What is an encumbrance certificate?


An encumbrance certificate is basically a legal document that clarifies whether or not a particular property is free from legal or financial burdens

An encumbrance certificate can provide answers to many queries that a home buyer can have. These include:

  • How to make sure the property you are buying is not pledged by the seller to a bank?
  • Is the person selling you the property actually its legal owner?
  • Do you know how many hand the property you are buying has changed since its inception?
  • How do I find out if the property that I am buying, is free of debts?
  • What if the previous owner has taken a debt against a property?
  • What if someone else has acquired this property, without the knowledge of the owner?

A buyer would find the answer to questions like these in an encumbrance certificate (EC), which is among the many documents that home buyers would find most crucial to complete their purchase. Considering this is an important piece of paper to ensure legal ownership over a property, buyers must make know everything about an encumbrance certificate (EC).

 

What is the meaning of encumbrance?

According to Oxford Learner’s Dictionary, encumbrance, a noun, means a person or thing that prevents somebody from moving easily or from doing what they want. The meaning of the term becomes clear if you check out its synonym, burden. The similar meaning applied in the context of a property.

An encumbrance certificate is basically a legal document that clarifies whether or not a particular property is free from legal or financial burdens. An encumbrance certificate would, for instance, show you if it has been pledged by the seller to a bank. This certificate would also show who the current owner is, and how many hands the property has changed since it first came into being. Once you receive this document, you would know you are dealing with a genuine seller and the property is not in any bind, legally or financially.

The Encumbrance Certificate would reflect the legal and financial associations of the property – if the owner has taken a loan against it, the certificate would show the same; if the property is caught in any legal tussle, the EC should reflect the same.

In Hindi, the encumbrance certificate is known as bhar-mukt praman.

How is EC different from OC and CC?

An encumbrance certificate is entirely different from an occupancy certificate (OC) or a completion certificate (CC). While the OC certifies that a building is for habitation by the residents, the CC is an official statement that the structure has been created in compliance with the rules.

A CC attests the fact that the building has been constructed by following the safety norms provided in the prevalent building code. The CC also acts as a proof that the building has been approved by the local authority or the municipal corporation or the directorate of town and country planning. Also, a provisional CC is provided when builders have to hand over units to the buyers, while some work is still pending.

Difference between EC, completion certificate (CC) and occupancy certificate (OC)

Buyers must be mindful of the fact that these three documents, which are crucial for property purchase, serve varying purposes and one must not be confused with another. While a CC is issued by the local authority to a builder after the completion of a building in compliance with the building plan and other regulations, the local authorities issue an OC stating their lack of objection in allowing the possession of the project. The EC as explained earlier, is neither of the two documents.

 

When is encumbrance certificate needed?

By and large, you would require an encumbrance certificate in the following circumstances:

When you are buying a property: This is a must document to ensure you are dealing with the real owner, and there are no pending loans against the property.

When you are taking a home loan to buy a property: Banks typically ask for the encumbrance certificate before accepting your home loan application.

When you withdraw money from your provident fund to buy a house: Your employer would ask for the EC if you are withdrawing money from your provident fund to make the upfront payment for your property purchase.

When you go for property mutation: After buying a property, the owner has to get the ownership transfer recorded in the government record by way of property mutation.

When you are selling a property: The seller has to apply and get the document out from the government record to show it to the buyer.

When do you need an encumbrance certificate?

  • When buying property
  • When selling property
  • When applying for home loan
  • When withdrawing PF to buy property

 

Which authority issues encumbrance certificate?

The sub-registrar in whose jurisdiction the unit exists issues the encumbrance certificate for the property. Basically, this is the office where the property was registered at the time of the purchase by the current and previous owners.

 

What details are mentioned in encumbrance certificate?

An encumbrance certificate issued by the sub-registrar’s office has all the details of the property, its owner, transfer of ownership, mortgages, etc.

 

What is nil-encumbrance certificate?

A nil-encumbrance certificate is issued by the sub-registrar’s office for a property which has not seen any transaction in the period for which an encumbrance certificate has been sought by the applicant. A nil-encumbrance certificate is issued in Form 16.

What are the documents needed to get encumbrance certificate?

And applicant will have to provide the documents below to apply for an EC:

  • His address proof
  • His signature
  • Details of the property for which he is seeking an EC
  • A copy of the deed if a deed has been created for the property

 

How many types of encumbrance certificates are there?

Encumbrance certificates have two types:

Form 15: If a property has any encumbrances during the period for which the applicant has sought a certificate, the sub-registrar’s office issues an encumbrance certificate on Form 15.

Form 16: If a property has not registered any encumbrances during the period for which the applicant has sought a certificate, the sub-registrar’s office issues a nil-encumbrance certificate on Form 16.

 

What are the details mentioned in Form 15?

Typically, Forms 15 will contain each piece of information pertaining to inheritance, sale, purchase, lease, mortgage, gifting, relinquishment, partition of the property in question.

 

Which are the states that issue encumbrance certificate online?

Barring a few states, encumbrance certificates in India are mostly issued physically. States that issue encumbrance certificates online are Andhra Pradesh, Odisha, Kerala, Puducherry, Tamil Nadu and Telangana.

