Legal Position of Notary's Cover Note Regarding Bank’s Legal Protection in Credit Agreements

Abstract

The signing of a credit agreement between a bank and a debtor involving collateral is generally bound by a notarial deed, which will undergo the collateralization process. Before the collateralization process is completed, the notary will issue a Cover note to the bank as the creditor. The purpose of this study is to evaluate the position of the Cover note issued by the notary in the bank credit agreement and the extent to which the legal strength of the notary's Cover note provides legal protection for the bank in the credit agreement. The research method used is normative legal research. The results show that the position of the Cover note issued by the notary or PPAT in the bank credit agreement is limited to explaining the existence of credit or collateral binding. The Cover note is not evidence of collateral but a temporary record and evidence that serves as a reference for the bank when granting credit. The notary's Cover note does not have legal strength to protect the bank as the creditor in the credit agreement if default occurs while the collateralization process is still ongoing by the notary.