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Option To Buy Agreement for Indonesia

Option To Buy Agreement Template for Indonesia

An Option to Buy Agreement under Indonesian law is a legally binding contract that gives the potential buyer (option holder) the exclusive right, but not the obligation, to purchase a specific property at a predetermined price within a specified timeframe. The agreement must comply with Indonesian Civil Code requirements and property regulations, including the Basic Agrarian Law (UUPA). This document outlines the terms of the option, including the option period, purchase price, exercise mechanism, and any conditions precedent. It requires proper notarization and registration in accordance with Indonesian property law requirements, particularly when dealing with land rights (hak atas tanah).

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What is a Option To Buy Agreement?

The Option To Buy Agreement is a crucial document in Indonesian property transactions, providing a structured way to secure potential property purchases while allowing time for due diligence, financing arrangements, or market assessment. This agreement type is commonly used in both commercial and residential property sectors in Indonesia, where property transactions must comply with specific regulatory requirements including the Indonesian Civil Code and Basic Agrarian Law. The document sets out key terms including the option period, purchase price, and exercise mechanisms, while ensuring compliance with local property ownership and transfer regulations. It's particularly valuable in scenarios where immediate purchase isn't feasible or desired, offering protection to both the potential buyer and property owner through clearly defined rights and obligations. The agreement must be properly executed, often requiring notarization and registration with relevant Indonesian authorities.

What sections should be included in a Option To Buy Agreement?

1. Parties: Identification of the option grantor (seller) and option holder (potential buyer), including their full legal names, addresses, and any registration numbers

2. Background: Context of the agreement, relationship between parties, and brief description of the property subject to the option

3. Definitions: Definitions of key terms used throughout the agreement, including 'Option Period', 'Purchase Price', 'Property', etc.

4. Grant of Option: Clear statement of the option being granted, including exclusivity provisions

5. Option Period: Specification of the duration for which the option is valid, including start and end dates

6. Option Fee: Details of the consideration paid for the option and whether it's refundable or applied to the purchase price

7. Exercise of Option: Process and requirements for exercising the option, including notice requirements

8. Purchase Price: Agreed purchase price for the property if the option is exercised

9. Property Details: Detailed description of the property subject to the option, including legal description and any encumbrances

10. Representations and Warranties: Standard representations about property ownership, authority to sell, and condition of property

11. Covenants: Obligations of both parties during the option period

12. Termination: Circumstances under which the agreement can be terminated and consequences

13. Governing Law: Specification of Indonesian law as governing law and jurisdiction

14. Execution: Signature blocks and execution requirements

What sections are optional to include in a Option To Buy Agreement?

1. Due Diligence: Include when the option holder requires specific rights to conduct property investigations during the option period

2. Foreign Investment Provisions: Required when either party is a foreign entity, addressing compliance with Indonesian foreign investment laws

3. Property Management: Include when specific arrangements are needed regarding property maintenance during the option period

4. Assignment Rights: Include when either party may need to transfer their rights under the agreement

5. Broker Provisions: Include when real estate brokers are involved in the transaction

6. Financing Contingencies: Include when the option holder's ability to exercise the option is contingent on obtaining financing

7. Multiple Properties: Include when the option covers multiple properties or parcels with specific terms for each

What schedules should be included in a Option To Buy Agreement?

1. Property Description Schedule: Detailed legal description of the property, including certificates, boundaries, and maps

2. Option Fee Payment Schedule: If the option fee is to be paid in installments, details of payment amounts and dates

3. Due Diligence Requirements: Specific requirements and procedures for property inspection and investigation

4. Form of Exercise Notice: Template notice for exercising the option

5. Permitted Encumbrances: List of accepted encumbrances or limitations on the property

6. Property Condition Report: Current condition of the property at the time of option agreement

7. Required Governmental Approvals: List of necessary permits and approvals for property transfer

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Indonesia

Publisher

Ƶ

Document Type

Purchase Agreement

Cost

Free to use
Relevant legal definitions








































Clauses






































Relevant Industries

Real Estate

Commercial Property

Residential Property

Industrial Property

Agriculture

Retail

Hospitality

Manufacturing

Warehouse and Logistics

Mixed-Use Development

Relevant Teams

Legal

Real Estate

Property Management

Business Development

Finance

Compliance

Operations

Corporate Affairs

Investment

Risk Management

Acquisitions

Relevant Roles

Real Estate Director

Property Manager

Legal Counsel

Investment Manager

Chief Financial Officer

Business Development Manager

Asset Manager

Acquisitions Manager

Real Estate Agent

Property Developer

Compliance Officer

Contract Administrator

Corporate Secretary

Land Acquisition Specialist

Industries






Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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