Thinking about Buying a Property in Bali?A True Story about a Property Scam.By Ima Deville
(For obvious reasons, names of people and places in this story have been changed.)
Dorothy and Tony have come to Bali every winter for the last three years and they simply love it! They escape the cold weather at home and they save a considerable amount of money by locking their house for two months and hop on a plane to come and enjoy the clement weather and affordable lifestyle of Bali. Locals have always been friendly, helpful and welcoming. Dorothy and Tony are 65 and 68 respectively, retired and their children are grown up. Two years ago, Dorothy planted the idea:
‘ Why don’t we go and live in Bali? We can build a small house and spend most of the year there. Our children would love to come and visit us on their holiday. Do you remember this couple we met in Jimbaran last year? They seemed very happy and relaxed. I am sure Nick could help us out, he’s been ever so helpful every time we asked him for anything and he has contacts.’
It all went very fast from then on. Tony did not need much time to be convinced that life in Bali was going to much sweeter than at home. He added up a few numbers and worked out that they could probably build something decent with their modest life savings. Their pension would easily cover the day-to-day expenses and return tickets home a couple of times a year. Health insurance could be organized at a reasonable cost and it felt there was nothing to lose. They bought the best tickets they found on the internet and dined out to celebrate their new life change that same evening. Their family was surprised but Tony had explained their excellent reasons, they sincerely felt happy for them and tentatively booked their next holidays.
Tony and Dorothy’s dream was becoming reality. When the plane landed, they knew what they had to do. After getting their visa on arrival, they would jump in a taxi and head to their favorite little hotel in Sanur where they would be welcomed by Made and Ketut as usual. They called Nick the next day, who was delighted to hear they were on Island and invited them for lunch to a new restaurant on the sea front. They had met Nick on their very first visit to Bali when he was running an export and shipping business. They had immediately liked him, he had a great sense of humor and always gave good advice. Nick helped them discover places and shared tips that made them feel they were not living like tourists but like expats in the know. When Tony unveiled their plan over a coffee at the end of the meal, Nick thought it was an excellent idea. He suggested they meet Pak Wayan, a really good Balinese friend of his who had lots of contacts in the community and who surely knew good value plots of land for sale.
The next day, they had a copious seafood meal with Nick and Pak Wayan at one of the beach restaurants in Jimbaran and they agreed to go and check a plot of land in their favorite area of Bali, to be sold extremely cheaply because the owner and his family had got himself into debts. They would also meet Pak Agus, a renowned contractor who had built several villas for Europeans. The only problem was that he might not be available because of high demand. The next day could not have gone any better. The land had a great view of rice paddies that belonged to a green belt and was only a short walk from the beach. Nick was efficient in his negotiations and got them a very reasonable price for a free hold property. That sort of money couldn’t get you anything back at home! The nominee was going to be Pak Wayan who genuinely wanted to help the couple. Pak Agus, on the other hand, was very business like and made them visualize their villa: he would maximize the area to include two separate buildings, a decent size pool, a bale and an outdoor area to enjoy the view. Once Nick obtained the land certificate, Agus estimated a conservative eight months to finish off the project. By May they would live in it.
The next couple of weeks were spent planning schedules and deadlines, visiting a notary and signing several pieces of paper with Wayan and Agus. Dorothy and Tony then had to go home to organize money transfers and prepare for the big move in eight months time. Back home, communication with Nick was smooth and Tony organized the payment of several installments, first for the land, legal fees and then construction materials. Nick was sending photos regularly and Dorothy was getting excited about her new furniture and decoration. All in all, they had calculated that the villa would cost them 100,000 Euros, leaving them a little margin for further improvements if necessary.
