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Left Holding the Bag?

Developer Who Failed to Obtain Licenses for the Non-Conforming Housing Estate May Have Defrauded investors in Penaurungan Residence in Bali

(12/9/2012) When investing in real estate in Bali it is essential to make sure that all permits and licenses are in hand before signing on the dotted line or remitting any payment.

The resultant dangers of ignoring this simple common sense approach to investment is now being painfully underlined in the current situation of the unhappy purchasers of homes in the 180-unit Penaurungan Residence constructed on a three-hectare site in Mengwi.

Radar Bali reports that the regent of Badung is taking an intractable stance on the nearly completed project that has been built without the building and zoning permits that must be hand before construction or property sales commence.

A.A. Gede Agung has declared he will not issue permits for the project that violates zoning rules and infringes on “no-build green zones.”

A.A. Gede Raka Yuda, the spokesman for the Regency of Badung, restated the regent’s no-compromise position on Saturday, December 8, 2012. Yuda told the press: “The regent has already stated his commitment to preserve the wholeness of the green zone. The regent will not grant any permits, especially for a project that has been built in violation of zoning rules, green zones or areas preserved for agriculture.”

Defending the “no compromise stance” of the Regent, Yuda pointed to the fact that the Penaurungan Residence has failed to apply for permission since before they commenced construction up until the point where the project is now nearing completion. After reviewing the errant housing project, it appears that land used was once productive agricultural land located in a “no-build” green zone protected from development under law.
Because of this situation, it is impossible for the Regent to even consider granting a temporary permit.

A furthe and more absoluter bar to finding a solution to complete the Penaurungan Residence project is the 2009 Provincial Zoning Law (RTRWP) that places the Regent in legal jeopardy of a large fine and five years in prison if he to grants permits to any project in violation of new zoning law.

The Bali police are now involved in the case trying to determine what criminal laws may have been violated by the developers descion to erect an illegal development and then fraudulently offering the illegal units for sale to the public. To date, a director of PT Padha Bagia who is developing the project, a member of the Badung legislature thought to have tried to broker a solution to the projects illegality and the chairman of Real Estate Indonesia have all been questioned by police in connection with the case.

The Penaurungan Residence real estate development has also been the focus of protests from local residents at Banjar Blumbang, Mengwi who claim the project infringes on green zones, trespasses sacred areas surrounding religious sites and violates water-use rules in connection with a nearby lake.

The Penaurungan Residence project was built after earlier plans by the government to construct a new prison facility in the same location were vehemently opposed by local residents who cited zoning, religious and land-use rules.

Moreover, a recent elevation of Bali’s traditional subak irrigation system by UNESCO is providing a further support in efforts to halt the Penaurungan Residence project that stands on traditional subak agricultural lands.