Mixed use - Common Problems Under Condominium Law
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Common Problems Under Condominium Law
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Mixed use - Common Problems Under Condominium Law
- 1. COMPANY PROFILE Condominium Law Perspective
- 2. Outline • Pre-Development oTitle Division oEnvironmental oTraffic oParking oElectricity oZoning www.lekslawyer.com
- 3. Outline – Cont’d • Development oPublic Condominium oPre-sale oCommunity • Post-Development oHandover oP3SRS oManagement oB3 Waste Management www.lekslawyer.com
- 5. Title Division (Pertelaan) www.lekslawyer.com • Title division is made in advance • Marketing cannot be initiated before the government has legalized the title division • Momentum for marketing may be lost since the government is slow to approve and legalize the title division • It is mostly not performed by developers • For mixed-use, extremely hard to prepare the title division since the project is gradually built and may be re-adjusted
- 6. Title – Cont’d www.lekslawyer.com • Determination of Comparative Proportional Value (NPP) is clear but not necessarily implementative • NPP is a number showing comparison between condominium unit and joint equipment, joint land, and joint facility, calculated based on the condominium unit’s value against the total condominium’s value at the time the developer initially calculates the total construction costs to determine the sale price
- 7. Title – Cont’d www.lekslawyer.com • Development of few condominiums in one plot of land is possible as long as it does not change the NPP • If the NPP is increased, P3SRS is notified • If the NPP is lowered, P3SRS has to approve the adjustment. If P3SRS does not approve, the local government will give decision final and binding • The adjustment of NPP needs to be re-legalized and re-registered
- 9. Environmental www.lekslawyer.com • Analysis of Environmental Impact (AMDAL) is obligatory prior to obtainment of building construction license • After AMDAL, the developer requires to obtain environmental license • Scope of AMDAL will depend on the mixed-use properties. Some type of property produce Hazardous and Poisonous Material (B3) waste, some are not • Will be discussed further on B3 Waste Management
- 11. Traffic www.lekslawyer.com • Mixed-use project most-likely raises the traffic congestion • Traffic impact analysis is obligatory prior to obtainment of location license or building construction license • Developer has to sign statement letter promising the performance of all obligations prior to, during, and after project completion • Violation administrative sanction
- 12. Traffic – Cont’d www.lekslawyer.com • Three warning letters. Duration: 30 calendar days each • Does not remedy the default temporary suspension of activity for 30 calendar days • Penalize of 1% of obligation value • After the lapse of 90 calendar days after penalty, the location license or building construction license is revoked
- 14. Parking www.lekslawyer.com • Parking can be a material issue on mixed-use • Difference on parking plot ratio (satuan ruang parkir) on every type of building • Parking plot ratio for mixed-use is not regulated • Parking division and flow according to building function in the mixed-use development
- 16. Electricity www.lekslawyer.com • Applying for the business license of electricity supply is obligatory • Developers are confused since many do not comply with the regulation • New regulation and not socialized • Differences on tariffs • Reason of dispute between tenant and management • There is a criminal sanction imprisonment 3 years maximum and fine of Rp2 bio maximum
- 18. Zoning www.lekslawyer.com • Having a mixed-use project does not necessarily mean that the zoning is for mixed-use • Sometimes it is for commercial or office purpose, where just next to it, it may be for residential • Developer needs to combine its plan with the zoning zoning
- 20. Public Condominium www.lekslawyer.com • Developer has to provide public condominium at least 20% of the total floor area of commercial condominium that is built • 20% out of sold units or total? What if not all units are sold? Would it be applicable? • Conflict with regulation of DKI Jakarta stating there may be a compensation for public condominium obligation • Unclearness on land, developer or government’s obligation?
- 21. Public – Cont’d www.lekslawyer.com • It is occasionally not implementative • The government tends to interpret that the developer should provide the land • Unclearness on the profits out of sale of public condominium • Minister reported many developers to District Attorney for violations • There is a criminal sanction imprisonment maximum 2 years or maximum fine of Rp 20bio (±US$2mio)
- 23. Pre-Sale www.lekslawyer.com • Pre-sale is subject to certain requirements • 20% has to be built out of the marketed condominium • This is not an issue, but important point to note • The mixed-use plan is 100,000m2, will be built in several stages, marketed is 30,000m2, then 20% is calculated from the 30,000m2 i.e. 6,000m2
- 25. Community www.lekslawyer.com • Every mixed-use development has higher risk of claim by the community • Any party that suffers losses as a result of condominium development may claim the developer • Developer needs to maintain good relationship with the surrounding community
- 26. Delivery of Unit www.lekslawyer.com
- 27. Delivery of Unit www.lekslawyer.com • Owners and Tenants Condominium Association (P3SRS) is established maximum 1 year after first delivery of unit • Title division has to be ready before formation • Example: 3 towers will be built @ 100 units each. Currently, only 1 tower is built (=100 units). Assuming the NPP is the same between units, then 1 unit will have 1/300 NPP. One tower built, meaning developer has 2/3 of voting rights
- 29. P3SRS www.lekslawyer.com • Unclearness of the formation • Formed by the deed, legalized by Regent or Mayor and for DKI Jakarta, by the Governor • Unclearness creates disputes • Different forms of Articles of Associations and By-laws are used and legalized by the official • Mixed-use development involves different stakeholders with their own interests
- 30. P3SRS – Cont’d www.lekslawyer.com • No standard forms of Articles of Association and By-laws for P3SRS • Formation of P3SRS needs to be properly implemented to avoid later dispute
- 32. Management www.lekslawyer.com • Condominium law is silent on the management of mixed-use development • One building manager for similar building function e.g one BM for apartment, one BM for shopping center, one BM for office • The practice is one P3SRS but with several BMs managing the buildings according to its functions
- 33. Management – Cont’d www.lekslawyer.com • Tenancy regulation in one type of building Vs regulation for the whole complex • In mixed-use development, tenancy regulation for the building and complex has to be regulated in advance through related agreements • P3SRS can set the regulation in their By-laws later • It is however essential during the 12 months operation before P3SRS is formed
- 35. B3 Waste www.lekslawyer.com • Hospital needs to have license on B3 waste management • Important point to note for mixed-use development having hospital as one of its facilities • Strict liability concept for environmental damage
- 37. Concluding Remarks www.lekslawyer.com Pre-Development • Title Division: not easy to obtain legalization of title division in advance, government needs to cooperate, change of NPP needs to be re-legalized and re-registered • Environmental: AMDAL and environmental license are obligatory to obtain construction license • Traffic: essential obligations to obtain construction license and risks of non-compliance • Parking: difference on parking plot ratio and its division • Electricity: unclearness of regulation, risks • Zoning: creatively combine the zoning
- 38. Concluding – Cont’d www.lekslawyer.com Development • Pre-Sale: 20% of the marketed building areas • Community: risk of claim, maintain good relationship
- 39. Concluding – Cont’d www.lekslawyer.com Post-Development • Delivery of Unit: to form P3SRS max 1 year after delivery • P3SRS: formed properly to minimize later dispute • Management: tenancy and complex regulation are agreed in advance • B3 Waste: obtain license, strict liability
- 40. Leks&Co Menara Palma 17th Floor, Suite 1702B Jl. HR Rasuna Said Blok X2 Kav. 6 Jakarta, Indonesia www.lekslawyer.com