The Truth about Security Interest: Immovable and Bulky Property

OVERVIEW

Though pledge and hypothecation are two of the oldest security interests acknowledged under the Indonesian Civil Code (“Civil Code”), they are still widely used even today. Apparently, even with the 166 years of legal development, since the Civil Code was introduced in 1847, the two security interests are used by parties to a loan.  

Pledge is still used to encumber immovable property, which includes: jewelry, auto vehicles, and basically any property that is movable and can be stored by the creditor. Hypothecation, on the other hand, is used to encumber immovable property, such land and buildings, as well as bulky property, such as ships and aircrafts.