Due Diligence When Buying Property in Bali

A property can look perfect on the surface while serious problems exist in the title, zoning, permits, access, or transaction structure. Due diligence is the process of systematically identifying those problems before you commit — while you still have options.

This guide covers what a buyer should verify before signing any agreement or releasing any funds. The precise scope of due diligence varies depending on the property type, legal structure and transaction. This is a practical framework — not a substitute for professional legal and technical advice. For the full buying process, see: The Complete Property Buying Process in Bali →

1. Verify the Seller

The first question is whether the person offering the property for sale has the legal authority to do so. Confirm:

• Identity: verify the seller's identity documents against the registered title holder on the land certificate
• Ownership: confirm that the registered holder on the BPN certificate matches the person selling
• Authority: if a third party is acting on the seller's behalf, verify the power of attorney (POA) is valid, notarised, and grants the required authority for this specific transaction
• Corporate transactions: if the seller is a company, verify that the individual signing has proper corporate authority and that the company's documents (articles of association, shareholder approvals where required) support the sale
• Inheritance situations: if the property was inherited, verify the chain of ownership and that all heirs are accounted for in the transaction

2. Verify the Land Title and Property Rights

The land certificate is the most critical document in a Bali property transaction. Your legal professional should verify:

• Certificate type: confirm the type of land right (Hak Milik, Hak Pakai, HGB, etc.) and whether it is consistent with the proposed transaction structure
• Registered holder: confirm the registered holder matches the seller
• Land area: confirm the area stated on the certificate matches the physical reality
• Status: verify the certificate at the relevant BPN office. Copies provided by the seller must be confirmed against the original BPN record
• Encumbrances: check for mortgages (Hak Tanggungan), liens, or other registered encumbrances that could affect the title or transaction
• Disputes: ask the notary/PPAT to check for any registered disputes or blocks on the title
• Land conversion: for agricultural land, check whether conversion to non-agricultural use has been properly obtained if the intended use is residential or commercial

3. Check the Physical Property

A physical inspection of the property should go beyond a walkthrough. Verify:

• Boundaries: walk the boundary markers and compare them to the certificate's land area. Discrepancies between the physical boundary and the certificate are common and can create serious problems
• Buildings: inspect the existing structures for condition, visible defects, water damage, structural issues and maintenance status
• Utilities: confirm electricity connection (PLN), water supply (PDAM or private well), drainage and waste water management
• Neighbouring properties: note any encroachments, shared walls, drainage issues, or activities on neighbouring land that could affect the property
• Flooding and drainage: assess drainage quality during site visits, particularly in lower-lying areas or areas with high rainfall. Local flooding history is worth investigating
• Document vs reality: confirm that the physical reality of the property is consistent with what the documents describe

4. Check Access and Road Rights

Access is one of the most commonly underestimated issues in Bali property transactions. A property without reliable, legally documented access may be legally and practically unusable in the future.

• Confirm that the property has direct legal access to a public road, or that a documented access right or easement exists across intervening private land
• Identify who owns the access road or pathway and whether that ownership could change
• Verify that the physical access is consistent with the legal documentation
• Consider whether the access is appropriate for the intended use — a narrow track suitable for pedestrians may not be adequate for construction vehicles, guests, or commercial operations
• Ask specifically whether there are any disputes or potential disputes involving the access route

5. Check Zoning and Permitted Land Use

Being able to acquire a piece of land does not automatically mean you can build or operate whatever you want on it. Zoning compliance is non-negotiable.

