Document background
The Mortgage Letter is a fundamental document in Indonesian property financing, used to create a legally binding security interest in real property under the Indonesian Hak Tanggungan system. This document is essential when a property is being offered as collateral for a loan, whether in residential or commercial contexts. It must comply with Law No. 4 of 1996 on Mortgage Rights and related regulations, and requires registration with the Land Office (Kantor Pertanahan) to be legally effective. The letter includes crucial information about the mortgaged property, loan details, parties' obligations, and enforcement rights, serving as a key document in protecting the lender's security interest while clearly defining the borrower's responsibilities. It's particularly important in Indonesia's civil law system, where formal documentation requirements are strictly observed in property transactions.
