The Importance of Being Aware of Building Rights Title Terms

The Importance of Being Aware of Building Rights Title Terms

Increasing capital is one way to expand a business. This capital can be obtained through various ways, including by borrowing a sum of money from financial institutions such as banks based on the terms and conditions that apply.

There are a number of conditions that must be met by debtors to obtain a certain amount of money, one of which is to provide collateral in the form of assets, securities, or others. In Indonesia, there are security rights granted, including mortgages and fiduciary rights. This mortgage right is regulated in Law No. 4 of 1996 on Mortgage Rights on Land and Objects Related to Land. This law is locally known as UUHT.

Article 1 point 1 of the UUHT explicitly states that a mortgage right is;

“Land and objects related to the land, hereinafter referred to as mortgage rights on land and objects related to land (Hak Tanggungan), is a security right imposed on land rights as referred to in Law No. 5 of 1960 on the Basic Regulation of Agrarian Principles, along with or without other objects that form an integral part of the land, for the repayment of certain debts, which gives priority to certain creditors against other creditors”.”.

The above provisions specify that creditors, who have mortgage rights, to take payment and/or repayment of debts from the pledged assets by selling the object of collateral either on their own power or through a public auction.

The granting of mortgage rights as collateral can provide a sense of security for lenders. Article 9 of the UUHT states that the holder of a mortgage right is an individual or legal entity in the position of a debtor.

Rights that can be encumbered by mortgage rights are property rights, business use rights, building use rights and use rights. According to Article 4 of the UUHT, the applicable provisions of this right of use must be registered and by its nature can be transferred.

The Nullification of the Building Rights Title

Holders of mortgage rights must be cautious because UUHT stipulates about the nullification of mortgage rights, especially land rights. Article 18 of the UUHT explicitly states that a mortgage right can be nullified due to;

the extinguishment of the debt secured by the mortgage right;
the release of the mortgage right by the holder of the mortgage right;
“cleansing” of mortgage rights based on a list issued by the Chief of the District Court;
nullification of land rights encumbered by mortgage rights.

The nullification of land rights is certainly one of the important points that must be of concern to creditors, when providing loans with collateral in the form of land rights in the form of building use rights, business use rights, and use rights. Special attention needs to be given because the law expressly regulates the period of granting land rights.

For example, a building rights title for a period of 30 years can be extended for a maximum of 20 years and can be renewed for a maximum period of 30 years. The example is based on Law No. 5 of 1960 in conjunction with Government Regulation No. 18 of 2021 on Management Rights, Land Rights, Flat Units, and Land Registration.

Article 46 of Government Regulation Number 18 of 2021 explicitly regulates that building use rights are nullified due to:

The expiration of the time period as stipulated in the decision to grant, extend, or renew the right
The right is canceled by the minister before the term expires due to
Non-fulfillment of the provisions of obligations and/or prohibitions as referred to in Article 42 and/or Article 43
Non-fulfillment of the conditions or obligations stipulated in the agreement on the granting of a building use right between the holder of the building use right and the holder of the property right or the agreement on the utilization of the Management Rights Land
Administrative defect or
A court decision that has obtained permanent legal force
The right is converted into another land right
Voluntarily relinquished by the right holder before the end of the term
Released in the public interest
Revoked by law
Designated as abandoned land
Designated as land destroyed
The expiration of a right granting agreement or land utilization agreement for a building use right on a free hold title or the rights to manage and/or
The right holder no longer qualifies as a right subject.

Extension of Term and Application for Renewal of the Building Rights Title

For land rights in the form of building use rights, of course, the landowner must submit an application for an extension of the period at the latest before the expiration of the building use right period.

What if the term has expired?

Article 41 paragraph 2 of Government Regulation No. 18 of 2021 provides an opportunity to apply for renewal, which is an increase in the period of validity of the right after the expiration of the term or before the end of the extension period. If the term of a building use right has expired, the application can be submitted no later than 2 years after the expiration of the term of the building use right.

Failure to extend the term of the building use right can, of course, lead to the nullification of the building use right. If the building use right is located on state land, the land becomes the property of the state.

From the description above, it can be concluded that if the extension of the building right title is not carried out on time, the land right is nullified so that the mortgage right attached to the object is also nullified as stipulated in Article 18 of the UUHT.

