Legal Construction of the Encumbrance of Fiduciary Security on Collateral Located Outside the Notary's Area of Office

Abstract

Fiduciary security is a widely used in rem security interest in financing practices, as it allows the debtor to retain possession of the collateral. Under Law Number 42 of 1999 concerning Fiduciary Security, the encumbrance of fiduciary security must be drawn up in the form of a Fiduciary Security Deed by a notary and subsequently registered to ensure legal certainty. However, a legal issue arises regarding the notary's competence to execute the deed when the collateral is located outside their area of office. The Law on Notarial Office strictly regulates territorial boundaries, whereas the Fiduciary Security Law lacks restrictions based on the location of the collateral. This study aims to analyze the regulation of notarial authority in drafting Fiduciary Security Deeds under both statutes, as well as the legal consequences regarding the authenticity of the deed and the validity of the fiduciary security itself. This normative legal research employs statutory, conceptual, and analytical approaches, utilizing the theories of legal certainty, authority, and legal protection. The results indicate that a notary is authorized to draft a Fiduciary Security Deed as a public official, provided that their authority is exercised in compliance with statutory provisions concerning territorial jurisdiction, procedures, and the formal structure of the deed. The location of the collateral outside the notary’s area of office does not automatically nullify the authenticity of the deed or the validity of the fiduciary security, as long as the deed is executed by a competent notary within their designated jurisdiction and fulfills all formal requirements of an authentic deed.