Land

Legal Aspect of the Grant of Right to Build (“Hak Guna Bangunan/ HGB”) or Right of Use (“Hak Pakai”) Over the Right of Ownership Land

, ,

Under Article 35 paragraph (1) of Law Number 5 of 1960 on the Principle Provisions of Agrarian (“Agrarian Law”), it is stated as follows:

“Right to Build is right to establish and to have buildings over land that is not his own, with a maximum period of 30 years.”

Right to build (“HGB”) may be extended with a maximum period of 20 years as a request from right’s holder and bearing in mind the need and state of buildings. Subject who can be the holder of HGB is an Indonesian citizen or legal entity that is established under Indonesian law and domiciled in Indonesia. Legal entity is an institution that is given a status as legal entity, such as the Limited Liability Company, Cooperative, the Association of Unit Owners and Occupants of the Condominium, and the Foundation.

According to the Government Regulation of Republic of Indonesia Number 40 of 1996 on Right to Cultivate, Right to Build, and Right of Use Over Land (“GR No. 40/1996”), the granting of HGB over a right of ownership is performed by the holder of right of ownership through a deed made by Land Conveyancing Officer (“Pejabat Pembuat Akta Tanah/ PPAT”). The granting of HGB over a Right of Ownership is made by an agreement between the holder of Right of Ownership and the prospective holder of HGB which is stated in the deed that is made by PPAT. The granting of HGB over a right of ownership shall be registered at the Land Office (Kantor Pertanahan). The period of HGB that is issued over the right of ownership is maximum 30 (thirty) years and may be renewed with the new provision of HGB based on the agreement that is implemented on the deed which is made by PPAT and the respective right to build shall be registered in the local land office (kantor pertanahan setempat).

Under Article 41 of Agrarian Law, it is stated as follows:

“Right of Use is the right to use and/or collect the results of the land that is directly controlled by the State or land owned by others, who gives the authority and duties which is specified in the decision by the competent official or in an agreement with the owner of the land, which is not a lease agreement or the agreement to cultivate a land, all things that are not contrary to the spirit and provisions of this law.”

The granting of Right of Use over Right of Ownership is performed by the holder of Right of Ownership through a deed made by Land Conveyancing Officer (“Pejabat Pembuat Akta Tanah/ PPAT”). The granting of right of use over the right of ownership shall be registered on the land book in the Land Office. The right of use over the right of ownership also binds the third party since it is registered. The period of the right of use over the right of ownership is maximum 25 (twenty five) years and it can not be extended. Right of use over the right of ownership may be renewed with the new provision of right of use based on an agreement between the holder of right of use and the holder of right of ownership, as implemented on the deed which is made by PPAT and shall be registered on the local land office.

Alsha Alexandra Kartika

read more

Verification of Old Rights on Land Registration

, ,

Article 24 Paragraph (1) of the Government Regulation Number 24 of 1997 on Land Registration (“GR No. 24/1997”) regulates that, for purposes of land registration which comes from the conversion of old rights, are proven by the evidence of existence of such rights in the form of written evidence, witness testimony and or the relevant statement that the level of its truth by Adjudication Committee on systematic land registration or by the Chief of the Land Office on sporadic land registration, are considered proper for right registration requirement, right holder and others people’s rights that is attached to them.

The application must be attached with the evidence of ownership/original document proving the existence of the related rights. Those evidences can be in the form of:

1. grosse certificate of eigendom right which is issued under Overschrijvings Ordonatie (S.1834-27), which had been given notes, that the related rights of eigendom was converted into ownership right.

2. grosse certificate of eigendom rights which was issued under Overschrijvings Ordonatie (S.1834-27) since the enactment of Law Number 5 of 1960 on Principle Provisions of Agrarian (“Agrarian Law”) until the date of land registration is conducted based on the Government Regulation Number 10 of 1961 within the respective area; or

3. letter of evidence of ownership right which was issued under the relevant Swapraja (autonomous region) Regulation; or

4. certificate of ownership which was issued by the Regulation of Minister of Agrarian Number 9 of 1959; or

5. certificate of ownership right from the authorized officer, either before or since the enactment of Agrarian Law, which is not followed by the obligation to register the given rights, but it has fulfilled all the obligation which mentioned in it; or

6. the private deed of transfer of rights that was given mark of testimony by Adat Chief/Head of the Village/Kelurahan which was made before this enactment of this Government Regulation (GR No. 24/1997); or

7. deed of transfer of land right which was made by PPAT, of which land has never been recorded; or

8. deed of waqaf oath/letter of waqaf oath which was made before or since the implementation of the Government Regulation Number 28 of 1977; or

9. the minutes of the auction which was made by an authorized Auction Officer, of which land has not been recorded; or

10. the appointment letter or the purchase of land plot for replacement of land that was taken by Government or Local Government; or

11. petuk Tax on land/Landrente, girik, pipil, kekitir and Verponding Indonesia prior to the enactment of Government Regulation Number 10 of 1961; or

12. an information letter of land history which has been made by the Land and Building Tax Service Office; or

13. the other form of any written evidence with any other name as also referred in Article II, VI and VII convertible provisions of Agrarian Law.

