Hak tanggungan in English: Law 4/1996, article by article

A Bali property can carry a mortgage the buyer did not create. The law of that mortgage: what it sits on, how it follows the property, and how it is struck off.

Law 4/1996, the articles a buyer meets, in order

A Bali property can carry a mortgage the buyer did not create. Law 4/1996 is the law of that mortgage, hak tanggungan: what it can sit on, how it is created and ranked, what it does when the property is sold, and how it is struck off.

What can be mortgaged

Hak tanggungan is a security right over a land right, with or without what stands on it, for a particular debt, giving one creditor priority over the others (Law 4/1996 art. 1(1)). The law allows it over hak milik, HGU and HGB — and hak pakai over State land that must be registered and is transferable (Law 4/1996 art. 4(1)-(2)). For hak pakai the later land regulation goes further: hak pakai with a term may be mortgaged (PP 18/2021 art. 60(1)). A lease is not on either list, so on our reading of the two lists together a leasehold cannot itself be the object of hak tanggungan.

It is created by an APHT, a deed made by a PPAT (Law 4/1996 art. 10(2)). A party living abroad must name a chosen domicile in Indonesia — failing which the PPAT's office is treated as the chosen domicile (Law 4/1996 art. 11(1)(b)). It is born on the date of the land book, the seventh day after complete documents are received (Law 4/1996 art. 13(4)-(5)), and several mortgages rank by the date of registration at the land office (Law 4/1996 art. 5(2)).

Buying a property that is already mortgaged

The rule that matters most to a buyer is the shortest: the mortgage follows the property into whoever's hands it passes (Law 4/1996 art. 7). Paying the seller does not pay the seller’s bank. On default the first-ranked creditor may sell it at public auction on its own authority (Law 4/1996 art. 6), and its certificate has the same executory force as a final court judgment (Law 4/1996 art. 14(3)).

The exits are in articles 18, 19 and 22. A mortgage ends when the debt is paid, the creditor releases it, a court orders the property cleared, or the land right itself ends (Law 4/1996 art. 18(1)). A buyer may ask the creditor to clear the property of any mortgage above the purchase price (Law 4/1996 art. 19(1)). And removal — roya — needs the creditor's note or written statement that the debt is paid, or a district court order if the creditor will not give one; the land office strikes the entry within 7 working days (Law 4/1996 art. 22(4)-(5), (8)). So the closing should be structured around the roya: the seller’s debt paid from the price, the creditor’s statement in hand, the entry struck off before or with the transfer. A certificate check shows whether there is an entry to strike. What a certificate check shows.

Leases on mortgaged land

An APHT may contain a promise to limit the owner's power to let the property, set or change a lease term, or take rent in advance without the creditor's written consent (Law 4/1996 art. 11(2)(a)). For a foreigner taking a long lease from an Indonesian owner whose land is mortgaged, that clause decides whether the owner could grant the lease at all without the bank. Ask whether the land is mortgaged, and if so, for the bank’s written consent. Leasehold explained.

What a mortgagee cannot do

A promise letting the creditor keep the property on default is void by operation of law (Law 4/1996 art. 12). The creditor sells; it does not take. And if the owner goes bankrupt, the mortgagee keeps all its rights (Law 4/1996 art. 21).

This is commentary, not legal advice. Electronic mortgages (HT-el) are governed by a separate regulation we have not read.

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