Why Encumbrance Certificate Is Important For A Homebuyer?

Realty Sector is the talk of town after Union Budget 2017 where Honourable Finance Minister Arun Jaitely has given affordable housing in India a boost by attaching various benefits to the sector. But, as a homebuyer, the process of purchasing a house is not easy. You need to have all documents in place in order to avoid any hassles regarding property transactions later on. Encumbrance Certificate (EC) is one such document that needs to be checked in order to execute your property deal legal and clean.

Encumbrance Certificate and its Significance:
This certificate certifies that a property is free from legal and monetary liabilities and can be sold further as free ownership or title. It clarifies that you can attain its title with no baggage associated with it. In order to obtain a home loan, banks generally demand past 13 years EC of a property against which the home loan is required to undertake. EC reflects the past property transactions as well.

It can be acquired from the sub-registrar’s office where that property deed has been executed. EC is basically an extract of the register maintain at the sub-registrar’s office and in case particular document is not registered with the registrar’s office, it will not reflect in EC. It is very important in to obtain a ‘no encumbrance’ certificate as in case of failure if there is a mortgage or liability of any outstanding loan, the same shall get transferred to new owner along with the title of new property.

Mortgages which are generally not reflected in EC:
• Short leases for a period less than one year are not registered at Registrar’s office.
• Testamentary documents
• Mortgage by deposit of title deeds like borrower deposits property’s original papers with bank.

Kinds of Encumbrance Certificates:
There are generally two types of EC base upon its time it is sought and the transactions pertaining to it and one must know both kinds of Encumbrance certificates.
Form 15: In case of sale, mortgage or other property deeds are executed with the sub-registrar, then From 15 shall be issued reflecting the name of the owner for a particular period.
Form 16: If no transaction is registered for the sought period of EC, then Form 16 shall be evidencing that the property is free from all kind of liabilities for the given period. However, the certificate does not clarify on the mortgages which are generally not reflected on EC.

Procedure for obtaining an EC:
• Apply on Form 22 with non-judicial stamp affixed on it to the Tahsildar
• Provide your complete residential address with an attested copy of your adhar card as residence proof.
• Also provide the purpose of certification application.
• Property details such as correct survey number, its full description, its measurements and boundary descriptions as well as its period must be clearly mentioned.
• A year-wise fee with any fraction of year taken as full is also required to be submitted.
• Application is required to submit to thee jurisdictional sub-registrar office.

Any pending litigation which is not registered with the registrar may not reflect in EC but still it is considered as one of the vital document that clarifies a property is ‘majorly’ free from encumbrances.