Real Estate In Indonesia – Pre-Contract

The Indonesian Civil Code (ICC), as the regulatory foundation for contracts, does not regulate pre-contract documents, such as letter of intent, memorandum of understanding, term sheet or other non-binding agreements, although these are customary to be entered into by the transacting parties prior to executing a binding contract.

Before signing a contract as part of a real estate transaction, the buyer will conduct due diligence to identify any material risks that may affect the transaction. The result of the due diligence is crucial to determine the terms and conditions of the binding contract to be entered into by the parties, such as the conditions precedent to be imposed on the seller, representations and warranties from the seller and indemnity in favor of the buyer. The parties will usually execute a non-disclosure agreement before making any disclosure of documents, data and information for the purpose of the due diligence.