If my villa in Bali collapses or stops working as a building after the builder hands it over, who is liable and for how long?

What counts as building failure

The Construction Services Law (UU 2/2017) defines building failure (Kegagalan Bangunan) as the collapse of a building, or its failure to function, after the final handover of the construction work (Article 1 point 10). That is narrower than a defect in general. Separately, the contract must state the maintenance period the contractor is responsible for (Article 47(1)(c)).

Both the owner (pengguna jasa) and the contractor (penyedia jasa) must meet the security, safety, health and sustainability standards in construction (Article 59(1), as amended by UU 6/2023). Where they are not met, either or both can be the party responsible for a building failure (Article 60(1)).

Who decides the cause

Building failure is determined by an expert assessor (penilai ahli) appointed by the minister, within 30 working days of a report of the failure (Article 60(2) to (4)). The assessor must hold an expert-level work competence certificate in the relevant field, have experience in that kind of building, and be registered with the ministry (Article 61(1)). The assessor determines, among other things, the cause, the extent of the collapse or loss of function, and the party responsible, and reports within 90 working days of starting (Article 61(2)). The assessor must work professionally and not be part of either side (Article 62(2)).

The owner, or any other party harmed by a building failure, may report it to the minister (Article 66(1)).

How long the contractor is liable

• The contractor must replace or repair a building failure caused by its own fault (Article 63).
• It is liable for a period set by the planned service life of the construction (rencana umur konstruksi) (Article 65(1)).
• Where that planned life is more than 10 years, the contractor’s liability lasts at most 10 years from the date of final handover (Article 65(2)).
• After that period, the owner is responsible (Article 65(3)).
• The liability period must be stated in the construction contract (Article 65(4)), and the contract must cover building failure: each side’s duties and the period of liability (Article 47(1)(k)).
• The contractor and/or the owner must pay compensation for a building failure within these periods, with the detail left to a government regulation (Article 67).

What to do at contract stage

• Check the contract names the planned service life and the building-failure liability period.
• Keep the final handover document and its date: the 10-year cap runs from it.
• Keep the drawings, the permits and the supervision reports. The assessor decides whether the standards were met (Article 61(2)(a)), and the supervision reports also support the SLF; see building permits: PBG and SLF.
• Keep the maintenance period and defects list separate from building failure, and make sure the contract covers both. See how to hire a builder in Bali.

Who does this work

• Builders and contractors carry the liability described here.
• Project managers and engineers supervise the work the assessor will examine.
• Property lawyers review the contract and act if there is a claim.