Introduction
In response to improve the transparency and efficiency of mortgage implementation, Ministry of Agrarian and Spatial Planning has enacted Regulation Number 5 of 2020 concerning Mortgage Registration in Electronic Services ("E-Mortgage"). Below we highlight key and issues under current situation of mortgage implementation under new regulation:
Land Mortgage under Indonesian Laws
Mortgage Rights is a security right imposed on land rights, as one of the instruments of material security right which is complementary to a loan agreement between creditor and debtor.
Before providing further information on the mortgage mechanism, please be informed that under the Indonesian Laws, the Mortgage Rights only be granted for all forms of immovable property, such as land and buildings or other fixtures that are deemed integrated with the land.
Pursuant to Article 4 paragraph (1) of Law No. 4 of 1996 concerning Mortgage Rights on the Land and Its Related Object ("Law No. 4/1996"), the Indonesian Government only admits objects classification of mortgage rights, issued by the National Land Agency (Badan Pertanahan Nasional/"BPN"), which consist the following objects:
- Right of Land Ownership (SHM);
- Right of Building Usage (SHGB); and
- Right of Housing Unit Ownership (SHMSRS). ("Property Certificate")
Furthermore, recognition of mortgage rights can only be given by making the Deed of Giving Mortgage Right (Akta Pembebanan Hak Tanggungan/ "APHT") by a land titles registrar (Pejabat Pembuat Akta Tanah/ "PPAT") who is domiciled within the jurisdiction of the city/regency where the property/object is located.
The APHT must contain the name and identity of the mortgage right holder and owner, the domicile of the parties, the clear appointment of the guaranteed debt, the value of the dependents, and the description of the object of the Mortgage's right will be used as a debt guarantee
After the PPAT issues an APHT, the APHT must be registered to the local BPN office ("Mortgage Registration") for the issuance of a Land Mortgage Certificate (Sertifikat Hak Tanggungan) as the perfect evidence for any claims by Creditors if the Debtor commits default.
After the issuance of Ministry of Agrarian and Spatial Planning Number 5 of 2020 concerning Mortgage Registration in Electronic Services ("MOA 5/2020"), which requires to Creditor and PPAT to submit the Mortgage Right to electronic system. The main services that conducted under MOA 5/2020 is consist of (i) the submission of Mortgage Registration; (ii) Mortgage Rights Transfer; (iii) the Change of Creditor's Name; (iv) Removal of Mortgage Registration; (v) Validation Mortgage Data.
The registration as referred above shall be conducted through an integrated electronic system called Aplikasi Mitra Kerja (https://mitra.atrbpn.go.id) ("Online BPN Application") provided by the Ministry of Agrarian and Spatial Planning ("Ministry"). To use this system, users as creditors (individuals or legal entities entitled to Mortgage Rights) or PPATs must first register their Online BPN Application access rights to be validated by the Ministry.
Implementation Mortgage Rights Registration in Electronic System
- Pre-Registration: Verification of Property
Certificate's Data
Every Mortgage Registration must be initiated by verifying the Property Certificate's data which consists of textual data and property spatial data to ensure the prospective land is not in dispute dan to ensure the Property Certificate's data is in accordance with the land data recorded in the BPN database These actions are subject to be conducted by PPAT via an Online BPN Application before issuing APHT.
- Registration of APHT by PPAT and Creditor
After the land status has been verified as clean and clear, the APHT must be issued by a PPAT no later than 7 days after being signed by Creditors and Debtors. The issued APHT then must be registered into the Online BPN Application by uploading the APHT and its supporting documents ( e.g.: AoA, Citizen ID of Director, and Property Certificate). Once this stage is completed, the Creditor is also obliged to register the APHT through BPN's Mortgage Application (https://htel.atrbpn.go.id). In this stage, the Creditor must check the application data uploaded by PPAT, make sure all information contained in the application conforms with original data, and give final confirmation.
