Nonresidential Function of Condominiums Eliminated by Condominium Law

Pangihutan Marpaung taking an oath before testifying as an expert for the government at the judicial review hearing of Law No. 20 of 2011 on Condominium, Thursday (9/1/2022). Photo by MKRI/Ifa.

Thursday, September 1, 2022 | 15:21 WIB

JAKARTA (MKRI)—The issuance of Law No. 20 of 2011 on Condominium had annulled Law No. 16 of 1985 and Government Regulation (PP) No. 4 of 1988, thus eliminating condominiums with independent nonresidential function, said Pangihutan Marpaung, the Civil Service Commission (KASN) Assistant for the Supervision of the Implementation of Basic Values, Code of Ethics and Code of Conduct, and Neutrality of State Civil Apparatus at a material judicial review hearing on Thursday, September 1, 2022.

“The elucidation mentions ‘Mix-use shall be the combination of residential and nonresidential functions.’ Therefore, based on Article 50, nonresidential function of condominium units is only possible for a single residential building or in another building where the residential building and the nonresidential one being located in one land,” he said.

Marpaung asserted that certificate of condominium unit ownership (SHMSRS) of Petitioner I for Alana Sentul City as well as of Petitioners II and III for Sahid Eminence Ciloto Puncak stipulates that the condominium is a residential condotel. “If the SHMSRS stated [that the condominium] is a nonresidential one, it would violate Law No. 2 of 2011 and PP No. 13 of 2011 and could be annulled, with the consequence that Petitioners I, II, and III could no longer have a certificate of condominium unit ownership,” he explained.

Also read: Condotel Owners Question Phrase in Condominium Law

No Loss of Constitutional Rights

Marpaung further explained that Article 50 of the Condominium Law had not impaired the Petitioners’ constitutional rights because it regulates residential or mix-use condominiums but does not regulate condominium management (relating to protection of property under its power following Article 28G paragraph (1) of the 1945 Constitution) or ownership (relating to the loss of ownership right as per Article28H paragraph (4) of the 1945 Constitution. He stressed that the Petitioners’ constitutional rights were not harmed due to the enactment of the provision as they could not assume that “joint parts, objects, and land” of the condominium were their personal property as per Article 28G paragraph (1) of the 1945 Constitution.

“Then, mutual ownership rights over joint parts, objects, and land is represented based on the proportional comparison value (NPP) of each owner as mentioned in the SHMSRS,” he said.

Also read: Condotel Owners Revise Material Petition Against Condominium Law

Condominium Unit Management

Marpaung added that the Petitioners had mixed the ownership of condominium unit, as shown by their SHMSRS, with their wish to manage it as a condotel. This shows their assumption that they would be able to manage it and obtain management permit from the Tourism Office or relevant offices.

“The Petitioners only have the right to form a [Condominium Owner and Tenant Association (PPPSRS)] to manage a condominium that functions fully as a residence or have mix-use, not as a hotel, as hotels require management by a professional that has obtained management permit from the local Tourism Office. Indeed, according to the Condominium Law, the PPPSRS was established with the aim of managing condominiums with residential or mixed (residential and non-residential) functions, and most importantly, it places more emphasis on management based on ownership and or occupancy, so the management must reside in the condominium unit, as regulated in Article 94 paragraph (2) of the Government Regulation No. 13 of 2021 on the Implementation of Condominiums,” he elaborated.

Also read: Condominium Ownership Certificate Must Follow Condominium Law

Condominium Ownership

Marpaung added that the Petitioners did not understand or pretended not to understand that aside from being a residence, condotels are also an investment by individuals or legal entities to lease with an agreement within a certain period as a hotel to a professional management, in order to make profits. The investors have the right to occupy any units within the condominium for several days annually for free, while receiving hotel services under the agreement with the management. During their stay, profits will be shared and the services they receive will be written down in an agreement with the management. This means that the Petitioners are aware of the management contract of units whose management is transferred to a third party.

“As such, the Petitioners are legally bound to that agreement. Technically, the Government cannot interfere with the civil agreement on the condotel, except with a court decision. One petitioner for the Alana Sentul City, two for the Sahid Eminence Ciloto Puncak, and one for the H Tower cannot claim to represent all condominium owners and cannot form a PPPSRS on those three condotel buildings. The Petitioners has not lost any civil right or any right in relation to the condominium units that they purchased because in the management of condotels, what is legally transferred is not the ownership of the property, but the individual rights as a result of management agreement in casu condotel. So, the ownership right to the property must be viewed separately from the temporary transfer of control right by management contract,” Marpaung stressed.

Thus, he added, the Petitioners’ argument of the impairment of ownership right and the right to control condominium units was legally groundless.

Also read: Govt: PPPSRS Management Must Reside in Building

No Causality

Marpaung emphasized that there was no causality between the Petitioners’ constitutional impairment and Article 50 of the Condominium Law, as each unit owner of residential or mix-use condominiums have the right to obtain proof of ownership (SHMSRS), which Petitioners I-III already have.

He added that each condominium owner may transfer, sell, lease, and/or lend the ownership as well as to enter into a condotel management contract with a condotel management. The condotel company is established as the result of the contract between the unit owner or investor and developer and the hotel management (third party). In other words, condotel residence does not emerge due to the lack of the word ‘non-residential’ intended by Article 50 of the Condominium Law, but the transfer of management is based on a written agreement between the unit owner and the hotel management. As such, there was no causality between the Petitioners’ claim of impairment and Article 50 of the Condominium Law.

“The takeover of condominium management as a condotel for a certain period is related to the order or the [sale and purchase agreement (PPJB)] that the developer and prospective buyers or condotel units have with the hotel management,” Marpaung stressed.

The case No. 62/PUU-XX/2022 was filed by owners of a condotel (condominium-hotel) Rini Wulandari, Hesti Br Ginting, Ir. Budiman Widyatmoko, and Kristyawan Dwibhakti (Petitioners I-IV). They challenge Article 50 of the Condominium Law, which reads, “The use of multi-story buildings shall be conducted in accordance with the function: a. residence; or b. mix-use.”

At the preliminary hearing, the Petitioners argued that a condotel that is not functioned for residence or mix-use kept them from forming a Condominium Owner and Tenant Association (PPPSRS) to deal with the interests of the owners and residents in terms of management, ownership, and occupancy. This led to the property (the multi-story unit complete with communal parts, objects, and land) not being owned by the Petitioners but the developer.

It also resulted in their condominiums not being able to be issued a certificate of condominium unit ownership for. Then, in their petition, they that the Court declare Article 50 of the Condominium Law conditionally unconstitutional and not legally binding as long as it is not interpreted as including “not a residence.”

Writer        : Utami Argawati
Editor        : Lulu Anjarsari P.
PR            : Andhini S. F.
Translator  : Yuniar Widiastuti (NL)

Translation uploaded on 9/9/2022 10:54 WIB

Disclaimer: The original version of the news is in Indonesian. In case of any differences between the English and the Indonesian versions, the Indonesian version will prevail.

Thursday, September 01, 2022 | 15:21 WIB 236