Jaminan fidusia in English: Law 42/1999 and a villa on leased land

A building on someone else's land cannot carry a hak tanggungan. The law that can secure a debt on it, article by article.

Law 42/1999, the articles a property owner meets

Hak tanggungan secures debts on land rights. A villa a foreigner built on leased land is not a land right — it is a building on someone else’s land — and the law that can secure a debt on it is a different one: fiducia.

What fiducia is, and what it can sit on

Fiducia is the transfer of ownership of a thing on trust, the thing staying in the owner's possession (Law 42/1999 art. 1(1)). Fiducia security is a security right over movables, tangible or intangible, and over immovables — especially buildings — that cannot be charged with hak tanggungan, which stay in the giver's possession (Law 42/1999 art. 1(2)). The law does not apply to hak tanggungan over land and buildings, where the law requires such security to be registered (Law 42/1999 art. 3(a)) — and its elucidation names, as a fiducia object, a building on land owned by someone else that cannot be charged with hak tanggungan (Law 42/1999, elucidation to art. 3(a)). It is an accessory to a principal agreement (Law 42/1999 art. 4): no debt, no fiducia.

That is the leasehold case. The land under a Bali leasehold villa belongs to the landowner, and a lease is not on the list of rights that can carry hak tanggungan. On our reading of the two laws together, a lessee who owns the building can give fiducia over it; a lender who accepts it holds a security over the building that lasts only as long as the lease lets the building stand. Hak tanggungan, for comparison.

Creating and registering it

It is created by a notarial deed in Indonesian (Law 42/1999 art. 5(1)), stating the parties, the secured agreement, a description of the thing, the secured value, and the thing's value (Law 42/1999 art. 6). It must be registered, even if the thing is outside Indonesia (Law 42/1999 art. 11) — through the electronic fiducia registration system, by the creditor or its proxy (PP 21/2015 art. 2), within 30 days of the date of the fiducia deed (PP 21/2015 art. 4). It is born on the date it is recorded in the fiducia register (Law 42/1999 art. 14(3)).

While the debt runs

The fiducia follows the thing into whoever's hands it passes, except inventory (Law 42/1999 art. 20). The owner may not give a second fiducia over a thing already registered (Law 42/1999 art. 17), and may not transfer, pledge or lease the thing to another without the creditor's prior written consent (Law 42/1999 art. 23(2)) — a villa under fiducia cannot be sublet to an operator without the lender’s written consent. The creditor has priority over other creditors, from the date of registration, surviving the giver's bankruptcy (Law 42/1999 art. 27 and elucidation); between two fiducias, priority goes to the party that registered first (Law 42/1999 art. 28).

On default

The certificate has the same executory force as a final court judgment (Law 42/1999 art. 15(2)). Execution is by the executorial title, by public auction on the creditor's own authority, or by private sale agreed by both sides where it gets the highest price (Law 42/1999 art. 29(1)), and the owner must hand over the thing for execution (Law 42/1999 art. 30). A promise letting the creditor keep the thing is void by operation of law (Law 42/1999 art. 33). The Constitutional Court has ruled on article 15 of this law (Decision 18/PUU-XVII/2019). We have not read the decision, so the self-help sale described here should be checked against it before anyone relies on it.

The end

It ends when the debt is paid, the creditor releases it, or the thing is destroyed (Law 42/1999 art. 25(1)); the creditor must notify within 14 days of the fiducia ending (PP 21/2015 art. 16(2)). The law was promulgated on 30 September 1999 (Law 42/1999, promulgation block); the registration regulation replaced PP 86/2000 (PP 21/2015 (JDIH BPK status: Mencabut)).

This is commentary on the official text, not legal advice. The law's criminal provisions are not summarized here.

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