Understanding Mortgage Rights as Security in Rem for Immovable Property

Object of Mortgage Rights

Article 4 of the Mortgage Law states that the objects of mortgage rights include:

1. Ownership rights;
2. Cultivation use rights;
3. Building use rights;
4. Right to use state land, which by its nature can be transferred and according to applicable regulations must be registered and can be encumbered with mortgage rights.

In addition to these rights, mortgage rights can also be encumbered on land rights including buildings, plants, and works that exist and will exist, which are an integral part of the land, which is owned by the holder of land rights with an encumbrance that is expressly stated in the APHT concerned.

Nature of Mortgage Rights

Execution of Mortgage Rights

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

1. the right of the first mortgage holder to sell the object of the mortgage rights on their own authority through a public auction without requiring further approval from the grantor of the mortgage rights and then take payment of their 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 does not pay off their debt to the Creditor within the agreed period, the Debtor has defaulted, and the Creditor can sell the Debtor's goods that have been encumbered with mortgage rights at auction.."
2. The Executorial Title contained in the Mortgage 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 binding legal force;
3. private sale based on agreement.

Mortgage Rights Imposition Process According to the Mortgage Law

1. Stage of Granting Mortgage Rights
   • The granting of mortgage rights is preceded by a promise to grant mortgage rights as collateral for the repayment of a specific debt, which is a separate right from the debt agreement. Then, the making of the Deed of Granting Mortgage Rights (APHT) is carried out before the Land Deed Official (hereinafter referred to as "PPAT") who is authorized.
   • The imposition of mortgage rights must basically be carried out by the grantor of the mortgage rights themselves. However, if the grantor of the mortgage rights is unable to attend or there is a process of the object of mortgage rights at the Land Office that has not been completed, the grantor of the mortgage rights can appoint another party as their proxy (generally the creditor themselves is given the power) by making a Power of Attorney to Impose Mortgage Rights (SKMHT) made by a notary.
   • The time limit for using the SKMHT for land that has been registered must be followed by the making of an APHT no later than 1 (one) month from the date the SKMHT was made, and for land that has not been registered or has been registered but not in the name of the grantor of the mortgage rights, an APHT must be made no later than 3 (three) months from the date the SKMHT was made, if it is not followed by the making of an APHT within the specified time, the SKMHT in question is null and void. After the APHT is signed, the PPAT must send the APHT along with other registration requirements to the local Land Office no later than 7 working days.
2. Registration of mortgage rights is carried out by the Head of the City/Regency Land Office where the object of the mortgage rights is located. The result or product is in the form of a Mortgage Certificate containing the preamble "FOR JUSTICE BASED ON THE ONE AND ONLY GOD" consisting of a copy of the mortgage land book and a copy of the APHT. The birth of the imposition of mortgage rights is on the day the mortgage land book is created at the Land Office.

Transfer of Mortgage Rights

The transfer of mortgage rights is regulated in Article 16 and Article 17 of the Mortgage Law and must be registered by the new creditor with the local Land Office. The transfer of mortgage rights can be carried out by means of: inheritance, cessie which is a legal act of transferring receivables by a creditor holding mortgage rights to another party by making an authentic deed or a private deed, subrogation or replacement of the creditor by a third party who pays off the debtor's debt, so that the right of claim from the creditor is transferred to the third party, and other causes such as mergers or acquisitions of companies resulting in receivables from the original company being transferred to the new company.

Extinguishment of Mortgage Rights

The reasons for the extinguishment of mortgage rights based on Article 18 of the Mortgage Law are as follows:

1. Extinguishment of the debt secured by mortgage rights;
2. Release of mortgage rights by the mortgage holder;
3. Cleansing of mortgage rights based on the determination of ranking by the Head of the District Court;
4. Extinguishment of the right to land encumbered with mortgage rights

The release or removal of mortgage rights is generally referred to as roya. In the explanation of Article 22 paragraph (1) of the Mortgage Law, it is stated that Roya is equated with deletion of registration. There are 2 (two) types of roya, namely: Full roya and Partial roya or partial roya.

Registration, Transfer, Roya of Mortgage Rights Electronically (HT-el)

Regulation of the Minister of Agrarian Affairs and Spatial Planning/Head of the National Land Agency of the Republic of Indonesia Number 5 of 2020 concerning Integrated Electronic Mortgage Rights Services regulates that mortgage rights services can now be carried out electronically with creditors and PPAT as users and can submit applications for HT-el Services through the HT-el System provided by the Ministry in accordance with the provisions of laws and regulations and submitted in the form of Electronic Documents.

Then the Head of the Land Office or the appointed official must check the suitability and completeness of the required documents and the draft HT-el Certificate which is carried out through the HT-el System.

If the results of the examination show that there are incomplete or unsuitable documents, the creditor and/or PPAT are notified to immediately complete the files no later than the 5th (fifth) day from the date the service application is received by the HT-el System, if the files are not completed after that period, the application is declared void.

If the required documents are in accordance, the Head of the Land Office or the appointed official gives approval for the uploading of the required documents and the draft HT-el Certificate. The results of HT-el Services in the form of Electronic Documents issued by the HT-el System, include:

1. The HT-el certificate, which is carried out on the 7th (seventh) day after the HT-el Service application is confirmed by the HT-el System;
2. encumbrance record on the land title book or Ownership Right to Condominium Unit; and
3. encumbrance record on the Land Title Certificate or Ownership Right to Condominium Unit Certificate.

In the event that the receivables have been paid off, the creditor is obliged to immediately register the deletion of the mortgage through an application for mortgage deletion service of the HT-el System. Partial mortgage deletion (partial roya) is issued a new HT-el Certificate with the same number as the previous certificate and containing the latest change data. The complete mortgage deletion (full roya) is carried out by giving a special mark on the previous HT-el Certificate stating that the certificate is no longer valid.

References

• Salim, HS. 2004. Development of Guarantee Law in Indonesia. Jakarta: PT. Raja Grafindo.
• Sutarno. 2003. Legal Aspects of Credit in Banks. Bandung: Alfabeta.
• Doly, Denico. “Legal Aspects of Mortgage in the Implementation of Roya”. Jurnal Negara Hukum, Vol. 2, no. 1 (2011).