Are you planning to move into a new house? Buying a home can be sometimes challenging due to a shortage of funds. In that case, you might opt for a Home Loan. This process requires several documents. One such document is an encumbrance certificate that you must have come across while preparing for certifications.
What is this encumbrance certificate, and why is it important? Let’s find out here.
What is a Certificate of Encumbrance?
“Encumbrance” refers to any financial or non-financial claims on a property in question by parties other than the property’s owner.
The Encumbrance Certificate (EC) is crucial documentation that serves as evidence of a property’s unrestrained title and possession. The document is required when purchasing or selling a property. When requesting a home loan, it is also crucial to verify that the property in question is free of any financial or legal obligations. One can obtain an EC by visiting the office of the relevant Sub-Registrar.
Encumbrance Certificate is a powerful means to answer your doubts about a property. It provides you with answers such as:
- How can you ensure that the vendor has not pledged the property you are purchasing to a bank?
- Is the individual selling you the property a legitimate owner?
- Since its construction, how often has the property in question been reconstructed?
- How do I determine if the property I am purchasing is debt-free?
- What happens if the preceding proprietor secures a debt with the property?
- What if another party has acquired this property without the owner’s knowledge?
Are there different types of Encumbrance certificates?
Form 15 and Form 16 are the two varieties of encumbrance certificates.
Form 16 or a nil-encumbrance certificate is issued if: a property in question hasn’t registered any encumbrances during the period for which the person has requested a certificate.
What is the Importance of the Encumbrance Certificate?
In the following elements, the significance of an EC is expressed:
- Purchasing a home is a substantial financial investment, so buyers must investigate any legal obligations that may migrate to them along with the property.
- Obtaining an “Encumbrance Certificate” for a property assures a buyer that the property is free of all financial and non-financial liabilities, such as liens, unpaid loans, and leases.
- This certificate is crucial and should be applied for before signing the conveyance deed.
- Subsequently, the document is additionally given at the time of loan against property and home loan application.
- The customer must obtain it to secure the property’s legal name and ensure the buyer is eligible for the loan.
Other instances where the Encumbrance Certificate may be required include:
- The necessary documents must be submitted to obtain property mutation (Khata Registration / Khata Transfer / Patta).
- If the property or land tax has been paid for less than three years, the Village / Panchayat Officer gives the certificates to supplant the land tax records.
- To withdraw PF for a property.
- To purchase a residence or reconstruct it.
How to Obtain a Certificate of Encumbrance?
The procedures required for applying for an Encumbrance Certificate vary by state. A few conditions in the United jurisdictions permit online applications for an EC. You must visit the sub-registrar’s office if you cannot submit an online application for an Encumbrance Certificate in your state.
The applicant must follow the steps outlined below to obtain encumbrance certificates online.
- Visit the official website for land registration in the respective state and select the option to register for an EC.
- On the application for the encumbrance certificate window, complete all required fields, then select save.
- Enter the time period for which you require the EC, then click the ‘Calculate Fee’ button.
- After the application fee has been paid and submitted, you will be directed to the ‘Acknowledgment’ window. You can print the acknowledgment by clicking the ‘View Acknowledgement’ button.
The applicant must follow the steps outlined below to obtain encumbrance certificates offline.
Application for an EC must be made to the registration office with an attested copy of the following:
- An address proof
- Information about the property
- Details about its title
- The fee for procuring the certificate
Once you submit the attested copy or documents online, the following will be:
- Following verification of the attested copy, your application will be forwarded to the sub-registrar’s office.
- The officer will conduct a physical inspection of the property. He will consult the Indexes for information about the specified time frame.
- If no transactions have occurred during a specified period, a Nil Encumbrance Certificate (NEC) is issued in its stead.
- The credentials are issued between 15 and 30 days after the application date.
- The applications and certificates are outlined in the annexures to the regulations of the respective states’ Registrations Acts.
- Typically, a request is made on Form No. 22, and the EC and NEC are issued on Forms No. 15 and 16 of the respective state’s regulations.
You can sign off the conveyance deed without stress now that you have the Certificate of Encumbrance.
