Due Diligence Bali: How to Verify Your Bali Property Deal and Avoid Costly Mistakes

Estimated Reading Time: 8 minutes

Bali isn’t just a tropical paradise—it’s one of Southeast Asia’s hottest real estate markets, attracting foreign investors seeking high rental yields and capital growth. But while the rewards are real, so are the risks. Unlike property systems in the West, Bali operates under Indonesian land law, with layers of bureaucracy, unfamiliar ownership structures, and varying degrees of document reliability.

That’s why due diligence in Bali isn’t just important—it’s essential. It’s a legal and financial safeguard that protects your investment from zoning violations, fake documents, ownership disputes, and unbuildable land. One oversight can result in costly delays—or a deal that unravels entirely.

Due Diligence Bali – Short Summary:

• What due diligence really means in Bali
• Key legal and structural checks every buyer must perform
• Common traps to avoid (like nominee agreements)
• A complete checklist of what to verify before you send any funds
• Cost Estimates

What is Due Diligence in Bali Real Estate?

In the context of Bali real estate, due diligence is the process of verifying the legal, technical, environmental, and financial aspects of a property before committing to purchase. It’s especially critical in Bali’s market, where documentation standards and ownership structures vary—and risk of title disputes, double sales, or unauthorised buildings is real.

“Foreign investors face extra considerations, as Indonesian law restricts title ownership. All documents must align with legally permitted use and the chosen ownership structure.”

Without professional due diligence, you risk inheriting legal disputes, unbuildable land, or invalid contracts.

Also read our complete guide on how to buy property as a foreigner:

How to Buy Property in Bali as a Foreigner

Due Diligence Bali: What it entails

1. Ownership and Title Verification

• Identify the Certificate Type
  Is it SHM (Sertifikat Hak Milik) for freehold (Indonesians only), HGB (Hak Guna Bangunan), or Hak Sewa (leasehold)? Foreign investors typically use leasehold or HGB via a PT PMA.
• Confirm Legal Owner(s)
  Match the seller’s name and ID (KTP for locals or KITAS for foreigners) with the land certificate. If the land is inherited, make sure all heirs are present and agree to the sale.
• BPN (Land Office) Search
  Check the certificate’s authenticity and full history at the Badan Pertanahan Nasional (BPN). Verify whether it’s clean, has prior transfers, or is under dispute.
• Check the Chain of Title
  Make sure the seller has the legal right to sell, and that the property hasn’t changed hands through unclear or disputed arrangements.
• Foreigners: See the step-by-step buying process

2. Zoning and Land Use Compliance

• Request Zoning Letter
  Get written confirmation of land use (residential, commercial, tourism, green zone) from the local district (kecamatan). What looks like a villa-ready lot might actually be protected farmland.
• Check Building Permits
  Ensure the property has a valid PBG (previously IMB) and SLF (Sertifikat Laik Fungsi) for buildings already constructed.
• Confirm Intended Use
  If you plan to rent, verify that short-term rental business licenses (TDUP or NIB) are legally possible on that plot.

3. Encumbrances and Legal Liabilities

• Mortgage, Loan, or Legal Claims
  Confirm there are no mortgages, liens, or disputes registered on the property. These should show in a BPN encumbrance check.
• Outstanding Taxes or Utility Bills
  Ask for receipts or proof of payment for property tax (PBB), electricity, banjar/community fees, and water bills.
• Litigation Check
  Search local court and land office records for any pending litigation involving the property or seller.

4. Access and Boundaries

• Deeded Access (Hak Jalan)
  Confirm written, legal access to the property from a public road. Informal pathways or verbal agreements are not secure.
• Survey the Boundaries
  Use a licensed surveyor to verify that the land matches the dimensions and coordinates stated on the certificate.

No legal road access? That property may be nearly worthless, no matter the view.

5. Physical and Technical Inspection

• Inspect Building Condition
  Check for structural issues, roof quality, plumbing/electrical systems, and pest damage.
• Match to Permit
  Ensure the actual building matches what’s approved in the PBG/IMB—this includes size, shape, and placement.
• Environmental Review
  Consider risks of flooding, landslides, erosion, and whether the land has been filled or modified without permits.

6. Final Contracting and Legal Safeguards

• Use a Reputable Notary (PPAT)
  Only sign contracts prepared and verified by a certified Pejabat Pembuat Akta Tanah (PPAT) who is independent—not tied to the seller or agent.
• Escrow or Staggered Payments
  Avoid paying 100% upfront. Use escrow, or stagger payments against legal milestones (e.g., BPN verification complete, permits received).
• Retain Certified Copies
  Get notarized, certified copies of all documents: certificate, ID, IMB/PBG, SLF, tax proof, contracts.

