INDONESIA Law and Practice Contributed by: Yogi Sudrajat Marsono, Heru Pamungkas, Agnes Maria Wardhana and Andin Aditya Rahman, Assegaf Hamzah & Partners
• Sale of the mortgaged property: proceeds from the sale are used to repay the outstand - ing loan amount, including any accrued inter - est, fees and execution expenses, with any surplus being given to the debtor. If the pro - ceeds are insufficient to cover the debt, the mortgagee may pursue other legal avenues to recover the remaining balance. • Registration of transfer: following the sale of the mortgaged property, the transfer of own - ership of the land title is registered with the Land Office, and the mortgage is discharged. There were no significant limitations regarding the lender’s capacity to enforce the mortgage during the pandemic, aside from occasional closures of court services, which affected court proceeding schedules in general. 3.7 Subordinating Existing Debt to Newly Created Debt Existing secured debt may become subordi - nated to newly created debt. Multiple creditors can hold mortgages on one property, or a sin - gle creditor may hold multiple mortgages on the same property. In such cases, each mortgage is ranked based on its registration date at the Land Office, which determines its repayment priority. 3.8 Lenders’ Liability Under Environmental Laws Lenders are generally not liable under the Envi - ronmental Law for any pollution of the real estate not caused by the lenders; see 2.7 Soil Pollution or Environmental Contamination regarding the application of the Environmental Law. 3.9 Effects of a Borrower Becoming Insolvent Under Law No 37 of 2004 on Bankruptcy Pro - ceedings and the Suspension of Debt Payment Obligations (“Bankruptcy Law”), if a borrower
becomes insolvent, any lender holding security interests (including mortgages) has the authority to execute their rights within two months after the commencement of the state of insolvency. If the two-month deadline has passed, the receiver is obliged to request a public auction of the collateral through the KPKNL, while ensur - ing the rights of the creditors who hold claims to the proceeds from the sale. In the event of an unsuccessful public auction, the supervisory judge may approve a private sale of the proper - ties. In any event, the receiver has the authority to release the collateral property by paying the respective creditor either the market value of the collateral property or the amount of debt secured by it, whichever is lower, at any given time. 3.10 Taxes on Loans In Indonesia, fees in the form of PNBP on mort - gage or mezzanine loans are imposed at the time of the registration or recording of the mortgage deed or related documents with the Land Office. Please see 3.4 Taxes or Fees Relating to the Granting and Enforcement of Security regard - ing mortgage registration fees. 4. Planning and Zoning 4.1 Legislative and Governmental Controls Applicable to Strategic Planning and Zoning Spatial planning policies are formulated through the Regional Spatial Plan (RTRW) and the Detailed Spatial Plan (RDTR). Governments enact regulations governing spatial planning and zoning, which are structured as follows:
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