Legal Consequences Of Deviations In The Transfer Of Rights Within Sale And Purchase Binding Agreements (Ppjb)

Abstract

The utilization of a Sale and Purchase Binding Agreement (Perjanjian Pengikatan Jual Beli or PPJB) as a camouflage to conceal a party’s obligation to repay a sum of money contradicts the principle of good faith in contract performance. Nevertheless, a PPJB mutually agreed upon by the parties and executed through an authentic deed by a notary fulfills all the essential elements of a valid agreement as stipulated in Article 1320 of the Indonesian Civil Code. Furthermore, such a PPJB may serve as a legally valid basis for encumbering mortgage rights through the drafting of a Deed of Granting Mortgage Rights (Akta Pemberian Hak Tanggungan or APHT) and its subsequent registration at the Land Office, pursuant to Articles 10 to 14 of Law Number 4 of 1996 concerning Mortgage Rights. Consequently, the PPJB and the mortgage rights arising therefrom maintain legal force and ought to receive valid legal protection.