Apply online for encumbrance certificate in Andhra Pradesh.

Apply online for encumbrance certificate in Odisha.

Apply online for encumbrance certificate in Kerala.

Apply online for encumbrance certificate in Puducherry.

Apply online for encumbrance certificate in Tamil Nadu.

Apply online for encumbrance certificate in Telangana.

After the state’s online system Kaveri Online Service developed technical glitches, the Karnataka government, on June 10, 2020, decided to go back to the offline mode for issuance of encumbrance certificates and other property-related documents. Owing to the malfunctioning of the site, the state had also allowed farmers in Karnataka to avail of loans without having to submit ECs. It was decided that farmers could submit this document at a later stage. The issue has also impacted property registrations across the state, including the capital Bengaluru.

How to apply for encumbrance certificate?

In states where ECs are not issued online, the applicant will have to visit the sub-registrar’s office where the property in question is registered. Write an application on a plain paper, clearly mentioning the information you seek, and submit it along with duly filled Form 22. You will have to pay a nominal fee along with your application to get the EC. The fee would vary, depending on the period for which the EC is sought.

What is an encumbrance certificate?

 

What is the process to apply for encumbrance certificate online?

To get encumbrance certificates online, the applicant follow this step-by step guide. Do note here that the service is available only in a few states.

For a clearer understanding, you will show here how to apply online for EC in Telangana.

Step 1: Go to the official website Meeseva portal.

Step 2: Click on the 3rd tab that appears on top of the page, Government Forms.

Step 3: Scroll down the page that appears. You will find the Application form of Encumbrance Certificate under the head Stamps and Registration. Download the form and fill the required information. Attach the necessary documents along with the form.

Step 4: Find out the nearest Meeseva centre, and submit your application there along with the required fee.

Step 5: After the submission, you will be issued an acknowledgement slip.

Step 6: After verification, you application will be sent to the sub-registrar’s office, which is responsible to carry out a physical inspection of the property before issuing an encumbrance certificate.

Step 7: While you would get updates on the progress of your application through SMSs from the Meeseva portal, you could also track the status on this portal.

Step 8: It takes 6 working days for the sub-registrar’s office to issue the EC.

 

What is the format for owners to apply for encumbrance certificate for their property?

Property owners have to follow a standard performa while applying for an EC. If you are a property owner applying for an EC in Delhi, click here to find the encumbrance certificate application format.

 

What is the fee to get encumbrance certificate?

There is only a nominal fee – charges vary from state to state and may range between Rs 200 and Rs 500 – that an applicant has to pay to get an EC. Charges might, however, vary depending on the period for which you are seeking information.

 

How much time does it take to get encumbrance certificate?

While it might take between 15 and 30 days to get an EC offline, the document is issued in matter of 6 to 7 days in states where the certificate is issued online. In Delhi, for instance, it takes 21 days to get an EC offline.

 

What is the period for which encumbrance certificate can be taken?

An encumbrance certificate could be taken for a period ranking between 12 and 30 years.

 

Why taking an encumbrance certificate is important?

The encumbrance certificate is among the many documents that establish that a property is or is not free from legal/monetary hassles. Buyers must demand the sellers show this document before they make a decision to purchase a property.

 

Is EC enough to make sure property is hassle free?

While an EC is a crucial document that helps buyers get the information they need with regard to a property’s legal/financial position, a buyer must be mindful of the fact that not all the information and change of hand of a property might be registered in government records. This is to say, the government will be able to provide though EC only that information which it has received from the owner by way of registration. If a transaction is not carried out personally without proper registration, the EC issued by the Sub-Registrar’s Office would obviously not reflect that information.

 

Why keeping an eye on the EC is important?

After he found out that his Chennai property was being encroached upon in 2020, Bangalore-based K Natesan got to know about the nature of the fraud through the encumbrance certificate. Three men, who were arrested in March 2021 for the offence, had grabbed his 2,400-sq ft land parcel, valued at Rs 1 crore and transferred the title to one Yesudas, through a settlement deed. This makes it evident why checking the EC is not a one-time job. One needs to keep an eye for any changes in it, as well.

 

Word of caution

Aside from making sure that the EC is made available by the seller, the buyer must also apply due diligence and make personal checks, to ensure that the said property is free from any encumbrance. While the documentary proof does act as a safety net, land-related frauds, especially in plot sales in rural areas, are quite common. Unfortunately, such buyers are also not able to move the RERA as these transactions do not fall under the purview of the Real Estate Regulatory Authority.

 

FAQs

Do I need EC for plot purchase?

Yes, a buyer should seek encumbrance certificate whether he is buying a plot of a residential building such as flat, apartment, etc.

Do I need EC for flat purchase?

Yes, a buyer should seek encumbrance certificate whether he is buying a plot of a residential building such as flat, apartment, etc.

What is Form 22?

Form 22 is the standard performa used to apply for an encumbrance certificate.

How can I get encumbrance certificate online?

In majority of states, applicants have to visit the sub-registrar’s office.

 

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