Building or buying a home is a significant milestone, especially in a place as unique as Bali. However, it’s also a major transaction that comes with its own set of potential pitfalls. Understanding the intricacies of building contracts is crucial to safeguard your investment and ensure a smooth construction process. This guide aims to provide you with key insights to protect your interests when signing a building contract in Bali.

The Importance of Integrity and Quality Control

The global financial crisis of 2008, triggered by issues in the housing market, serves as a stark reminder of the importance of integrity and quality control in any property transaction. It highlights how easily poor lending practices and lack of oversight can lead to significant financial losses. In today’s financial landscape, where complex schemes and a focus on profit can overshadow ethical practices, it’s essential to exercise due diligence. When dealing with property, one of the most substantial investments most people make, thorough checking is prudent, especially when building or buying in Bali.

Many people are eager to buy a property, and this enthusiasm can lead to signing contracts without fully understanding their terms. While there are many reputable developers, some may not be as scrupulous, potentially turning your dream into a nightmare. Therefore, it is crucial to take the necessary precautions to protect your interests.

Key Precautions When Signing a Building Contract

Here are several crucial factors to consider when signing a building contract in Bali:

• Verify the Builder’s Credentials: Ensure that the builder is from an established company with a valid construction license. Do not simply rely on their word; verify their credentials independently.
• Engage an Independent Notary: Hire a reputable Notaris who is not representing any other party involved in the transaction to avoid conflicts of interest.
• Understand the Contract: Do not sign any document until you fully understand its contents, including the fine print.
• Detailed Specifications: Make sure the contract includes clear specifications of what you are getting, including a full set of drawings, a bill of quantities, and a complete list of all inclusions like furniture and fittings.
• Reasonable Maintenance Periods: Check that the contract includes reasonable maintenance periods. Typical guidelines include a 5-year guarantee on the structure and foundations, 3 years on the roof (or three wet seasons), and 12 months for all other items, starting from the official handover date after all initial faults are addressed.
• Payment Schedule with Retention: The payment schedule should include a reasonable retention amount (generally 10%) to be held back until after handover. This ensures that any faults that appear after completion will be addressed.
• Land Certificate Verification: Always view the land certificate and have your lawyer fully investigate its ownership before making any payments. Keep in mind that foreigners cannot own freehold land in Bali; instead, they can lease land under the Agrarian Law.
• Building Permit (IMB): Confirm that the project has an IMB (building permit) before construction commences.
• Qualified Structural Engineer: Ensure a qualified structural engineer designs the building and regularly checks the construction process. Remember, an architect is not a structural engineer.

The Importance of Independent Advice

Navigating the complexities of construction in Bali can be challenging. It’s advisable to seek independent advice and support from someone who is clearly representing your interests. This can save you considerable time and stress during the building process. Make sure this advisor is knowledgeable and trustworthy.

Building or buying property in Bali is a significant undertaking. By taking these precautions and seeking qualified independent advice, you can protect your interests and ensure a smoother, more positive experience.