Novasi is: understanding, type, legal basis, and examples in the agreement

Novasi is a term in civil law that refers to debt renewal by replacing the old engagement into a new engagement. This concept is generally applied in the relationship between debts and aims to change the parties involved or objects in the engagement. In this article, we will discuss in depth about the understanding, type, legal basis, and examples of their application in the agreement.

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What is Novasi?

Understanding of Novasi until now has not been explicitly defined in the legislation in Indonesia. However, this mechanism is listed in Article 1413 to Article 1424 of the Civil Code (“Civil Code”).

According to this rule, the meaning of Novasi is the process of debt renewal by replacing the old alliance with a new alliance. Or in other words, Novasi is an agreement between the debit and creditor to replace the old alliance with a new alliance, which causes the old alliance not to occur, so the next time is a new alliance.

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The legal basis of novasi in Indonesia

Novasi is regulated in the Civil Code, namely in:

1. Article 1413 Civil Code, regulates three types of novasi in civil law.
2. Article 1414 – 1424 Civil Code, regulates the terms, conditions and legal consequences of the Novasi.

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Types of Novasi

Based on the Civil Code and Civil Law Doctrine, Novasi is divided into 3 (three), namely:

1. Objective Novasi
Objective Novasi is a debt update carried out by changing the old engagement into a new engagement, without changing the debtor or creditor. Or in other words, objective novasi only changes in the contents or objects of the debt, while related to the parties involved remains the same.

2. Passive Subjective Novasi
Passive subjective novasi is a debt update made by changing the old debtor into a new debtor. In this case, the creditor approved the replacement and released the old debtor from all rights and obligations that exist in the engagement.

3. Active Subjective Novasi
The active subjective novasi is a debt update carried out by replacing the old creditor into a new creditor. Or in other words, the legal relationship between the debtor and the old creditor ends, then the debtor is required to pay off the new creditors.

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Requirements for Novasi

Based on the Criminal Code there are several requirements for novasi. Among the requirements of the novasi include:

1. There must be a debt agreement that has been made previously between the debtor and the creditor;
2. There are requirements expressed by the parties and cannot be expected;
3. Meet the valid requirements of the agreement, including:
   – The agreement of the parties who bind themselves;
   – skills to make an engagement;
   – specific questions;
   – Unexpected reasons.

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Examples of cases of novasi in everyday life

Examples of cases of novasi in everyday life are as follows:

1. Objective Novasi
A bought a car from B for Rp. 250 million with a payment agreement made in 10 installments. After paying 3 installments, A experienced financial difficulties. B then agreed to delete the debt of the car’s purchase and replace it with a new agreement where A would rent his house to B for 2 years as a form of repayment of the remaining debt. Old engagement (buying and selling cars) is removed and replaced with new engagement (renting a house).

2. Passive Subjective Novasi
A has a debt to ABC Bank of Rp. 100 million. Difficulty paying, A asked his brother, D, to take over his debt. With the approval of Bank ABC, a novasi agreement was made where D became a new debtor responsible for the debt, while A was released from its obligations. Bank ABC remains as a creditor, but the debtor changes from A to D.

3. Active Subjective Novasi
A has a debt to B of Rp. 30 million. B requires immediately cash and offers receivables to C. With the approval of A, a Novasi agreement is made where C becomes a new creditor replaces B. A remains as a debtor, but the payment obligation is transferred from B to C. A is released from its obligations to B and now owes C.

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The difference between novasi and subrogation and cessie

The following is the difference between novasi and subrogation and cessie:

1. Novasi
Novasi is a debt update carried out by replacing the old debt with new debt, so that the old debt is removed and replaced by a new debt. This process can be in the form of a replacement of the contents or requirements of the engagement and replacement of one party (both debtors and creditors) with new parties. In practice, Novasi is carried out on the basis of agreements and approval between the parties.

2. Subrogation
Subrogation is the replacement of third parties in the position of the creditor because it has paid off debt to the creditor. In this case, debt remains, but the position of the creditor moves to the third party who makes payments. This process does not change the contents of the engagement, but only replaces the old creditor with a third party.

In practice, subrogation can occur without being obliged to do a notification to the debtor, because it is based on law or agreement between a third party and the creditor. The goal of a third party to make payments to the creditor is to take over the old creditor’s position, not to free the debtor from the obligation to pay debt.

3. Assignment
Cessie is the transfer of the right of the rights (receivables) from the old creditor to the new creditor based on the agreement. In this case, there is no payment of debt, but rather transferring the right of creditor to other parties without changing the position of the debtor.

In practice, Cessie must be notified or approved by the debtor. The purpose of Cessie is to divert the right to collect legally to a third party, so that the debtor knows whom he must fulfill his obligations.

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Benefits and Risks of Novasi

Novasi in its implementation has benefits as well as risks for the parties involved. The benefits of novasi include:

1. Increase legal certainty
With the agreed agreement in writing, Novasi provides clarity regarding the rights and obligations of each party after the debt renewal is carried out.

2. Providing legal flexibility
The parties can adjust the contents of the agreement as needed, including replacing the debtor, creditor, or changing the contents of the engagement.

3. Reducing the potential loss for the parties
Through Novasi, creditors can replace debtors who are at high risk with parties who are more capable of paying, while debtors who experience financial difficulties can get time leeway to pay off debt, so that both parties avoid losses or default.

While the risks of novasi, consist of:

1. Risk of causing new disputes
If the New Testament is not well organized, it can make a new dispute about the content or implementation of new alliances made by the parties.

2. Special Rights and Guarantees Do not automatically move
The privilege and guarantees (such as mortgages) attached to the old debt do not automatically move to new debt unless it is explicitly agreed upon, so that it can pose a risk to the creditor.

Also read: Do you need a debt agreement? Check out functions and examples!

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(This article has been edited by the perqara editorial team)

Legal basis

1. Civil Code (“Civil Code”)

Reference

1. Alfitri Setyaningrum, “Juridical Problematic Implementation of Passive Subjective Novasi in Credit Agreements in Agreement Credit Due to Dependent Rights Giving”, Repertorium Journal, (2015).
2. CORRY Angelica Bintania Dwi Putri, Achmad Busro and Ery Agus Priyono, “Passive Subjective Novasi Mechanisms With the Delegation (Study at PT Bank Mandiri (Persero) Tbk Kebon Jeruk Branch West Jakarta)”, Diponegoro Law Review, (2016).
3. Gede Bangbang Mertha Yasa and I Nyoman Surata, “Settlement of bad credit through Novasi at PT BPR Padma Singaraja Branch”, Kertha Widya: Journal of Law, (2016).
4. I Gede Angga Permana, “The Use of Novasi Legal Efforts in Settlement ACTA COMBITAS: Journal of Notary Law, (2019).