If, the written evidence of the land ownership is not complete or no is longer available, the verification of ownership shall be performed with the witness’s testimony or statement considered as reliable in the opinion of Adjudication Committee or the Head of Land Office. What is meant by the witness is a person who is competent to give testimony and knows about that ownership of land.

In the condition of the unavailability of evidence instruments as mentioned above, then Article 24 of paragraph (2) of GR. No. 24/1997, provide a solution by replacing the unavailability of the evidence of land ownership with the evidence of physical control for a period of 20 (twenty) years or more in a row by the applicant and its predecessors, with the following conditions:

a. that the possession and the usage of the related land was conducted explicitly and in a good faith for 20 years or more in a row.

b. that the fact of the possession and the usage of land is so long as there is no claim and, therefore it is considered to be recognized and justified by the relevant adat community or village/kelurahan;

c. that those things are strengthened by the testimony of people who is trustworthy;

d. that it has been given the opportunity for other party to file an objection though the announcement;

e. that has been conducted a research on the truth of the issues as mentioned above;

f. that finally the conclusions on the status of land and its right holder is formulated in a decision of recognition of related right by Adjudication Committee on systematic land registration and by Chief of the Land Office on sporadic land Registration.

The provision of Article 76 paragraph (3) of the Regulations of State Minister of Agrarian/ Head of National Land Board Number 3 of 1997 on the Implementation of Government Regulation Number 24 of 1997 on Land Registration (“Regulation of State Minister of Agrarian No. 3/1997”) regulates further about the evidences of the land ownership which is not available, as stated in Article 24 paragraph (2) of GR No. 24/1997.

The application must be submitted with the following attachments:

1.) statement letter from the applicant stating the following matters:

a. that the applicant has clearly possessed the relevant land for 20 years or more in a row, or has obtained its possession from party or others parties which have possessed it, so that the period of applicant and the predecessor possession is totally 20 years or more.

b. that the possession of the land has been conducted in a good faith;

c. that the possession has never been claimed and therefore it considered to be recognized and justified by the related adat community or village/kelurahan;

d. that the current land does not contain matters that do not correspond with reality, the signed statement letter which stated the willingnes to be sued in front of the court by criminal or civil claim if providing false information;

2.) Information letter from the Head of Village/Urban Village (Lurah) which usually known as Letter of Land Information and at least 2 (two) witnesses whose its testimony can be trusted, because of its function as a local traditional elders and/or residents who have lived in a long time in the rural/village where the relevant land located and, has no family relationship with the applicant until the second degree in both vertical and horizontal, which confirms the statement of the applicant in the Letter of Land Information above.

Verification of the old rights is usually conducted by groups of people who have not experienced modern administration and agrarian law. After the evidence of physical possession is attached to the application for land rights, and then conducted an investigation of the land as part of the land registration process, then it will be clear that the rights holders and the land has been registered and the holder of such rights have legal relationship with the land. As proof that the right holder is entitled to his or her land, the National Land Agent will issue a Certificate of Land. With the land registration and the issuance of the Certificate of Land, then legal certainty is achieved.

Sofie Widyana P.

read more

Adjudication of Land Registration

, ,

Definition of adjudication based on Article 1 point 8 of Government Regulation Number 24 of 1997 on Land Registration (“GR No.24/1997″) is “activity which is performed in the process of land registration for the first time, including collection and determination of the fact of the physical data and juridical data concerning one or more objects of land registration for the purposes of its registration”. Adjudication of land registration activities are special procedures performed for granting legal status of parts of land to the actual owner.

On the implementation of systematic land registration, which is generally in large-scale and massive, then to implement it, the Head of the Land Office is assisted by the Adjudication Committee that was formed specifically for that by the Minister or appointed officer, and thus the routine duties of the land office are not disrupted. In performing its duties, the Adjudication Committee is assisted by units of juridical and administrative tasks, units of collection of juridical data and units of administrative task where their duties, the composition, and the activity are regulated by the Minister.

