The deletion of mortgage rights is regulated in the Law No. 4 of 1996 on Mortgage. Mortgage (hak tanggungan) means a security right over right(s) of land as set out under the Law No. 5 of 1960, along with or without other goods that constitute a unity with such land, for the settlement of certain debts, which gives the preferred position to certain creditors against other creditors.
Deletion of Mortgage Rights
The mortgage right is deleted based on the following reasons:
- The debt secured by mortgage rights is settled.
In principle, the mortgage rights will depend on the debt that is secured by mortgage rights. It means that if the debt is concluded due to the settlement of debt by the debtor or any other reasons, then the mortgage rights will also be removed.
- The mortgage holder releases the mortgage rights.
The deletion of mortgage right due to the release made by the mortgage holder shall be made by written statement by the mortgage holder to the mortgage grantor which states that the mortgage right is released.
- The clearance of mortgages right based on the stipulation of ranking by the chairman of district court.
The clearance of mortgages right based on the stipulation of ranking by the chairman of district court can be made by application made by the buyer of land right that is secured by mortgage rights in order to remove the mortgage rights.In principle, the buyer (either in the public auction that is conducted based on the instruction of the chairman of district court or in the voluntary sale and purchase) may request to the mortgage holder to remove the mortgage right that exceeds the purchase price. This can be done by written statement by the mortgage holder.
If the land right is secured by more than one mortgage rights, and there are no agreements between the mortgage holders for removing the mortgage right that exceeds the purchase price, the buyer may file an application to the chairman of district court in order to (i) stipulate the release, and (ii) simultaneously determine the sharing of auction proceeds among the creditors, and their ranks under the prevailing laws and regulations.
The application to the chairman of district court cannot be made if the sale of land rights is conducted voluntarily, and in the deed of granting mortgage right, the parties have expressly stipulated that the object shall not be released from the mortgage right.
- The land rights secured by mortgage rights are removed.
The land rights may be removed due to several reasons, such as (i) revocation of rights, (ii) voluntary relinquishment by the landowner, (iii) abandonment of land, (iv) violation on the requirements of the holder of land rights, and (v) the land is vanished.
Deletion of Mortgage Right’s Record
After the mortgage right has been removed, the Land Office shall delete the record of the mortgage right in the land book and the certificate of mortgage rights. The certificate of mortgage rights shall be withdrawn, and the land book of mortgage right land book shall be declared as no longer valid by the Land Office. If the certificate of mortgage right is not returned to the Land Office by any reason, the Land Office shall record it in the land book of mortgage.
The application to delete the mortgage rights shall be submitted by attaching (i) certificate of mortgage right, where the creditor gives notes that the mortgage right is removed since the receivable has been settled, or (ii) written statement from the creditor that the mortgage rights has been removed since the receivable has been settled, or (iii) written statement from the creditor that the creditor releases the mortgage rights.
If the creditor does not want to give a written statement, the interested party may submit the application to the chairman of district court for requesting the removal of mortgage rights. If the application is granted, the interested party shall attach the court decision when submitting application to the Land Office. The Land Office shall delete the record of mortgage right at the latest 7 business days from the receipt date of application.
In principle, the mortgage right can be imposed to several land rights. Under the deed of granting of the mortgage rights, the parties may make an agreement that the repayment of debt will be conducted by installments, and the mortgage rights will be released based on the installments made by the debtor. The remaining mortgage right will only secure the remaining debts that have not been paid. For that matter, the deletion of record in the land book and certificate of mortgage rights will only be conducted for the mortgage rights that have been settled by the debtor.