Problems in the Implementation of Mortgage Rights Based on Law No. 4 of 1996 Concerning Mortgage Rights

After the enactment of Law No. 4 of 1996 on Mortgage Rights (hereinafter referred to as UUHT), the provisions for the execution of Mortgage Rights are regulated under Article 20 of UUHT, which provides three alternative methods that creditors can use to execute the collateral object of the mortgage in the event of a debtor's default. These methods are: 1) parate executie, 2) execution based on the executorial title contained in the Mortgage Certificate, and 3) sale by private treaty. These steps can be taken if the debtor is in breach of contract. However, in practice, these mechanisms need to be reviewed in greater depth to determine whether they can be implemented, as Article 26 stipulates that 'as long as no regulations are enacted, the execution shall refer to the provisions regarding the execution of hypothec existing at the time of the enactment of this Law.' The term 'regulations to be enacted' should refer to 'Government Regulations' (as implementing regulations of the law), and the 'provisions regarding the execution of hypothec existing at the time of the enactment of this Law' as explained in Article 26 of UUHT refers to Article 224 of the HIR, which stipulates that bodily coercion can only be carried out after being authorized by a court decision. This creates practical problems, leading some to argue that even though the execution of Mortgage Rights is regulated under Article 20 of UUHT, in the absence of 'Government Regulations' (as further implementing regulations concerning the execution of mortgage rights under the Mortgage Law), any public sale (auction) of the object of mortgage rights must still go through the fiat of the Chief Judge of the Court as stipulated in Article 224 of the HIR. On the other hand, some believe that the fiat of the Chief Judge of the Court as stipulated in Article 224 of the HIR is unnecessary, as Article 20 of UUHT already provides for parate executie, which can serve as an alternative in the execution of Mortgage Rights, allowing the creditor to directly apply for auction without a court fiat.