• Confirm the current zoning designation of the land with the relevant local authority (Dinas)
• In Bali, major zoning categories include residential (pemukiman), tourism (pariwisata), agricultural (pertanian), and protected/conservation areas, each with different permitted uses and development restrictions
• Agricultural-zoned land generally cannot be legally used as a private residence or operated as a commercial accommodation without appropriate conversion, which is subject to its own requirements and limitations
• If you intend to operate the property as a rental or hospitality business, verify that the applicable operational permits (including TDUP where relevant) are in place or obtainable
• Verify that any existing buildings on the land comply with applicable setback requirements, height limits and coverage ratios
• Check whether the zoning plan (RTRW — Rencana Tata Ruang Wilayah) for the area is likely to affect the property in the foreseeable future

6. Check Building Permits and Approvals

For any property with existing buildings, verify:

• Building permit: confirm that an applicable building permit (historically IMB — Izin Mendirikan Bangunan; replaced by PBG — Persetujuan Bangunan Gedung under UU Cipta Kerja No. 11/2020) was issued for the existing structures
• Correspondence: verify that the permitted building matches the actual construction — in footprint, height, number of structures, and use. Significant discrepancies between the permit and the actual building can create compliance risks and affect the legality of the property
• Sertifikat Laik Fungsi (SLF): the certificate of occupancy/function; may be relevant depending on the property type and applicable local requirements
• Future development: if you plan to build or extend, verify separately that a permit for your intended development is obtainable before purchasing

7. Check Taxes and Outstanding Liabilities

Several tax-related items should be confirmed before completing a transaction:

• PBB (Pajak Bumi dan Bangunan): confirm that annual land and building tax payments are current and that there are no outstanding arrears. PBB arrears must generally be cleared before a title transfer can be processed
• Transaction taxes: understand which taxes will apply to your specific transaction, who is responsible for each, and when payment is due. BPHTB (acquisition duty) for registered right transfers and PPh final for the seller are common in purchase transactions
• Other liabilities: check whether any utility bills, service charges, or other financial obligations are attached to the property and will need to be settled before or at handover

For a full breakdown of the taxes and costs involved in a Bali property transaction, see: Property Taxes and Buying Costs in Bali →

8. Review the Contract Before Signing

Every agreement, including preliminary agreements and reservation letters, should be reviewed by an independent legal professional before you sign. Key items to verify:

• Parties: correct legal names and identities of all parties
• Property description: accurate description of the property including certificate number, land area, and location
• Rights being transferred: what exactly is being sold, leased, or granted, and for how long, in the case of leasehold
• Price and payment: agreed price, payment schedule, and currency
• Conditions precedent: any conditions that must be satisfied before completion is binding
• Representations and warranties: seller's confirmations about the property's legal status, absence of disputes, and condition
• Default provisions: what happens if either party fails to perform
• Leasehold-specific: for leases, extension rights, renewal mechanism, permitted use, assignment, and expiry terms must be unambiguous
• Handover conditions: what condition the property should be in at handover

9. Red Flags

The following warning signs should prompt additional caution or independent verification:

10. Your Due Diligence Team

Due diligence in Bali typically involves more than one professional. The appropriate team depends on the transaction:

• Notary/PPAT: performs title verification at BPN, confirms encumbrances and disputes, prepares and executes the required legal deeds. The PPAT is the cornerstone of any registered-right transaction
• Independent legal counsel: reviews contracts, advises on the legal structure, identifies risks and conditions. Engage separately from the notary/PPAT recommended by the seller if you want fully independent advice
• Tax professional: advises on the applicable taxes for your specific transaction structure, both at acquisition and on an ongoing basis
• Surveyor or technical professional: for physical inspection of buildings, boundary verification, structural assessment, or technical systems — particularly for older properties or significant developments
• Other specialists: depending on the transaction, you may need additional advice on environmental matters, operational permits, or business licensing

No single professional automatically handles every aspect of every transaction. Be clear about who is doing what before the process starts.

11. Final Due Diligence Checklist

Before signing any binding agreement or releasing any funds:

12. Final Takeaway

Due diligence is not a formality. It is the stage where problems are identified while you still have the ability to walk away, renegotiate, or require the seller to resolve an issue before completion.

The cost of proper due diligence — in professional fees and time — is almost always small relative to the cost of a transaction that goes wrong after completion. Budget for it, plan for it, and do not allow timeline pressure to shortcut it.

Frequently Asked Questions