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Rent To Own Lease Agreement for Indonesia

Rent To Own Lease Agreement Template for Indonesia

This document is a comprehensive legal agreement under Indonesian law that combines elements of both a lease agreement and a purchase agreement. It enables a tenant to rent a property with the option to purchase it at a predetermined price within a specified period, with a portion of the rent payments typically credited toward the purchase price. The agreement must comply with Indonesian Civil Code (KUHPerdata) requirements and various property-related regulations, including the Basic Agrarian Law (UU No. 5/1960) and relevant housing regulations. It outlines the terms of tenancy, purchase option details, payment structures, and the process for transitioning from tenant to owner.

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What is a Rent To Own Lease Agreement?

The Rent To Own Lease Agreement is a specialized legal instrument used in Indonesian property transactions where traditional property purchase financing may not be immediately available or desired. This document type has gained prominence as an alternative pathway to property ownership, particularly in urban areas where property prices have risen significantly. The agreement must conform to Indonesian legal requirements, including the Civil Code and property regulations, while protecting both parties' interests. It typically includes detailed provisions for rental payments, maintenance responsibilities, purchase option terms, and the eventual transfer of ownership. The document is particularly relevant in situations where buyers need time to arrange financing or want to occupy the property while building equity through rental payments. The Rent to Own Lease Agreement serves as both a lease and a commitment to sell/purchase, requiring careful attention to both aspects in its drafting and execution.

What sections should be included in a Rent To Own Lease Agreement?

1. Parties: Identification of the Owner/Lessor and Tenant/Potential Buyer, including complete legal names, addresses, and ID numbers

2. Background: Context of the agreement, including property details and parties' intention to enter into a rent-to-own arrangement

3. Definitions: Key terms used throughout the agreement, including Property, Lease Period, Purchase Option, Rent Payments, etc.

4. Property Details: Comprehensive description of the property, including address, certificate number, and specifications

5. Lease Terms: Duration of lease, monthly rental amount, payment terms, and allocation of rent towards purchase

6. Purchase Option: Terms of the purchase option, including final purchase price, credit for rental payments, and exercise period

7. Maintenance and Repairs: Responsibilities for property maintenance, repairs, and improvements during the lease period

8. Insurance and Taxes: Requirements for property insurance and responsibility for property taxes during lease period

9. Default and Termination: Circumstances constituting default, remedies, and termination procedures

10. Exercise of Purchase Option: Process and requirements for exercising the purchase option

11. Transfer of Ownership: Procedures and requirements for final property transfer upon exercise of purchase option

12. Governing Law: Specification of Indonesian law as governing law and relevant jurisdictional matters

13. Dispute Resolution: Procedures for resolving disputes, including mediation and court jurisdiction

14. Notices: Methods and addresses for formal communications between parties

15. Execution: Signature blocks and execution requirements

What sections are optional to include in a Rent To Own Lease Agreement?

1. Property Management: Required when the property is part of a managed complex or apartment building, detailing management rules and fees

2. Subletting Prohibition: Include when subletting needs to be explicitly prohibited or regulated

3. Foreign Ownership Provisions: Required when either party is a foreign national, addressing compliance with Indonesian foreign ownership restrictions

4. Early Purchase Option: Terms for exercising the purchase option before the standard exercise date, if permitted

5. Property Modifications: Required when specific rules about property modifications need to be established

6. Death or Incapacity: Succession provisions in case of death or incapacity of either party

7. Guarantor: Required when a guarantor is involved in guaranteeing the tenant's obligations

8. Force Majeure: Detailed provisions for handling unforeseen circumstances affecting the agreement

What schedules should be included in a Rent To Own Lease Agreement?

1. Schedule A - Property Description: Detailed description of the property, including floor plans, boundaries, and included fixtures

2. Schedule B - Payment Schedule: Detailed breakdown of monthly payments, including portion allocated to purchase price

3. Schedule C - Property Condition Report: Documentation of property condition at commencement of lease

4. Schedule D - Maintenance Requirements: Detailed maintenance obligations and standards

5. Schedule E - Purchase Price Calculation: Formula and method for calculating final purchase price, including rental credits

6. Appendix 1 - Property Certificates: Copies of relevant property certificates and ownership documents

7. Appendix 2 - Required Insurance: Details of required insurance coverage and terms

8. Appendix 3 - Property Rules: Applicable building or complex rules and regulations

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

Rental Agreement

Cost

Free to use
Relevant legal definitions















































Clauses







































Relevant Industries

Real Estate

Property Development

Residential Housing

Commercial Property

Property Management

Legal Services

Financial Services

Property Investment

Construction

Urban Development

Relevant Teams

Legal

Real Estate

Property Management

Compliance

Risk Management

Operations

Finance

Asset Management

Business Development

Contract Administration

Relevant Roles

Real Estate Attorney

Property Manager

Real Estate Agent

Legal Counsel

Property Developer

Lease Administrator

Contract Manager

Real Estate Investment Manager

Housing Finance Specialist

Property Rights Specialist

Compliance Officer

Risk Management Officer

Real Estate Operations Manager

Asset Manager

Transaction Coordinator

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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