Although the secured debt is not erased, due to the absence of the privilege given to obtain prior payment from the debtor’s assets, of course this is very detrimental. To reduce the risk of loss, the creditor holding the security right must routinely check or at least provide special notes regarding the expiration period of the land rights that are used as credit collateral.

Minister of Communication and Informatics Circular Letter (No.3/2022)

Regarding the Private Electronic System Operators (PSE) registration requirement set forth in Government Regulation No. 71 of 2019 and Minister of Communication and Information Technology Regulation Nos. 5 of 2020 and No. 10 year 2021, a circular letter from the Ministry of Communication and Information was issued on July 14, 2022.

This circular letter outlines the registration requirements and effective date for each business that operates the electronic system. The current revision to No. 10 of 2021 and the Regulation of the Minister of Communication and Information No. 5 of 2020 both indicate that registration must be completed no later than six months after January 21, 2022. PSE that are not registered on July 20, 2022 will be subject to administrative penalty.

According to Article 7 paragraph 2 of the Regulation of the Minister of Communication and Information Technology No. 5 of 2020, the administrative sanction in question takes the form of limiting access to the electronic system (terminating access privileges).

You can register by using the Investment Coordinating Board’s (BKPM) Online Single Submission (OSS RBA).

New Penalty for Coal DMO Violations

Finance Minister Sri Mulyani Indrawati issued a new regulation on penalty and compensation funds for coal companies that do not follow the rules for fulfilling domestic needs, or known as domestic market obligations (DMO). The regulation, Minister of Finance Regulation (PMK) No.17/PMK.02/2022 on Types and Tariffs on Types of Non-Tax State Revenue for Urgent Needs in the Form of Fines and Compensation Funds for Fulfilling Domestic Coal Needs at the Ministry of Energy and Mineral Resources, was issued to increase the fulfillment of coal DMO for the interests of the public.

Rules on Obligation to Fulfill DMO

The existing regulation on the obligation of coal mining businesses to fulfill the DMO is stipulated in the Minister of Energy and Mineral Resources (ESDM) Regulation No.139.K/HK.02/MEM.B/2021 on the Fulfillment of Domestic Coal Needs. The regulation stipulates that coal producers are obliged to sell 25% of the planned amount of coal production per year for DMO needs at a benchmark price of 70 US dollars per metric ton. This is based on a reference specification of 6,322 kcal/kg GAR calories, 8% total moisture, 0.8% total sulphur, and 15% ash.

Applicable Non-Tax State Revenue (PNBP)

Article 1 of PMK No. 17/PMK.02/2022 stipulates that the type of PNBP applicable to the Ministry of Energy and Mineral Resources in the context of fulfilling domestic coal needs consists of penalty and compensation funds. All PNBP, both in the form of penalty and compensation funds for fulfilling the coal DMO, must be deposited into the state treasury.

Method of Imposition of Penalty and Compensation Fund

The provisions on the penalty rate (in USD/ton) are as follows: a. Based on the difference between the average selling price of coal abroad based on the quality specified in the sales contract at the Free on Board Vessel handover point during the reporting period of coal fulfillment from domestic coal users with the average benchmark price of coal for the provision of electricity for general purposes based on the quality specified in the sales contract. b. Based on the difference between the average benchmark price of coal based on the quality specified in the sales contract and the average benchmark price of coal for the provision of electricity for public interest based on the quality specified in the sales contract in the event that the selling price of coal abroad is not available. c. Based on reports of fulfillment of sales contracts from domestic coal users that have been clarified to the Mining Business Entity or Coal Transportation and Sales License holder.

Penalty payment must be made if the selling price of coal abroad is higher than the coal benchmark price. The compensation rate is paid if the realization of DMO fulfillment per year (in tons) is less than the obligation to fulfill DMO per year (in tons). The compensation rate is calculated based on coal quality and the reference coal price (HBA) multiplied by the volume difference between the obligation to fulfill the DMO per year and the realization of DMO fulfillment per year.

