Legal Literacy - Recently, there have been rampant cases of forced and arbitrary vehicle confiscation by third-party services used by financing/leasing companies, in this case, debt collectors. So, is it actually permissible for debt collectors to forcibly seize our vehicles? What about the fiduciary agreement? Let's delve into the explanation in the following article.

Fiduciary Agreement

A fiduciary agreement is an agreement containing an agreement between the fiduciary grantor and the fiduciary recipient, that a certain object is surrendered/will be surrendered its ownership rights in trust, from the fiduciary grantor to the fiduciary recipient, to guarantee the payment of the debtor's debt in a certain principal agreement.

Based on Article 1 number 1 of Law Number 42 of 1999 concerning Fiduciary Guarantees (“Law 42/1999”), fiduciary is the transfer of ownership rights of an object based on trust from the Fiduciary Grantor to the Fiduciary Recipient for a specific purpose.

Based on these provisions, a fiduciary agreement has the following elements:

  • There is an element of trust, namely the fiduciary grantor surrenders his ownership rights over a certain object to the fiduciary recipient. The fiduciary grantor retains ownership rights over the object, but these rights are surrendered to the fiduciary recipient for a specific purpose.
  • There is an element of a specific purpose, namely the object surrendered as a fiduciary guarantee must be used for a specific purpose, for example, to pay off debt.
  • There is an element of agreement, namely the fiduciary agreement must be made in writing and agreed upon by both parties.

Fiduciary agreements can be used for various types of transactions, for example:

  • Financing, for example, financing the purchase of motor vehicles, housing financing, or working capital financing.
  • Lending and borrowing, for example, lending and borrowing money or goods.
  • Work contracts, for example, work contracts between companies and their employees.

In financing transactions, a fiduciary agreement can be used to guarantee debt payment by the debtor. If the debtor cannot pay the debt, then the fiduciary recipient can take over the object that is the object of the fiduciary guarantee and sell it to pay off the debt.

The fiduciary agreement must be registered at the Fiduciary Registration Office to provide legal certainty to both parties and third parties.