As access to financial services becomes increasingly convenient, many people choose to apply for financing or pawn transactions through authorized institutions. A house or land certificate is one of the most valuable assets commonly used as collateral.
So, is it possible to use a property certificate that is not under your own name as loan collateral? To find the answer, continue reading the explanation below.
Can You Use a House Certificate Not Under Your Name as Loan Collateral?
In principle, applying for a loan using a property certificate that is not under your name is a complex process. Financial institutions generally conduct strict verification to ensure the authenticity and security of the transaction.
If the certificate used as collateral does not belong to the applicant/borrower, lenders will naturally question it.
So, is it still possible to proceed with such a loan? Yes, provided that the legal owner of the property gives explicit consent for their certificate to be used as collateral.
One financial institution that offers flexibility regarding this matter is BFI Finance.
However, certain requirements must be met. The certificate must be under the name of your biological parents (both must still be alive) or your spouse. More detailed eligibility information can be found in the next sections.
How to Use a Property Certificate Not Under Your Name as Collateral
Although it is possible, applying for a loan using someone else’s property certificate is not a simple process. Below are several methods that may be used when applying through certain financial institutions:
1. Transfer the Name on the Certificate First
Every loan application; whether using your own certificate or someone else’s; comes with risks. This is why commitment from the borrower is crucial to avoid default in the future.
For a smoother process, it is recommended to apply for a name transfer on the certificate first. This can be done through the Land Deed Official (PPAT) or the local land office.
Make sure to complete all required documents, including the introduction letter issued by PPAT. While the name transfer process may take time and incur costs, it is worthwhile to avoid potential legal issues later on.
2. Using a Power of Attorney
Some financial institutions may still process a loan application using a certificate owned by someone else, but a power of attorney is usually required.
Legally, only the rightful owner whose name appears on the certificate has the authority to apply for financing using that asset.
Therefore, a power of attorney for encumbrance of collateral must be prepared; stating that the legal owner authorizes their asset to be used as loan collateral.
This helps prevent disputes if the borrower defaults and the collateral needs to be executed.
This power of attorney is known as SKMHT (Surat Kuasa Membebankan Hak Tanggungan), regulated under Article 1792 of the Indonesian Civil Code and Article 15 of the Law on Land Mortgage Rights. Key provisions include:
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SKMHT must be issued through a notarial deed or PPAT deed and must:
a. Contain no authority beyond granting a land mortgage.
b. Not include substitution of power.
c. Clearly specify the object of the mortgage, the loan amount, and identities of both the creditor and borrower (if different from the owner). -
The power of attorney cannot be revoked or terminated except when executed or after the validity period expires.
3. Using a Certificate Owned by Immediate Family Members
Generally, a loan application using a property certificate not under the applicant’s name can be approved if the certificate belongs to an immediate family member, such as a parent, child, in-laws, or vice versa.
It is also required that both the applicant and the certificate owner are listed under the same Family Card (KK). Additional requirements include a notarized statement letter from both the certificate owner and the family member involved.
The letter must clearly state their consent for the certificate to be used as collateral.
But what if the certificate owner has passed away? In that case, the certificate must first be transferred to the heir’s name, and a valid inheritance letter must be provided.
These are the essential points you need to know regarding using a house certificate not under your own name as collateral. This method carries high risk, so all parties involved must fully understand and willingly agree to the terms, with no coercion or falsification of data.
Clarity of ownership and authorization must be ensured before applying for such a loan. Therefore, make sure to choose a financial institution that is capable of handling these situations.
BFI Finance is a trusted financing company with a proven reputation and official authorization from the Financial Services Authority (OJK), ensuring transparency and legal compliance.
BFI Finance accepts loan applications with collateral such as Car BPKB, Motorcycle BPKB, or House/Shop Certificates. The approved funds can be used to meet various financial needs.
BFI Finance is the right partner to support you in achieving your financial goals. So, why wait? Apply for a legal and secure loan today; because #SelaluAdaJalan with BFI Finance.
