The Petitioners’ legal counsel at the petition revision hearing for case No. 107/PUU-XXIII/2025 on Law No. 4 of 1996 on Mortgage Rights over Land and Objects Related to the Land, Thursday (7/24/2025). Photo by MKRI/Bayu.
JAKARTA (MKRI) — The Constitutional Court (MK) held the second material judicial review hearing of Article 6 and Article 7 of Law No. 4 of 1996 on Mortgage Rights over Land and Objects Related to the Land (Mortgage Law) on Thursday, July 24, 2025. Legal counsel Lalu Zulkifli represented Petitioners I-III R. Lella Karmila, Rejeki Putri, and Sri Ayu Suryati at the hearing for case No. 107/PUU-XXIII/2025 to hear the revisions to the petition.
Zulkifli said that the Petitioners had revised several parts of the petition, such as the elaboration of the Constitutional Court’s authority over the case, the Petitioners’ potential losses and legal standing, the reason behind the petition (posita), and the petitums.
“The Petitioners respectfully request that the Court declare the Elucidation to Article 6 and Article 7 of Law No. 4 of 1996 on Mortgage Rights over Land and Objects Related to the Land to be in contradiction with the 1945 Constitution of the Republic of Indonesia and, consequently, to have no binding legal force insofar as it is not interpreted to mean that the right to sell the object of the mortgage right on one’s own authority constitutes a manifestation of the preferential status accorded to the holder of the mortgage right—or the first-ranking holder in the event of multiple holders of mortgage rights; this preferential status is based on the covenant made by the grantor of the mortgage right, whereby, in the event of a default by the debtor, the holder of the mortgage right is entitled to sell the object of the mortgage right at a public auction without requiring further consent from the grantor, and to take repayment of the debt from the proceeds of such sale before other creditors; any remaining proceeds shall remain the right of the grantor of the mortgage right, provided that there exists a final and binding court decision declaring that the creditor acted without due diligence in granting the loan, thereby violating the principle of prudential banking, and that the initial purchaser of the object does not possess a valid legal right to the object under applicable law, and has committed an unlawful act and/or has defaulted on an obligation,” Zulkifli read out at the panel hearing presided over by Deputy Chief Justice Saldi Isra (chair) and Constitutional Justices Anwar Usman and Enny Nurbaningsih.
Also read: Devious Creditors and Debtors Conspiracy Harms the First Buyer of Mortgaged Property
At the preliminary hearing on Friday, July 11, legal counsel Lalu Zulkifli said the Petitioners challenge the articles against Article 28G paragraph (1) of the 1945 Constitution. In this petition, the argument is focused on the parties harmed by conspiracy between creditor (recipient of the Mortgage Right object) and debtor (who handed over the Mortgage Right object) who took advantage of the loophole in the elucidation of the norm. This resulted in losses for the first buyer of the Mortgage Right object and has led to the occupation of the physical Mortgage Right object legally.
Fundamentally, the elucidation to the articles under review confer authority upon creditors that is inconsistent with the 1945 Constitution. Specifically, it allows creditors to interpret two legal errors: first, the alleged bad faith of debtors in default when pledging an object as collateral under a mortgage right; and second, the negligence of creditors in accepting the collateral object, which violates the principle of prudential banking. This includes failing to conduct prior due diligence, such as studying, physically inspecting, and directly verifying the collateral object before executing a foreclosure sale.
In concrete terms, many individuals in society have suffered harm due to debtors who had previously sold their collateral objects to third-party buyers but later, without disclosing this fact, used the same property as collateral to secure loans from creditors. These original buyers reasonably believed that the property they had purchased was free of encumbrances, as evidenced by a binding sale and purchase agreement. In such situations, both the original buyers and the creditors are, in essence, injured parties. However, even when creditors are aware that the collateral object has already been sold and is under the possession of the first buyer, they still proceed with foreclosure sales, relying on the provisions set forth in Articles 6 and 7 of the Mortgage Law.
The Petitioners acknowledge that in Indonesia, there are numerous unscrupulous actors, including bad-faith debtors and corrupt individuals within financial institutions acting as creditors, who seek to gain personal profit through improper means. These devious creditors are often enticed by large illicit payments offered by dishonest debtors and therefore approve credit applications without conducting direct inspections or verifying the collateral used for the mortgage right. What matters to these creditors is merely the formal credit agreement between creditor and debtor and the provisions of Articles 6 and 7 of the Mortgage Law. Even though the physical object of the mortgage right has already been sold and is in the possession of the first buyer, they proceed with foreclosure and execution regardless.
The collusive, corrupt, and nepotistic actions of bad-faith debtors and devious creditors have caused substantial harm to the Indonesian public, including the Petitioners. The exploitation of the elucidation to Articles 6 and 7 of the Mortgage Law by such actors, in furtherance of acts of collusion, corruption, and nepotism, constitutes a violation of Article 28G paragraph (1) of the 1945 Constitution.
Author : Sri Pujianti
Editor : N. Rosi
Translators : Yuniar Widiastuti (NL)
Disclaimer: The original version of the news is in Indonesian. In case of any differences between the English and the Indonesian versions, the Indonesian version will prevail.
Thursday, July 24, 2025 | 15:23 WIB 183