Essentially, adjudication duties are investigation task to examine and seek for true formal evidence, that is juridical initial data which is owned by holder of land rights, and justification task, that makes determination and ratification of evidence which is already examined.

Even though, the actual duty of adjudication is actually a task of judicial institution that is to give a decision or judgment., but in the land registration, the adjudication duty is given to the government as an executive.

The adjudication of land registration activities, if managed seriously will support the acceleration of land registration and to ensure the legal certainty.

Sofie Widyana P.

read more

Land Registration Activity

, ,

Background

Definition of land registration in Government Regulation Number 24 of 1997 on Land Registration (“GR 24/1997”) constitutes perfection of scope of the land registration based on Article 19 paragraph (2) of Law Number 5 of 1960 on the Principles Provision of Agrarian (“Agrarian Law”) which includes; measurement, mapping, land records, registration and transfer of right of land and granting of evidence instrument of right as strong evidence.

Further provisions of land registration activities are regulated in GR 24/1997, which include:

1. Land Registration for the First Time ( Opzet or Initial Registration)

Land registration for the first time is the activity of land registration for the object of land that has not been registered based on Government Regulation Number 10 of1961 (“GR 10/1961”) or GR 24/1997. Land registration for the first time is performed through land registration systematically and sporadically. Land registration systematically is defined as activity of land registration for the first time simultaneously including all object of land registration that has not been registered in area or part of area of a rural/village (Article 1 paragraph 10 GR 24/1997). While, land registration sporadically is land registration activity for the first time concerning one or some object of land registration in area or part of area of a rural/village (Article 1 point 11 GR 24/1997).

Land registration activities for the first time, include:

a. Collecting and processing of physical data

1. Preparation of base map registration;

2. Registration of land boundary areas;

3. Measurement and mapping of land areas and making registration map;

4. Preparation of land registers;

5. Preparation of letter of measurement;

b. Evidence of rights and its records, including:

1. evidence of new rights

2. evidence of old right

c. The maintenance of land registration data activities.

d. Presentation of the general register and document

e. Activity of land registration data maintenance.

2. Maintenance of Land Registration Data Activities (Bijhouding atau Maintenance)

This is the land registration activity to adjust the physical data and juridical data in maps of registration, land register, name register, letter of measurement register, land records, and certificate with the changes that happen later on (Article 1 point 12 of GR 24/1997).

Based on Article 36 of GR 24/1997, the maintenance of land registration data is performed if there is a change of physical data or juridical data of land registration object that has been registered. Physically data changes occured if there is segregation, separation, or merging of areas of land that have been registered. Juridical data changes occured for instance if there is an encumbrance or or transfer of right over of land areas that have been registered.

The relevant right holder shall register the change of physical data or juridical data to the Land Office and the district/local city to be recorded in the book of land.

Activity of maintenance of land registration data, includes:

a. Registration of transfer and imposition of rights.

1. Transfers of right through auction;

2. Transfer of right due to inheritance;

3. Transfer of right due to merger or

consolidation or merger of limited

liability companies or cooperative;

4. Imposition of right;

5. Rejection of registration transfer and

imposition of right.

b. Registration of change of other land registration data, including:

1. Extension of the period of right of land;

2. Segregation, separation, and merging

of area of land;

3. Distribution of joint right;

4. Abolishment of right of land and ownership rights of condominium units.

5. Transfer and abolishment of mortgage;

6. Changes of land registration data based

on judgment or court decision.

7. Changes of name

Sofie Widyana P.

read more

Execution of The Mortgage

, , ,

Background
Mortgage regulated under the Law No. 4 of 1996 on Mortgage (“Mortgage Law”). Under the Mortgage Law, it is regulated that guarantee repayment of debt through mortgage provides a feature which is called the preferred creditor/ kreditur preferen. Preferred creditor is a creditor who has priority/ privilege right more than other creditor for the debt repayment of debtor in the case of failure events receivable. The holder of mortgage lender who is also separatist creditor has separated position than other creditor in condition of bankruptcy of the personal or legal entity. It is regulated under the Law No. 37 of 2004 on Bankruptcy and Suspension of Payment.

Execution

According to the Great Dictionary of Indonesian Language (Kamus Besar Bahasa Indonesia), execution is “Pelaksanaan putusan hakim; pelaksanaan hukuman badan peradilan atau Penjualan harta orang karena berdasarkan penyitaan.”

