The increasing national development, which is based on the economic sector, transforms potential economic power into real economic strength by utilizing available capital facilities as the main support for this development. This requires a substantial amount of funding. To finance and ensure its proper distribution, credit-based funds are an essential means of financing. In 1984, the Governor of Bali established a rural financial institution to eliminate the ijon system and improve the rural economy. The management and ownership of this financial institution were entrusted entirely to the respective traditional villages (desa adat). Since its inception, the financial institution known as Lembaga Perkreditan Desa (LPD) has grown significantly. The increasing number of traditional villages in Bali that own LPDs demonstrates this growth, and the community has gradually felt its benefits. However, there are still shortcomings in its operations, particularly regarding credit agreements and mortgage rights. This study aims to examine the legal position of LPD in relation to mortgage rights in the loan and savings process and to understand the legal strength of LPD in credit agreements. The method used in this research is normative with regulatory, case, historical, comparative, and contextual approaches. The findings are expected to contribute to civil law literacy and serve as a reference for regulations related to LPD.