Subjects of Mortgage Rights

1. Grantor of Mortgage

The grantor of the mortgage is an individual or a legal entity that has the authority to perform legal actions on the object of the mortgage in question. The authority to perform these legal actions must be held by the grantor of the mortgage at the time the mortgage is registered.

2. Mortgagee/Holder of Mortgage

The mortgagee is an individual or a legal entity that is positioned as the creditor in the principal agreement, who becomes the Holder of the Mortgage after the mortgage is registered.

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Objects of Mortgage Rights

Article 4 of the Mortgage Law stipulates that the objects of the mortgage include:

  1. Right of ownership;
  2. Right to cultivate;
  3. Right to build;
  4. Right to use state land, which by its nature can be transferred and according to the prevailing regulations must be registered and can be encumbered with a mortgage.

In addition to these rights, a mortgage can also be imposed on land rights including buildings, plants, and works that already exist and will exist, which form a unity with the land, which is owned by the holder of the land rights with the encumbrance expressly stated in the relevant Mortgage Deed.

Nature of Mortgage Rights

  • A mortgage cannot be divided, which means that the mortgage fully encumbers its object and every part thereof.
    • The full payment of part of the debt that is guaranteed does not mean releasing part of the object of the mortgage, but the mortgage continues to encumber each object of the mortgage in its entirety for the remaining debt of the debtor to the creditor that has not been paid off;
  • The mortgage encumbrance agreement is not a stand-alone agreement. The mortgage is an agreement accesoir in the credit agreement or an agreement that creates a legal relationship of debt as an agreement principal, this is because the mortgage is given to guarantee the repayment of the debtor's debt to the creditor.

Execution of Mortgage Rights

The execution of a mortgage is an effort for the mortgagee to recover its receivables if the debtor defaults. However, it shall be null and void if it is agreed that the mortgagee will own the object of the mortgage if the debtor defaults. The Mortgage Law stipulates that the execution of the object of the mortgage can be carried out in 3 (three) ways, namely as follows:

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  1. the right of the first mortgagee to sell the object of the mortgage on its own authority through a public auction without requiring further approval from the grantor of the mortgage and then take the repayment of its receivables from the proceeds of the sale (Article 6 of the Mortgage Law);
    • This is in line with the Supreme Court Decision Number 1995 K/PDT/2012 which states that:If the Debtor fails to pay off their debt to the Creditor within the agreed period, the Debtor is in default, and the Creditor may auction off the Debtor's assets that have been encumbered with mortgage rights.."
  2. The Executorial Title contained in the Mortgage Right Certificate which contains the preamble with the words "FOR JUSTICE BASED ON THE ONE AND ONLY GOD" as referred to in Article 14 Paragraph (2) of the Mortgage Law, thus having executorial power equal to a court decision that has legal force;
  3. private sale based on agreement.