Standard Mortgage Contract Template for Indonesia

The Standard Mortgage Contract is a fundamental legal instrument in Indonesian property financing, used to create a security interest known as Hak Tanggungan over real property. This document is essential when providing property-backed financing in Indonesia, whether for residential, commercial, or industrial purposes. It must comply with Law No. 4 of 1996 on Land Mortgage, the Indonesian Civil Code, and relevant banking regulations. The contract includes detailed provisions on the property description, loan terms, borrower obligations, lender rights, and enforcement mechanisms. It requires execution before a Land Deed Official (PPAT) and subsequent registration with the Land Registry Office to be legally effective. The document is typically used by banks and financial institutions when extending credit facilities secured by real property, ensuring they have enforceable security rights under Indonesian law.

1. Parties: Identification of the lender (mortgagee), borrower (mortgagor), and their respective details including registration numbers for institutions and ID numbers for individuals

2. Background: Context of the mortgage agreement, reference to the underlying loan or credit facility, and purpose of the mortgage

3. Definitions: Definitions of key terms used throughout the agreement, including technical terms required by Indonesian law

4. Property Details: Detailed description of the mortgaged property, including certificate numbers, land rights type, and location details as required by Indonesian land law

5. Creation of Security Interest: Provisions establishing the Hak Tanggungan (mortgage right) over the property in accordance with Law No. 4 of 1996

6. Loan Terms: Details of the underlying loan including principal amount, interest rate, term, and payment schedule

7. Borrower's Representations and Warranties: Statements regarding property ownership, authority to mortgage, and absence of encumbrances

8. Borrower's Covenants: Ongoing obligations including property maintenance, insurance, payment of taxes, and restrictions on dealing with the property

9. Events of Default: Circumstances constituting default and triggering enforcement rights

10. Enforcement Rights: Lender's rights and remedies upon default, including power of sale under Indonesian law

11. Insurance: Requirements for property insurance and assignment of insurance proceeds

12. Costs and Expenses: Allocation of costs including registration fees, taxes, and enforcement expenses

13. Notices: Process for giving formal notices between parties

14. Governing Law and Jurisdiction: Confirmation of Indonesian law as governing law and jurisdiction of Indonesian courts

15. Execution: Signing requirements including notarization provisions as required by Indonesian law