ANALYSIS OF ARTICLE 6 OF LAW NUMBER 4 YEAR 1996 CONCERNING MORTGAGE RIGHTS AND ARTICLE 1400 OF THE INDONESIAN CIVIL CODE ON SUBROGATION

Abstract

The problem of guaranteeing mortgage rights on the debtor's property will not actually occur if the debtor fulfills the obligations as stated in the principal credit agreement. However, it often happens that debtors cannot fulfill their obligations as agreed. Article 20 paragraph 1 of the Law Number 4 Year 1996 on Mortgage Rights has stipulated the protection for creditors by giving the authority to execute the collateral provided by the debtor once a state of default is established. The research results show that in the event where the debtor is in default, subrogation can be carried out, namely the reimbursement of the creditors’ rights to repayment by a third party. Subrogation occurs either by agreement or by law, and is different from debt relief in that it involves a third party who pays the recurring debts to the creditors, not with the aim of releasing the debtor from his obligation to pay the debt but replacing the position of the former creditor. With regards to mortgages as collateral in debt and loan agreements, if the debtor does not change the object of collateral as agreed in the initial agreement, then the same provisions on mortgage will be applicable to the new creditor. This paper features a juridical normative legal research with statutory and conceptual approaches.