Consumer Legal Protection Against Housing Developers: An Examination of Sale and Purchase of Flats Before Commencement of Construction Process

Abstract

This paper aims to examine the importance of the law on consumer protection in Indonesia in the case of buying flats/apartments from developers who sell the properties before they develop them. There is a phenomenon where flat developers can market and sell units of flats/apartments to public even though the construction of flats has not been implemented and many legal requirements in terms of administrative, technical and ecological have not been fulfilled. This paper found that many developers sell units of flats/apartments when they have not fulfilled all the requirements including legal aspect from the government. Findings also show that although developers and consumers have a binding agreement in selling and buying flats/apartments, in this case, consumers are often in a weak position and incur losses compared to developers. This paper also highlights that there is still the absence of sanctions for developers who violate the regulation, although the law on consumer protection is enforced through regulating on the marketing of the units of flats/apartments. It is therefore, suggested that developers have to comply with the guideline of selling and buying of the units of flats/apartments based on the Decree of the Indonesian Minister of Public Housing. Thus, for developers who sell the units of flats/apartments improperly may be subject to criminal or imprisonment penalties. For instance, imprisonment or penalties result from making a binding agreement on selling and buying which have not fulfilled various requirements from the government. It is therefore asserted that the government and developers need to socialize the obligations of developers to consumer base Government Regulation Number 88 (2014), on the units of flat/apartment and on consumer rights. On the other hand, consumers should pay attention to legal aspect in buying a unit of flat/apartment. Thus, in terms of law, this paper suggests the need for revision of Law Number 20 (2011) and Law Number 1 (2011) to establish a regulation on sanctions for developers who sell units of flat/apartment in violation of all requirements.