Does a developer have the right to delay the handover of a property unit to a consumer due to delays in obtaining local government permits?

Question:

Is a developer’s delay in handing over an apartment unit due to the unissuance of a habitability permit (certificate of functional suitability) legally justifiable, or does it constitute a breach of contract with the consumer?

(Rizky**, 0812976****)

Answer:

1. In property sales and purchase transactions, particularly apartments or condominiums, the legal relationship between the developer and the buyer is governed by a binding Sales and Purchase Agreement (PPJB). Based on Article 1338 of the Civil Code, every legally executed agreement is binding as law for the parties. Therefore, the developer is obliged to fulfill the terms of the agreement, including the unit handover schedule to the consumer as stated in the PPJB.
2. According to Article 4, Paragraph 4, letter b, of the Minister of Public Works and Public Housing Regulation Number 11/PRT/M/2019 concerning the Preliminary Home Sale and Purchase Agreement System, developers can only hand over units if they have obtained a Certificate of Functional Worthiness (SLF) from the local government. Without an SLF, a building cannot be declared safe for occupancy. However, a delay in issuing an SLF by a government agency does not automatically absolve the developer of its responsibility to consumers, as the obligation to obtain an SLF is part of the developer’s administrative responsibilities before promising handover.
3. In practice, many developers use permit delays or external factors as an excuse to delay handover. However, legally, such excuses are only acceptable if they fall under the category of force majeure, which is truly unpredictable and beyond the developer’s control. Administrative delays or unprepared permit documents generally do not constitute force majeure, but rather constitute administrative negligence. 
4. Consumer protection is regulated in Law Number 8 of 1999 concerning Consumer Protection, specifically Article 7 letter b and Article 19 paragraph (1), which emphasizes that business actors are required to provide accurate information, guarantee the quality of goods/services, and be responsible for losses arising from delays or failure to fulfill performance. Therefore, developers remain legally responsible for providing compensation or redress if a delay in handover results in losses for consumers.
5. Based on the above description, it can be concluded that developers cannot legally delay the handover of units to consumers solely on the grounds of delays in obtaining permits from the local government, as this administrative responsibility rests with the developer as part of their professional obligations. Delays without a valid basis can be categorized as breach of contract and give rise to compensation obligations for consumers. Consumers have the right to file objections, demand refunds, or request late fees in accordance with the provisions stipulated in the Sales and Purchase Agreement (PPJB).

This legal opinion is based on available general information. For further analysis of the contents of the PPJB and the developer’s legal responsibilities, please schedule a consultation with our lawyer.