants the buyer no rights that Indonesian courts will recognize.

Bali Province formalized criminal enforcement in 2026. On 24 February 2026, Governor Wayan Koster signed Bali Provincial Regulation No. 4 of 2026, which criminalizes nominee land arrangements in Bali Province with penalties of up to five years imprisonment and a fine of one billion rupiah (approximately USD 60,000). Intermediaries, agents, and notaries who help structure a nominee arrangement share criminal exposure under the regulation.

Foreign buyers have legal alternatives that avoid all of these risks. A PT PMA company can hold land under a renewable Hak Guna Bangunan (HGB) title for up to 80 years in total. Foreign residents with a valid Indonesian stay permit (KITAS, KITAP, or the Second Home Visa) can hold Hak Pakai directly in their own name under Government Regulation No. 18 of 2021. A notarized leasehold (Hak Sewa, UUPA Article 44) is the most common structure for buyers who prefer not to set up a company. For a full comparison, see our ownership structures guide. This article is general information and is not legal advice.