Procedures for Handling of Legal Cases within the Ministry of Health

Minister of Health issued Minister of Health Regulation No. 33 Year 2022 on the procedures for the handling of legal cases within the Ministry of Health. This regulation is stipulated to create order, uniformity, and legal certainty in the implementation of the handling of legal cases within the Ministry of Health. The regulation stipulates the handling of legal cases within the ministry of health, the procedures and settlement of legal cases.

Legal Case Handling

The handling of legal cases within the Ministry of Health consists of handling legal cases in non-litigation basis and litigation basis.

The handling of legal cases in litigation basis consists of:

Handling of judicial review cases
Handling of civil cases
Handling of state administrative cases
Handling of criminal cases
Handling of cases in other judicial bodies.

The handling of legal cases in non-litigation basis consists of:

Resolved through deliberation or non-judicial institutions/bodies based on the agreement of the litigants.
The deliberation is conducted between the litigants or involving third parties.
Third parties include mediators, consultants/experts, practitioners, and/or other parties who assist in the settlement of legal cases.
Institutions/agencies outside the judiciary as referred to are the Indonesian National Arbitration Board and the Ombudsman of the Republic of Indonesia, the Public Information Commission and other alternative dispute resolution agencies/institutions both at home and abroad.
Conducted through consultation, negotiation, mediation, conciliation, expert judgment and other efforts in accordance with the provisions of laws and regulations.

Forms of Legal Case Handling

The forms of the handling of legal cases within the Ministry of Health are as follows:

The Handling of Non-litigation Legal Cases

The handling of non-litigation legal cases is carried out by the Secretariat of Echelon I Units, Technical Implementation Units and/or Bureau. The technical implementation units must coordinate with the Bureau. The results of the agreement in the handling of non-litigation legal cases can be registered with the court to obtain a stipulation to be implemented by the parties.

The Handling of Litigation Legal Cases

The Handling of Judicial Review Cases. The handling of judicial review cases is carried out by the president, who appoints a minister. With the exception of the provisions, the handling of judicial review cases against ministerial regulations, or other legal products for which a judicial review application is received at the Supreme Court, is carried out after a notification letter from the Supreme Court. The minister may grant substitute power of attorney to an associate leadership official for the handling of judicial review cases at the Constitutional Court and the head of bureau and other officials within the ministry of health for the handling of judicial review cases at the Supreme Court.
The Handling of Civil Cases. The handling of civil case is carried out to resolve disputes between beneficiaries and other legal subjects, either individuals or legal entities in the civil sector through ordinary legal remedies and extraordinary legal remedies in accordance with statutory provisions. The beneficiary can act as the party filing the lawsuit/plaintiff (beneficiaries who are facing legal cases that cannot be resolved non-litigation) or the party being sued/defendant (beneficiaries who are facing legal cases that cannot be resolved non-litigation and have received a summons from the court).
The Handling of State Administrative Cases. The handling of state administrative cases is carried out in the event of a state administrative dispute between the beneficiary and a person or civil legal entity as a result of the issuance of a state administrative decision related to the ministry of health which is the object of the case through ordinary legal remedies and extraordinary legal remedies in accordance with the provisions of laws and regulations. The beneficiary is the party filing the lawsuit/plaintiff or the party being sued/defendant. The object of the case consists of presidential decisions, ministerial decisions, decisions of the head of the main unit, other decisions issued by officials within the ministry of health and other decisions issued by officials outside the ministry of health related to the ministry of health.
The Handling of Criminal Cases. The handling of criminal cases is carried out in the event that the recipient of assistance receives a request from law enforcement officials to provide information on the occurrence of alleged violations of criminal law or the recipient of assistance reports/complaints to law enforcement officials on the occurrence of alleged violations of criminal law. Handling is provided in the form of legal assistance. Legal assistance can be provided in the process of requesting clarification, investigation, investigation and/or trial and providing information or reporting/complaints by recipients of assistance to law enforcement officials as witnesses, experts, or reporters/complainants.
The Handling of Cases in Other Judicial Bodies. The handling of cases in special courts consists of industrial relations courts and other courts in accordance with the provisions of laws and regulations. Activities in the handling of cases in other judicial bodies are the preparation of legal studies/examination of the object of the lawsuit, preparation of documents and data, preparation of power of attorney or letter of assignment, and assistance or attendance to represent the legal interests of the beneficiary.

