On 21 June 2019, the Minister Agrarian Affairs issued the Minister of Agrarian Affairs and Spatial Planning No. 9 of 2019 regarding Online System for Administration of Mortgage over Land (“Regulation No. 9/2019”) with the purpose to improve the administration of the mortgages over land registration process, by introducing an online system which has since been christened as Ellectronically Integrated Mortgage Services (Pelayanan Hak Tanggungan Terintegrasi Secara Elektronik – Sistem HT- el).
The implementation of the system (Sistem HT – el) as well as the caretaking of its’ subsequent administrative responsibilities is to be assigned to and carried out by the Lan Office in accordance to and concurrently with the readiness of Sistem HT – el’s supporting data.
Regulation No. 9/2019 provides the following services:
a. Registration of mortgages;
b. Transfer of mortgages;
c. Change of creditor’s name; and
d. Removal of mortgages.
REQUIREMENTS TO REGISTER
Users of Sistem HT – el are divided into:
(i) The government officials whom are responsible for the running of the system, and
(ii) The creditors.
As creditors, in order to use the system, the person/legal entity will need to register, by submitting:
a. Electronic domicile;
b. Registration Letter discharged by Financial Services Authority (Otoritas Jasa Keuangan - OJK);
c. Statement which conveys that the relevant party have fulfilled the necessary requirements and criteria as well as obtaining an approval through the fulfilment of conditions as registered user; and
d. Other requirements as determined by the Minister of Agrarian Affairs and Spatial Planning.
One of the requirement put in place by OJK with regard to the submitting of the Registration Letter implies that the “registered users” can only be banks (or other types of financial institutions) that supervised by OJK.
The regulation is “silent” with respect to of the use of system by creditors that are either foreign banks or financial institutions or security agents or agencies acting on behalf of syndicated lenders or club-deal arrangement.
REQUIREMENT TO RECORD AND REMOVE MORTGAGE OVER LAND
The registered user will need to file an online application through Sistem HT - el and then submit a statement letter with regard to the responsibility over the legality and validity of the submitted electronic documents.
The electronic submission shall includes the Deed to Grant Mortgage (Akta Pemberian Hak Tanggungan) issued by the Land Deed Official. Worthwhile to note, that it is only certificates of rights over lands or strata title certificates submitted under the debtor’s name may be registered in to the system. This particular requirement raises a question with respect to mortgages granted by third-party guarantors acting to secure the loan of another debtor.
System users with accepted application will be given proof/receipt of registration confirming details of the registration as well as request and instructions on how to make payment for the registration fee.
After payment has been received and processed, Sistem HT- el shall then issue a Certificate of Mortgage (Sertifikat Hak Tanggungan) and annotation of mortgage on the land book as well as the certificate of rights over land or strata title certificate. The creditor may then print out the annotation produced by Sistem HT – el and attach the print-out on to the certificate of rights over land or strata title certificates.
Regulation No. 9/2019 only recognizes the removal of mortgage based on repayment of loan. However, Law No. 4/1996 on Mortgage gives 4 (four) grounds of reason to remove mortgage which are as follows:
a. Removal of debt that is secured by the mortgage;
b. Release of debt by the mortgage holder;
c. Mortgage clereance pursuant to the ranking stipulated by the head of district court; and
d. Removal of land right that is encumbered with mortgage.