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The Lease Option Agreement serves as a vital instrument in Indonesian property transactions, providing flexibility for both property owners and potential buyers. This document type is particularly useful when a potential buyer wishes to secure future purchase rights while immediately occupying the property, or when a property owner wants to maintain ownership while generating rental income with a potential future sale. The agreement must comply with Indonesian property law, including the Basic Agrarian Law (UUPA) and relevant regulations concerning property rights and foreign ownership restrictions. It combines detailed lease provisions with specific option terms, setting out clear conditions for both the rental period and the potential purchase, while addressing local regulatory requirements, property registration, and transaction procedures specific to the Indonesian jurisdiction.

1. Parties: Identification of the lessor/option grantor and lessee/option holder, including complete legal names, addresses, and any registration numbers for companies

2. Background: Context of the agreement, including property description and parties' intentions regarding both lease and purchase option

3. Definitions: Key terms used throughout the agreement, including property-specific terms and Indonesian legal terminology

4. Lease Terms: Core lease provisions including duration, rent amount, payment terms, and permitted use of property

5. Option Grant: Explicit grant of the option to purchase, including the option period and exercise conditions

6. Option Price: Agreed purchase price if option is exercised, including any adjustments or credits from lease payments

7. Option Exercise: Procedure for exercising the option, including notice requirements and timeframes

8. Property Maintenance: Responsibilities for maintaining the property during the lease period

9. Insurance and Risk: Insurance requirements and allocation of risk during the lease period

10. Default and Remedies: Events of default under both lease and option, and corresponding remedies

11. Assignment and Subletting: Restrictions on transfer of lease or option rights

12. Governing Law and Dispute Resolution: Choice of Indonesian law and dispute resolution mechanisms

13. Notices: Format and delivery requirements for formal communications

14. Execution: Signature blocks and execution requirements under Indonesian law