Planning to invest in a residential property, then there are high chances of you coming across the Encumbrance Certificate. Before buying a property there are so many things that need to be taken into consideration. The most important thing is to verify if there are any legal charges associated with that particular property before making any decision. This Certificate will help you in finding out about the legal charges pressed on the property.
Buying a property is not something that you decide on a whim. There is so much careful consideration before you take that leap to purchase the property. People check whether the property is in a developing area, its locality, market price, whether there will rise in value over time. However, most people forget to check if there is or was any legal dispute on the property. It is important for you to know if the property has been in any legal disputes to make your decision. With EC you can ascertain such information.
So, in this article, we will provide you with all the information you need to know about the Encumbrance Certificate (EC).
Why is EC important?
EC plays an important role in property transactions. If you think that is it, then you are wrong. This certificate is crucial for those applying for loan property as collateral. It is important for applying for a home loan too. This certificate is important for any party that is involved financially with a property. Banks or Government institutions usually ask for 10 to 15 years of the encumbrance of your property. You can obtain EC for 30 years. If you want further assurance, then you can get the possession certificate of ownership of the property or land at their regional office.
EC has such importance because it serves as evidence to the buyer that there are no legal disputes on the property and the owner has a clear title. Buying a property under legal dispute unknowingly can cause numerous troubles to the buyer. So usually buyers should come prepared and check all the important details related to a property. If you are buying a property and take a home loan on that property, then you must remember to get EC of the property beforehand and secure the legal right and be eligible for a home loan.
Is everything included in the Encumbrance Certificate?
While Encumbrance Certificate consists of the complete transactional history of a property. However, there is still a chance that not every detail relating to the property is included in the Encumbrance Certificate. It will only show you formally registered transactions only. Let’s make it clear to you with an example if the concerned property is transferred from one party to the other, this particular transaction will appear in the Encumbrance Certificate only if the transaction is registered. The testamentary documents such as short term leases and wills are usually not registered so they will not be documented in the Encumbrance Certificate.
How to obtain an Encumbrance Certificate of a property?
To obtain an Encumbrance Certificate you must first register your property. You can get the Encumbrance Certificate from the sub-registrar office of the area in which you are planning to buy the property. There are few states such as Tamilnadu, Andhra Pradesh, Kerala, Gujarat, Odisha, Karnataka, Pondicherry are allowing people to obtain the computerized EC extract. For all the other states you must obtain the handwritten EC.
All you have to do is follow these steps:
- Apply at the regional registration office of the property. Fill the Form 22 i.e., application form and provide other details such as an attested copy of address proof, property details, a title deed, and EC obtaining fees. Remember the fees charged will depend on the period for which you need EC.
- Once the records are inspected for the requested time, the certificate will be issued between 15-30 days from the date of the application.
- The certificate will be issued along with either of two forms i.e., Form 15 or Form 16. In case of multiple transactions Form no 15 is issued and if there are no transactions recorded then Form 16 or Nil Encumbrance Certificate is issued.
Form 15 and 16
Form 15- This Certificate will hold details relating to the property transactions such as date of the mortgage, lease, sale, release, partition, Second party involvement, etc. It holds all the information relating to the other transactions, taxes, loans and all this will be listed according to the date.
Form 16- This certificate is also called as Nil or No Encumbrance Certificate. If the property you are interested in does not have any previous transaction history for the period you are checking this certificate is issued.
Conclusion
Before buying or investing in a property ensure that you have all the required documents. Ask your seller to provide you with the Encumbrance Certificate along with the other important documents. If not you can apply it yourself by following the steps mentioned above. The property you are interested in is in the states that issue computerized EC extract then you can get it online. Remember having complete information about the property you are interested in will save you from any future troubles. If you are planning to buy or invest or apply for a home loan do not forget to get your Encumbrance Certificate.