- Post-Registration: Payment of Non-Tax State
Revenue
If all the application data is confirmed, the system will generate an Official State Invoice (Surat Perintah Setor) that must be paid within 3 (three) days via a local admitted For your information, this Official State Invoice is known as Administration of Non-Tax State Revenue (Penerimaan Negara Bukan Pajak/ "PNBP").
- Issuance of Land Mortgage Certificate (Sertifikat
Hak Tanggungan)
After the BPN System confirms the payment, the system will generate a Draft Land Mortgage Certificate to be reviewed by the user. Lastly, a final Land Mortgage Certificate will be issued which has been given an e-sign by the Head of the Local BPN Office.
Regulatory Obstacles and/or Issues and How to Overcome the Obstacles
- Land Mortgage Registration on Land and Building that
Uncertified by Local National Land Agency
Actually, the Uncertified Land and/or Building is legally able to become collateral/be mortgaged under Article 10 paragraph (3) of Law No. 4/1996, but in practice, the Online BPN Application is unable to register the uncertified landand/or building under Mortgage. If this circumstance occurs, the Mortgage Registration can be submitted by these options, i.e., (1) PPAT/Creditor is manually registered the APHT to the Local BPN Office simultaneously with processing the certification of the land object; or (2) the Creditor waits until the uncertified land and building become certified, and to tying up the Debtor, the Creditor request a Power of Attorney to Register a Mortgage Rights (Surat Kuasa Membebankan Hak Tanggungan/SKMHT) which only applies for the 3 (three) months.
- Verification/validation of Property Certificate for the
First Time
If the Property Certificate data has never been verified/validated, then for the first time being, PPAT is required to physically visit the Local BPN Office by bringing the original Property Certificates to be submitted into the BPN online database. In this case, the registration process can take longer and hinder the electronic registration of APHT.
- Liability to Examine Document Authentication
As previously mentioned, pursuant to Article 20 of MOA No. 5/2020, both PPAT and BPN are not responsible for the authentication of the documents. Any uploaded documents regarding Mortgage Registration must be checked for authenticity by the Creditor.
- Compliance with Local Property Tax
Under the Indonesian Laws, the debtor's compliance with the payment of the Local Property Tax (Pajak Bumi Bangunan/ "PBB") is mandatory in the Mortgage Registration process. BPN's internal provisions require PPAT to submit a Property Tax Due Notification Letter ("SPPT-PBB") to check the debtor's compliance in paying the local property tax. In fact, not every Indonesian (both persons or entities) complies with this, hence PPAT will take time to help debtors pay property taxes and issue SPPT PBB. Therefore, it is recommended that the Creditor ensure that this property tax obligation has been carried out properly by the Debtor.
- Wet-Signature and Physical Appearance is Mandatory for
APHT
Notwithstanding that the Mortgage Registration is able to be conducted in the electronic system, but, the signing of the APHT still requires the wet-signatory and physical appearance from both Creditor and Debtor before PPAT. In this case, an e-signature for APHT is unacceptable.
Recent Key Operational
- Timeline of Framework
The solid synergy between the PPAT and the BPN Officer is highly-required to prevent delays in the fulfillment of the APHT registration application documents, especially if the PPAT uploads documents that do not meet the requirements. The system only gives PPAT 5 days from the date the application uploads the documents. If the submission fails after 5 days, the system will automatically cancel the application for APHT registration and PPAT must re- register.
- Authentication of the Application Documents
The system cannot detect and verify the authenticity of documents uploaded to the system, therefore, the Creditor is fully responsible to examine the authenticity of Debtor's document. In other words, the Creditor must be confident and perform good governance to avoid any falsification or fraud.
- Procedural Cooperation between Creditor and PPAT
To ease the work and provide certainty, the Creditor is suggested to establish an MOU with PPAT to obtain the best result of services, and avoid conflicts that may emerge between PPAT and Creditor.
Originally published 01 April 2022
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