Common pitfalls for foreign investors include:

• Gaps in chain-of-title, especially with inherited or multi-owner land
• Zoning disagreements: Learn more at Bali land zoning explained
• Missing, outdated or fake permits (IMB/PBG, SLF)
• Undisclosed mortgages, taxes, or unresolved disputes

Bali Property Inspection Checklist

• Physical Condition: Foundation, roof, dampness, electrical, plumbing, HVAC, finishes, code violations
• Infrastructure and Access: Legal right of way, road state, water source and pressure, electrical metering and capacity, internet, sewage/septic
• Building Permits & Zoning: Zoning for intended use, PBG/IMB matches build, SLF present
• Environmental Review: Flood risk, setback compliance, AMDAL or UKL-UPL, neighborhood context
• Legal Review: Certificate authentic and in seller’s name, no registered encumbrances, all taxes paid, all previous sales/leases accounted for

Land Inspection Checklist: Get the checklist

Villa Inspection Checklist: Get the checklist

Legal Check Before Buying Bali Property

Core legal checks:

• Certificate type and authenticity (e.g., SHM for ownership, or leasehold with full notarial record)
• Seller identity matches certificate; joint-ownership consent if applicable
• No encumbrances, verified at BPN
• Zoning compliance, PBG/IMB permits, SLF all align with build and usage
• Environmental approval (AMDAL, UKL-UPL) where relevant

For expert review, consult a Bali property lawyer and reputable PPAT.

Note for foreigners: You cannot directly own freehold SHM. Only compliant lease or corporate structures are allowed; ensure all permits fit your intended use.

How Much Does Due Diligence Cost in Bali?

• Legal checks: Title verification, search for encumbrances, permit history, taxes, and zoning (may include BPN/agency fees)
• Technical inspection: Condition report, cost-to-repair, MEP/structural safety
• Environmental: Flood/erosion assessment, AMDAL/UKL-UPL status, local area check

“Due diligence fees often save many times their cost by preventing invalid or non-developable purchases.”

• Clarify deliverables, official verifications, and site visits in writing.
• Fees depend on property complexity, scope, and region.
• Price can range from 1000-5000 USD

Proper due diligence is critical to maximizing ROI. See maximizing real estate returns in Bali.

Who Can Help with Due Diligence in Bali?

Licensed Notary (PPAT) for deed prep and BPN filings, specialized Bali property lawyer for document and legal risk review, and technical inspector or engineer for in-depth building and infrastructure check

Extra Tips:

• Check practitioner licenses, references, and sample reports
• Ensure independence (no ties to seller/agent)
• Red flags: Pressure to skip BPN checks, refusal to show originals, promises to fix zoning later, no written contracts

With years of experience with over 20 different legal companies, one thing is clear, the right partner is crucial for a smooth and successful process.

Need help with due diligence?

We always use the services of ILA Global Consulting

Tips and Tricks for Successful Due Diligence in Bali

• Always check all certificate and permit originals at BPN. Retain certified copies.
• In inherited or multi-owner situations, confirm written consent from all owners.
• Only release payments upon milestone completion, never in advance of formal verification.
• Verify road access in writing—do not assume public or legal access.
• For development, anticipate future zoning or AMDAL requirements to avoid post-purchase blocks or demolition.
• Centralise your due diligence file: keep IDs, NPWP, permits, taxes, contracts, and inspection reports for legal/financial clarity.

Conclusion

Rigorous due diligence in Bali real estate—across title, permits, encumbrances, environmental, and physical checks—is the single best way to limit risk and safeguard your investment. Rely on the Bali property inspection checklist and trusted professionals for every transaction.

For a wider investment context, market ROI, and new regulations covering 2025, see Bali real estate market predictions.

Download our checklist.

Land Inspection Checklist: Get the checklist

Villa Inspection Checklist: Get the checklist

FAQs

• Do foreigners need different due diligence steps in Bali?
  Yes. Foreigners must prove structure compliance (e.g., leasehold or PT PMA) and verify all permits, zoning, and certificates fit with their allowed ownership type.
• If the property is owned by multiple heirs, what do I check?
  Make sure all registered owners sign sales documents and consent to the deal. Confirm the full legal partition is registered at BPN before payment.
• How do I check zoning and permits for a Bali property?
  Obtain zoning certificates from the local government, ensure the PBG/IMB permit names and building match the actual structure, and confirm SLF (worthiness certificate) exists for completed properties.
• What if the road access is informal?
  Informal use is never secure. Only buy with an official, registered right of way (hak jalan) attached to the land certificate.
• What are typical due diligence timeframes in Bali?
  2–3 weeks for most verifications; can be longer if documents are incomplete or encumbrances found.