PPJB and AJB: The Difference and When Each Is Used

The difference between a PPJB and an AJB lies in their legal effect. A PPJB (perjanjian pengikatan jual beli, a conditional sale and purchase agreement) is a preliminary agreement that binds the seller to sell and the buyer to buy at a later date. An AJB (akta jual beli, deed of sale and purchase) is a deed made by a PPAT (land deed official) and is the basis for registering the transfer of rights at the Land Office. With a PPJB, the certificate cannot yet be transferred into the buyer's name. With an AJB, it can.

PPJB vs AJB at a glance

When a PPJB is used

A PPJB is not compulsory. It is used when the parties have agreed but an AJB cannot yet be made, for example because:

• the certificate is still being processed, such as a subdivision of the plot, an upgrade of the title, or a transfer from the deceased to the heirs;
• the price is paid in instalments or is waiting for a KPR (mortgage) to be disbursed;
• the land is still mortgaged to a bank and is waiting for roya (release of the mortgage);
• a house or apartment is bought from a developer while still under construction;
• documents or tax payments are not yet complete.

A good PPJB describes the property clearly and sets out the price and payment schedule, the conditions to be met before the AJB, the deadlines, who bears the taxes and costs, and what happens if either party does not keep its promises.

Fully paid and not fully paid PPJB

A PPJB not fully paid (PPJB belum lunas) is made when the price has not been paid in full. It mainly contains promises: the payment schedule, conditions for cancellation, and penalties.

A fully paid PPJB (PPJB lunas) is made when the price has been paid in full but the AJB is still waiting for formal conditions. A fully paid PPJB before a notary is usually accompanied by a power of attorney from the seller to the buyer to sign the AJB on the seller's behalf once the conditions are met. In practice, such a power is regarded as different from a stand-alone irrevocable power of attorney (kuasa mutlak), which may not be used as the basis for a PPAT deed (Article 39(1)(d) PP 24/1997), because it forms an inseparable part of an agreement whose price has been paid in full.

The Civil Chamber formulation in SEMA 4/2016 (a Supreme Court circular) states that a transfer of rights based on a PPJB legally takes place if the buyer has paid in full, controls the property, and acts in good faith. This formulation guides judges in disputes, but it does not replace the AJB for registration purposes. The certificate is still transferred only after the AJB has been registered.

PPJB with a developer

For houses and apartment units marketed by developers, PP 12/2021 (amending PP 14/2016 on the Organisation of Housing) sets special rules:

• The PPJB is made before a notary.
• A PPJB can only be made once there is certainty about the status of land ownership, the subject of the agreement, the building approval (PBG), the availability of infrastructure, facilities and public utilities, and at least 20% of construction completed (Article 22(5)).
• The minimum contents of the PPJB include the identity of the parties, a description of the property, the price and method of payment, the developer's guarantee, the handover date, maintenance, transfer of rights, cancellation, and dispute resolution.
• The regulation also governs the refund of payments if the purchase is cancelled, with different provisions depending on which party is at fault.

For buyers, these conditions are worth checking before signing. For developers, meeting them reduces the risk of disputes later.

Tax on the PPJB and AJB

PPh (income tax). PP 34/2016 makes income from a transfer of rights and from a PPJB subject to final PPh at the same rate, generally 2.5%. For developers, PPh is due each time a payment is received, including a down payment, and must be paid by the 15th of the following month (Article 3(2)–(4)). If the buyer in a PPJB is replaced through an addendum, the original buyer must pay PPh on their income before the seller signs the amendment (Article 5).

BPHTB (land and building acquisition duty). Article 49(a) UU 1/2022 (UU HKPD, the Law on Central and Regional Government Financial Relations) provides that BPHTB on a sale becomes due when the PPJB is made and signed. The Constitutional Court rejected a judicial review of this provision in Decision 117/PUU-XXI/2023. Buyers therefore need to budget for BPHTB from the PPJB stage. How to calculate it is explained in the article on AJB requirements for land and buildings.

From PPJB to AJB

1. The conditions in the PPJB are met, for example the subdivided certificate is issued, the roya is completed, or the price is paid in full.
2. The PPAT checks the certificate and confirms that taxes have been paid and validated.
3. The seller and buyer sign the AJB before the PPAT and two witnesses. If there is a power of attorney in a fully paid PPJB, the buyer can act for themselves and as the seller's attorney.
4. The PPAT registers the AJB at the Land Office no later than seven working days after signing.

Frequently asked questions