Under the Mortgage Law, there are 3 (three) types of the mortgage execution:

1. Executorial Title

Is execution according to irah-irah “Demi Keadilan Berdasarkan Ketuhanan Yang Maha Esa”. The method of that execution is performed by institution of parate executie. It is based on the Code Civil Law. This type of execution has the same strength with court decisions that already have permanent legal force.

2. Execution of The Own Power / Eksekusi atas kekuasaan sendiri

Under The execution of the rule itself has to be settled in previous agreements. According to Article 20 (1) a jo. Article 6 of Mortgage Law, if the debtor defaults then the first mortgage lender has the right to sell the mortgage object on its own power through a public auction and taking the payment of claims from the proceeds.

3. The Underhand Execution/ Eksekusi Dibawah Tangan

The object of the underhand execution is regulated under Article 20 (2) and (3) of the Mortgage Law. The essence of this clause is the existence of an agreement between the giver and the mortgage holders that the sales of the underhand object will obtain the highest price which will benefits all parties. The underhand sales can only be done after 1 (one) month notice in writing by the mortgage holders to the interested parties and it should be published in at least 2 (two) newspapers which circulating in the relevant area and there is no objection from any parties.

Ivan Ari & Ivan Setiady

read more

Covenants Stipulated in Deed of Granting of Mortgage

, , ,

Introduction

As we already have known, according to Law Number 4 of 1996 on Mortgage of Land along with Properties Related to the Land (“Law 4/96”), the granting of mortgage is conducted by making the Deed of Granting of Mortgage (“Deed”) by the Land Conveyancing Officer (“Pejabat Pembuat Akta Tanah/PPAT”) in accordance with the prevailing laws and regulations. It is also regulated in Law 4/96, particularly in Article 11 paragraph (2) that the Deed may stipulate some covenants, considering the effort to keep the good value of the mortgage object, especially at the time of the execution. The covenants are facultative, means that it has no effect to the validity of the Deed. The parties concerned are free to determine whether or not they will stipulate the covenants in the Deed. However, in the event that the parties concerned are stipulating the covenant in the Deed and registering the Deed at the land office, such covenants shall be binding to the third party.

Covenants Stipulated in the Deed

According to Article 11 paragraph (2) of Law 4/96, the covenants that may be stipulated in the Deed are as follows: [More…]

covenant which is limiting the competency of the mortgage provider to rent out the mortgage object and/or determine or change the lease term and/or receive the rent money in advance, unless with the prior written approval of the mortgage holder;
covenant which is limiting the authority of the mortgage provider to change the form or structure of the mortgage object, unless with the prior written approval of the mortgage holder;
covenant which is giving authority to the mortgage holder to manage the mortgage object according to the stipulation of chairman of the district court which jurisdiction covers the location of the mortgage object, in the event that debtor is in default;
covenant which is giving authority to the mortgage holder to save the mortgage object, if it is necessary for the enforcement of the execution or to prevent the abolishment or cancellation of the rights as the mortgage object, due to the non-fulfillment or violation of the provisions of law;
covenant that the first mortgage holder has the right to sell, on its own authority (power), the mortgage object if the debtor is in default;
covenant given by the first mortgage holder that the mortgage object will not be cleared from the mortgage;
covenant that the mortgage provider will not relinquish its right of the mortgage object without prior written approval of the mortgage holder;
covenant that the mortgage holders will acquire all or the part of the compensation received by the mortgage provider as the settlement of the loan concerned in the event that the mortgage object is released by the mortgage provider or revoked for public interests;
covenant that the mortgage holder will acquire all or the part of the insurance money received by the mortgage provider for the settlement of the loan concerned, if the mortgage object is insured;
covenant that the mortgage provider will vacate the mortgage object at the time of execution;
covenant that the certificate of land right(s) as the mortgage object will be held by mortgage holder.

Furthermore, Article 12 of Law 4/96 clearly expresses that if there is covenant which is giving the authority to the mortgage holder to own the mortgage object if the debtor is in default, such covenant is null and void. Such provision is stipulated in order to protect the interests of the debtors and other mortgage providers, especially if the value of the mortgage object exceeds the amount of the debt that is being collateralized.

Ivan Setiady

read more

Debt Secured by Mortgage

, , ,

Background
Referring to Law Number 4 of 1996 on Mortgage of Land along with Properties Related to the Land (“Law 4/96”), particularly Article 10 paragraph (1), it is stated that the granting of mortgage is preceded by a covenant to provide mortgage as the security for settlement of certain debts, which is set out in and as an integral part of the debt (loan) agreement concerned or other agreement which causees such debt. Mortgage is accessoir, which means that the granting of a mortgage should be a follow-up of the principal agreements i.e. agreement that gives rise a legal relation of such debt in which its settlement is secured. Therefore, it can be said that the existence of a mortgage is always agreed upon and follow (accessoir) the principal agreement.

