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VOL. 10, ISSUE 3 (2024)
The use of buy back guarantee clauses in mortgage agreements
Authors
T Ahmad Denada, Azhari Yahya, Yusri
Abstract
A guarantee agreement is an accessory agreement between a third party
and the creditor concerning the debtor's debts, as per Article 1820 of the
Indonesian Civil Code. Principally, a guarantor is not obliged to pay unless
the debtor defaults. The use of buy back guarantee clauses in mortgage
agreements is not explicitly regulated by law. This term has only developed as
a customary practice in business contracts. This study aims to analyze the
legal certainty of buy back guarantee agreements, the legal relationships
between the parties in fulfilling obligations, and the realization of buy back
guarantees by developers to banks. The research method is normative legal
research (juridical normative) using data from court decisions, legislation,
and relevant literature. The results show that buy back guarantee agreements
ensure legal certainty. Banks can enforce such agreements if explicitly
stipulated. Consumers and developers act as buyers and sellers, while banks and
developers are bound by guarantee agreements. Banks can transfer the risk if
the debtor defaults. In the realization of buy back guarantees, banks can hold
developers accountable if consumers default. The principle of subrogation
occurs when the developer settles the consumer's debt to the bank; even if the
consumer's debt is written off, the developer can still claim from the
consumer. The Tangerang District Court Decision No. 665/Pdt.G/2018/PN. Tng
emphasizes the importance of buy back guarantees in mitigating default risks.
It is recommended that banks and developers exercise caution in drafting
guarantee agreements and consider potential situations triggering the buy back
guarantee. The involved parties should pay attention to legal and contractual
aspects related to buy back guarantees in mortgage agreements and provide input
to lawmakers.
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Pages:103-105
How to cite this article:
T Ahmad Denada, Azhari Yahya, Yusri "The use of buy back guarantee clauses in mortgage agreements". International Journal of Law, Vol 10, Issue 3, 2024, Pages 103-105
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