4 months after the beginning of the works, Dorothy and Tony decided to go for a short trip and check out the progress. The villa was far from finished and many workers were away on ceremony but Nick was enthusiastic and explained that once the foundations were made, the rest was a question of weeks. “These guys are capable of putting together a great villa in no time, I’ve seen it many times and it always impresses me.” The certificate for the land was still being processed and would be ready for the next visit. It was all under control. Dorothy spent the rest of her stay looking, picking and ordering tiles, pieces of furniture, lighting and decorative pieces that she would store for the time being. Back home, two months away from the deadline, they received bad news from the contractor who was asking for another 300 million Rupiah because of the raise of material costs and to finish off the pool. Nick confirmed this. If money was not transferred, work would stop. Dorothy and Tony started getting worried about the turn of events. They flew again to Bali to find a building site with no workers and an unfinished villa. Nick seemed embarrassed but explained that it was common in Bali but, not to worry because everything would get solved in the end if they paid the extra 300 million. The quality of the villa would just be much better.
Tony and Dorothy felt trapped and wanted to move on. They did not understand the contractor’s quote and it looked as if he wanted to charge for work they hadn’t asked for. Nick was still not in a position to give the land certificate or the IMB (building permit). At this point, the couple went to the consulate and was advised to obtain a proper translation of the contractor’s quote. The outcome was that what they saw on the building site and the work being quoted did not match and at this point, they are advised to stop any further work with this contractor and not hand in any more money. To their surprise, the contractor put a complaint against them for not paying the extra costs. They wisely decided to take a lawyer who accompanied them to the police station when they were summoned to attend a hearing. The risk was too serious, in the worse case they could be detained.
After long and painful negotiations, Dorothy and Tony faced with a grim alternative: pay the unjustified 300 million to the contractor or face the consequences of not having a building permit, hence risking the demolition of the house. Tony, with his heart condition, was not feeling good and both his wife and the lawyer were worried about him but this was no time to panic. They found out that Nick had arranged that the contractor would file the building permit but the latter only pocketed the money. Having no choice, they settled the 25 million Rupiah bill for justice costs and employed another contractor to finish the work for another 200 million Rupiah. They cashed in their life insurance to pay these costs.
Their lawyer saw no other solution but to file a complaint against Pak Agus to fight back and also against Pak Wayan to put pressure to obtain the legal land certificate. The threat of being accused of embezzlement together with an extra 10 million Rupiah finally got them the land certificate. On top of this, the IMB (building permit), which never existed before, cost them another 25 million Rupiah. The next problem was to change the name of the nominee and that required them to pay 10% of the estimated value of the house or another 130 million Rupiah, just to change the name of the seller and buyer in a new sale and changeover of papers. They had no means to settle this amount. The defense of their lawyer and the wise opinion of the police made Pak Agus drop charges as he could be accused of extortion.
Dorothy and Tony have now lived in their villa for two years but the change of names has not happened yet and their money has run out. It’s a precarious situation. On reflection they fell into several traps. No foreigner is allowed to buy land or property in Bali. A lease was the only possible option for them. A nominee is illegal and can turn out to be part of a scam. And, more importantly, they fell in the trap of their own image of Bali. Too many foreigners think everything is possible in this country. They find it difficult to decipher the law and conclude that it is normal to act “illegally”. Of course, it all seems normal until one faces Tony’s problem. Another mistake was to hand money too soon and to trust a fellow citizen, just because he was. Lastly, they fell into the trap of time. Foreigners tend to want things fast. Building a villa when we don’t live or haven’t lived in this country for a while is a risky adventure. It is a much better idea to rent a place for a while and assess the possibilities. Let’s not forget the trap of language either: when we don’t speak Bahasa Indonesia, important elements get lost in translation and it becomes vital to have an excellent translator who can explain the implications of the written word. Consulates can provide lists of professional translators and honest solicitors. Don’t cut corners, take time to understand the situation and surround yourself by reliable advisers and friends. Dorothy and Tony wished they had.
As this article is being written, Pak Wayan continues to accompany tourists on exciting discovery visits of Bali. Pak Agus has embarked on new luxury dream villa developments advertising serenity and best financial placement to wise and informed (by him) investors. Our friend Nick is living a peaceful life as was always his intention because, after all, it was all Dorothy and Tony’s fault for being too demanding.
