THE LEGAL POWER OF THE NOTARY'S COVERNOTE IN CREDIT AGREEMENTS GUARANTEE LEGAL PERSPECTIVE

Abstract

The notary’s covernote is a document typically made by a notary to provide assurance for a transaction or credit. This covernote is commonly used to secure credit provided by a bank or other financial institution to the borrower. The existence and legal strength of the notarial covernote in credit agreements are influenced by the laws applicable in the country where the transaction takes place. However, generally, the notarial covernote can have several functions and legal strengths in the context of credit agreements, especially from the perspective of security law. The results of this study indicate that the authority and responsibility of the notary in credit agreements serve to bridge the interests of creditors and debtors in the preparation of deeds in credit agreements. Legal protection for creditors in credit agreements through the use of notarial covernotes is basically not prohibited and is permissible according to Law Number 10 of 1998 concerning Banking and Law Number 2 of 2014 concerning Amendments to Law Number 30 of 2004 concerning Notary Positions. However, the notary issuing the cover note as the basis for bank credit disbursement must be careful and thorough in checking the documents of the collateral object and verifying the involved parties to prevent issues in the land registration process and granting mortgage rights to the land office.