Do Not Get It Wrong: Understanding 7 Types of Land Certificates and Their Legal Strength
Land is a unique asset; its quantity remains fixed whilst demand continues to soar. In Indonesia, control over this agrarian resource is strictly regulated through Law Number 5 of 1960 concerning the Basic Regulations of Agrarian Principles (UUPA). In our legal system, every registered parcel of land generates a certificate as authentic proof that provides legal certainty for its holder. However, the public often falls into the trap of oversimplifying matters by assuming that all certificates are identical. These differences encompass who is entitled to own the land, the purposes for which it can be used, and the duration of the right’s validity.
- Certificate of Ownership Right (Sertipikat Hak Milik/SHM): The Highest Tier of Ownership
Within the land tenure hierarchy, SHM occupies the top position. This is the strongest and most complete form of right, is hereditary in nature, and has no expiration date as long as the land is used in accordance with its social function. One crucial point to remember is that SHM is an exclusive right reserved for Indonesian Citizens (WNI). Legal entities or foreign nationals are in principle prohibited from owning SHM, except for certain legal entities designated by the government.
- Certificate of Building Use Right (Sertipikat Hak Guna Bangunan/SHGB): The Right of “Utilisation”
Unlike SHM, SHGB grants the authority to construct and own buildings on land that is not owned by the holder (typically state land or land under management rights). This right has a limited “lifespan”. Under UUPA, SHGB is granted for a maximum of 30 years and may be extended for up to 20 years. In the urban landscape, SHGB is the principal instrument for residential developers, apartment builders, and commercial centre operators.