Court Rejects Petition by Condotel Owners

Constitutional Court handing down a ruling at the judicial review hearing of Law No. 20 of 2011 on Condominium, Monday (10/31/2022). Photo by MKRI/Bayu.

Monday, October 31, 2022 | 15:49 WIB

JAKARTA (MKRI)—The Constitutional Court (MK) had ruled on the judicial review of Law No. 20 of 2011 on Condominium with Decision No. 62/PUU-XX/2022 on Monday, October 31, 2022 in the plenary courtroom. It ruled the Petitioners’ subject matter legally unfounded and rejected the entire petition. The ruling was pronounced by Chief Justice Anwar Usman. “[The Court] rejected the Petitioners’ petition in its entirety,” he said reading out the verdict.

In its legal considerations, the Court asserted that following dynamics of society, especially in urban areas, there has been increasing rate of urbanization and industrialization, resulting in population density due to limited land for settlements.

“The condominiums, which Law No. 16 of 1985 was designed to overcome, have not been effective and even been misdirected. The beneficiary of the enactment of Law No. 16 of 1985 turned out to be the upper middle-income community. Therefore, it was necessary to amend Law No. 16 of 1985 because it was no longer in accordance with legal developments, the needs for occupancy, ownership, and use of condominiums,” said Constitutional Justice Wahiduddin Adams.

He also explained that the influence of globalization, culture, and dynamics of people’s lives made the law obsolete when regulating condominiums. One of the changes in Law No. 20 of 2011 is related to the function of condominiums, which are no longer residential or non-residential but residential or mixed, pursuant to Article 50 of Law No. 20 of 2011. The law actually still accommodates the non-residential function. Furthermore, the Elucidation to Article 50 letter b reads, “‘Mix-use’ shall be the combination of residential and nonresidential functions.” For condominiums with mix-uses, it serves a main function as a residence and also has other functions in order to meet the needs of its residents. Such a use is based on Article 1 point 1 of Law No. 20 of 2011, which stipulates that a condominium primarily functions as a residence.

Therefore, Justice Wahiduddin added, it is clear that the non-residential function for condominiums constructed in Law No. 20 of 2011 does not stand alone following Law No. 16 of 1985 and PP No. 4 of 1988. The change into mix-use in Law No. 20 of 2011 was to overcome the lack of public condominiums for low-middle income communities and to eliminate units in buildings or condominiums that are ‘uninhabited’ at night. In this regard, it was important for the Court to emphasize that condominiums with non-residential functions do not eliminate their main function as a residence and must not eliminate the complementary nature of the condominiums.

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Regulation on Condominiums

Justice Wahiduddin explained that the Court believes no mention of ‘non-residential’ function in Article 50 of Law No. 20 of 2011 does not contradict Article 28H paragraph (1) of the 1945 Constitution. Article 1 point 1 of Law No. 20 of 2011 must be interpreted as a whole, starting from the structure of the building, its ownership, to its use primarily as a residence. This is in line with the definition of building as per Article 1 point 1 of Law No. 28 of 2002 on Buildings as partly amended by Law No. 20 of 2011 on Job Creation, which stipulates that buildings may function as residence, for religious activities, for business, as well as for social, cultural, or special activities.

In this regard, the condotel as a building that has a business function is confirmed in the Elucidation to Article 5 paragraph (3) of PP No. 16 of 2021 on Implementing Regulations of Law No. 28 of 2002 on Buildings (without the Court intending to assess the legality of said PP), which reads, “What is meant by business functions include: e. Hospitality buildings, such as guesthouses, inns, hostels, motels, boarding houses, hotels, and condotels.”

Thus, a condotel that functions more as a location for business is not in accordance with the definition of a condotel based on Law No. 20 of 2011 and adding a non-residential function in Article 50 of Law No. 20 of 2011 as requested by the Petitioners would cause disharmony between Law No. 20 of 2011 and other laws and regulations. It could lead to legal uncertainty because Law No. 20 of 2011 stipulates that condominiums serve primarily as a residence. Thus, according to the Court, the Petitioners’ arguments were legally unfounded.

Justice Wahiduddin also said the Court understood condotels being a new type of business or investment that would continue developing along with the increasing need for hospitality services in Indonesia, so they must have their own legal basis according to its characteristics. Based on the considerations, the condotel has the same building structure and ownership model as the condominium. However, the difference lies in the function of the condotel as a place of business, which was not accommodated in positive law, thus creating legal vacuum. Therefore, the Court encouraged legislators to immediately draw up a law and implementing regulation to serve as a legal basis for the management of condominiums that have non-residential functions.

Also read:

Govt: PPPSRS Management Must Reside in Building

Nonresidential Function of Condominiums Eliminated by Condominium Law

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 11/3/2022 14:22 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.

Monday, October 31, 2022 | 15:49 WIB 47