Settlement of Certain Debt

According to Article 3 paragraph (1) of Law 4/96, the debts, in which its settlement can be secured are as follows: [More…]

debt which is already existed at the time of the granting of the Mortgage;
debt which has not yet been existed but has been agreed.

Furthermore, it is also regulated that the amount of the debt which its settlement is secured with the mortgage can be determined at the time agreed (agreed in the related agreement) or determined at the time of the execution petition is filed, under the debt (loan) agreement or other agreement that give rise to the related debt relation.

Article 3 paragraph (2) of Law 4/96 states that the mortgage can be encumbered upon a debt due to a legal relation or upon one or more debts due to several legal relations. Based on that, Rachmadi Usman, S, H., M.H. interprets that the granting of a mortgage is possible upon:

several creditors who combine in providing loan to a debtor under a legal relation (loan agreement);
several creditors who provide loan to a debtor under several and different legal relations (loan agreement) for each creditors.

Ivan Setiady

read more

The Legal Meaning of Mortgage

, , ,

Background
To maintain the sustainability of the national economic development, it needs large amount of funds. The more increase of development activities, the more of the needs of availability of funds, whereas such funds are mostly obtained through credit financing activities.

Considering the importance of the position of credit financing in the property development, it is reasonable enough for the creditor and the debtor and other related parties to obtain protection through an institution of security rights and who can provide legal certainty for all parties concerned, which can
encourage public participation in national development to realize
a prosperousand fair society. In order to realize that purpose, the government already arranged provisions in relation to such security rights, particularly for security rights of land as set forth in Law Number 4 of 1996 on Mortgage (Hak Tanggungan) along with Properties Related to the Land (“Law 4/96”).

Mortgage (Hak Tanggungan) of Land
In Article 1 of Law 4/96, a mortgage is a security right over right(s) of land, along with or without other properties that constitute a unity with such land, for the settlement of certain debts, which gives the preferred position to certain creditors against other creditors (“Mortgage”). Mortgage cannot be split, unless otherwise agreed in the Deed of Granting of Mortgage.

Rights of land that can be encumbered with Mortgage are right of ownership, right to cultivate, right to build, and right of use over state’s land (“Object”). An Object can be encumbered with more than one Mortgage in order to guarantee the settlement of more than one debt. If an Object is encumbered with more than one Mortgage, the rank (level) of each Mortgage is determined by the date of their registration at the Land Office.

read more

Inheritance of the Right of Use

, , ,

According to Article 41 of Law Number 5 of 1960 on the Principles Provisions of Agrarian (“Agrarian Law”) [Note: sy sudah ingatkan berkali2 untuk gunakan terms yang sama dengan yang sudah kita buat dan ada di web kita[, Right of Use means right to use and collect the production over State Land or land which is owned by private parties. As stipulated in Article 42 of Agrarian Law, Right of Use can be granted to:

Indonesian citizens;
foreigners domiciled in Indonesia;
Indonesian companies established based on Indonesian law and domiciled in Indonesia; and
foreign companies having its representative office in Indonesia.

Assignment of Right of Use

According to Article 54 paragraph (3) of Government Regulation Number 40 of 1996 on Right to Cultivate, Right to Build, and Right of Use Over Land (“Government Regulation 40”), it is stated that the Right of Use can be assigned by the following reasons:

sale and purchase;
exchange;
capital participation;
grant;
inheritance.
Further, the assignment shall be registered to the Land Office (kantor pertanahan). For the assignment of Right of Use as a result of inheritance, Article 54 paragraph (7) stipulates that the assignment shall be evidenced with the testament or heir information document (surat keterangan waris) which is issued by the competent authority.

The Article 42 of Government Regulation Number 24 of 1997 on Land Registration (“Government Regulation 24”) has set out the required documents that must be provided by the heirs for land registration:

land certificate;
death information document (surat keterangan kematian) of the holder of Right of Use;
heir information document (surat keterangan waris).
Moreover, the elucidation of Article 42 of Government Regulation 24 stated that the transfer of right is occurred when the holder of Right of Use dies, which means the heir will become the new right holder. With regards to the party who has the right to become the heir, it will depend on the civil law that applies to the existing right holder.

read more