Hak tanggungan is the security right over land rights, together with buildings and other objects that form part of the land, which secures repayment of a debt and gives the secured creditor priority over other creditors. It is the Indonesian equivalent of a mortgage.
Legal Basis
Hak tanggungan is governed by Law No. 4 of 1996 on Security Rights over Land and Objects Related to Land. It replaced the colonial-era hypotheek and credietverband for land.
Land Rights That Can Be Encumbered
Ownership rights (hak milik), rights to cultivate (hak guna usaha), rights to build (hak guna bangunan), and rights of use (hak pakai) over state land that are registered and transferable may be encumbered, as may apartment ownership rights.
Creation
The parties sign a Deed Granting Hak Tanggungan (APHT) before a Land Deed Official (PPAT). The hak tanggungan comes into existence when it is registered at the Land Office, which issues an electronic certificate with executorial force.
Key Features
Hak tanggungan follows the encumbered object into the hands of any new owner (droit de suite), gives the creditor a preferred position (droit de préférence), and is indivisible, so that partial repayment does not release part of the land unless agreed.
Enforcement
On default, the first-ranking holder may sell the land at public auction on its own authority (parate eksekusi) under Article 6 of the law, or enforce the certificate through the court. A private sale is permitted if it yields a higher price and the statutory notice requirements are met.