Procedures for The Handling of Litigation Legal Cases

Based on Minister of Health Regulation No. 33 of 2022, the process of the handling of litigation legal cases is as follows:

Every activity in the handling of litigation legal cases n within the Ministry of Health is carried out by the assistance provider based on a request from the recipient of the assistance.
In the implementation of such activities, coordination with the bureau is carried out.
The provider of assistance in the handling of legal cases may coordinate and/or involve with related ministries/institutions, experts, experts, academics, and/or other relevant stakeholders.
The recipient of assistance must submit an application for assistance in the handling of legal cases by attaching a summons from law enforcement officials/judicial institutions and a chronology of the legal problems faced.
The secretary of echelon I unit shall then submit an application for assistance in the handling of legal cases from the bureau chief’s work unit by attaching a summons from law enforcement officials/judicial institutions, a chronology of legal problems faced, studies / studies and other necessary data.
The request for assistance is submitted in writing by the head of the work unit to the bureau chief by attaching documents. If urgent, the request can be submitted orally or through electronic media.
The request is followed up no later than five working days after the request is submitted.
The handling of judicial review cases is carried out since the minister receives a notification letter and power of attorney from the president. This handling is carried out by preparing a legal study/examination of the object of the petition for judicial review, preparing a special power of attorney from the president to be signed by the minister, preparing a substitute power of attorney from the minister to the relevant high-ranking officials within the ministry of health, preparing the statement of the president/government and additional information if needed, preparing evidence, preparing witness and/or expert testimony, preparing conclusions and accompanying or attending the trial at the Constitutional Court.
The preparation of legal studies/examinations for the handling of civil cases is carried out by the bureau after receiving a request submitted by the secretariat of echelon I units or work units within the secretariat general. The stages of trial examination that must be followed by the receiver of power of attorney include mediation/agreement/reconciliation, receiving or filing a lawsuit/answer and/or counterclaim, receiving or filing a replication/duplicate, receiving and filing evidence, attending a local examination, if necessary, presenting witnesses and/or experts, submitting conclusions, receiving a copy of the decision, filing or withdrawing an appeal, receiving or filing the reason of an appeal (memori banding) and/or the reason to counter-appeal (kontra memori banding), filing or withdrawing a judicial review request, receiving or filing the reason of judicial review (memori kasasi) or-counter-judicial review (kontra memori kasasi), filing or withdrawing a request for reconsideration, receiving or filing the reason of a reconsideration and/or counter-reconsideration, conducting case file examination (inzage), filing a request for execution, responding to a warning (aanmaning); and/or attending the execution.
In the handling of state administrative cases, the beneficiary may involve state attorney prosecutors at the district attorney’s office, high attorney’s office, or attorney general’s office in accordance with the case being handled. The stages of trial examination at the Administrative Court are carried out with the provisions of attending the preparatory examination, receiving or filing a lawsuit/respond, receiving or filing a claimant reply to the defense/a respond to the defense of counterclaim, receiving and filing evidence, presenting witnesses/experts, submitting conclusions, receiving a copy of the decision, filing or withdrawing an appeal, receiving or filing a reason of appeal (memori banding) and/or counter-appeal (kontra memori banding), filing or withdrawing a judicial review request, receiving or filing a reason of judicial review (memori kasasi) and/or counter-judicial review (kontra memori kasasi), filing or withdrawing a request for reconsideration, receiving or filing a reason for reconsideration and/or counter-reconsideration, conducting examination of case files (inzage), filing a request for execution and responding to warnings (aanmaning).
Rehabilitation applies to the handling of criminal law cases in the form of restoring rights in the ability, position, dignity and respect of the person concerned. Recovery is carried out based on a warrant to stop the investigation, a determination letter to stop prosecution, or a court decision that has permanent legal force, the recipient of the assistance is not proven to have committed a criminal offense.
The bureau shall monitor and evaluate the handling of legal cases within the ministry of health in the form of coordination and advocacy meetings. Monitoring and evaluation are carried out at least twice a year.
In the implementation of the handling of legal cases within the ministry of health, legal guidance can be carried out in the form of counseling, technical guidance, group discussions, socialization and seminars.