Encumbrance Certificate – most important legal document for buying property

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The “Encumbrance” means the charges or obligations produced with a specific property, whereby it is kept as a security for any legal liability of its owner which has not been discharged as on date. The encumbrance certificate includes all the transactions (financial & others) related to a specific property for a time period as required.

The encumbrance certificate is required in property dealings as a proof of free title/ownership. When purchasing a flat, land or house, it is essential to concur that the land or property does not have any legal dues. A probable home buyer needs to ensure that the property he / she plan to buy has a clear and viable title. The encumbrance certificate confirms that the property is not mortgaged and contains no legal charges. The encumbrance certificate for property is provided by the relevant sub registrar office where the deed has been recorded.

The encumbrance certificate is important for buying property as well as for applying Home loan or Loan against Property. Government Authorities and Financial Institution like banks etc. request 13 years of encumbrance. You can get 30 years encumbrance certificate to be checked out. If you still have any concerns, it is possible to take a Possession Certificate of the ownership of the particular property, which can be provided by the village office.

EC Limitations

General public often use encumbrance certificates in property dealings as the only evidence for checking out free title / ownership. They are under the false impression that the encumbrance certificate would reveal all the encumbrances that a property might have. Nevertheless, encumbrance certificate has several limitations and public should never entirely depend on this certificates.

Besides the transactions normally reported in an Encumbrance Certificate, there are certain other transactions referring to immovable properties as well as other matters which will not captured in an encumbrance certificate for the reason that, such documents are not required registration under the Registration Act, 1908. Various kinds of transactions and matters, which will not appear in an EC, are mentioned below:

• Equitable mortgage details: This is a mortgage by depositing title deeds in which the customer has to deposit the original documents relating to the property with the bank and does not get it registered at the registrar’s office.
• Testamentary documents: These documents are not essential to be registered with the registrar.
• Leases: Any lease for a period of less than a year does not require to be registered. In any transaction of sale or buying of property.
• Other transaction: Oral tenancy, tax liabilities, prior unregistered agreements, family arrangement, unregistered Will and other unregistered agreements do not need to be registered.

Procedure to apply for Encumbrance Certificate

Apply on Form 22 withRs.2 non-judicial stamp affixed to the Tehsildar of relevant area. You have to give your complete residential address and the purpose for which the certificate is needed.

• Address Proof: You should attach Certified Copy of ration card or any residence address proof (attested by any government authority).
• Details of the property Title: Details of ownership of the property, survey number and address. It is very important to mention full description of the property, measurements and boundaries as well as the time period for which the certificate is required.

The application should be submitted to the jurisdictional sub-registrar’s office. The required fees have to be paid. The charge is usually to be paid year-wise, with any time fraction of the year being taken as a full year. The year commences on 1^st April and ends on 31^st March.

The Tehsildar (revenue administrative officer-taxation) will look for a report from the Talatti (Patwari) if there is any entry in support of any person or legal body. In case there is no such entry and the report is positive, “No Encumbrance Certificate” is issued after doing a detailed enquiry. The Encumbrance certificate may be issued between 15 to 30 days.

The Encumbrance certificate is issued on Form no 15 or Form no 16 depending on whether any encumbrance is produced on property or not. If there does not any encumbrance on property during said time period then Form no 16 will be issued with nil encumbrances. And if there is any charge against the property for said time period then Form no 15 will be issued which reveals the nature of charges produced, documents of the property registered, amount secured, and the registration details and references etc. which have been registered before the registration authorities and recorded in Book-I maintained by the Registration Authorities for any meticulous period for which the encumbrance certificate is wanted for.

Importance: A ‘no encumbrance certificate’ is the most important document. It is also issued for the purpose of mortgaging a property for a loan. It certifies that the property is not already mortgaged.

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