Can Inherited Land Certificates Be Mortgaged to a Bank Before the Name Transfer is Completed?
JAKARTA — The need for urgent funds often prompts heirs to consider mortgaging inherited land to banks. However, complications arise when the land certificate remains in the name of the deceased parent or original owner.
Whilst the family physically controls the land, administratively the name transfer has not been completed.
“If the rights holder whose name is listed in the certificate has passed away, a transfer of inheritance rights must be carried out to the heirs by submitting the relevant documents,” stated Shamy Ardian, Head of the Public Relations and Protocol Bureau of the Ministry of Agrarian Affairs and Spatial Planning/National Land Agency (ATR/BPN), as cited on Monday, 2 March 2026.
Under Indonesian law, when the property owner dies, their land rights automatically transfer to the heirs. This is affirmed in Article 833 paragraph (1) of the Civil Code (KUHPerdata).
However, in banking and land administration practice, the legal basis for action is not merely material rights, but also the juridical data recorded in the certificate. If the certificate remains in the name of the deceased, heirs are not yet recorded as rights holders at the Land Office (Kantah).
To mortgage land to a bank, a Mortgage Right (Hak Tanggungan) must be established over the property. The requirements are regulated in Article 8 paragraph (1) of Law Number 4 of 1996 concerning Mortgage Rights.
The law stipulates that the party granting the Mortgage Right must possess the authority to perform legal actions regarding the pledged property. This means the mortgagor must be registered as the rights holder in the certificate. If the name transfer has not been completed, administratively the heirs do not yet possess such authority.
Additionally, inherited land that has not been divided constitutes joint property belonging to all heirs. Any legal action regarding such property, including mortgaging to a bank, requires the approval of all heirs. Without such approval, the security agreement risks being void or unable to be registered as a Mortgage Right.