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Encumbrance certificate is a proof of complete ownership on the property. This document also proves that the property does not have any legal dues on it. A house buyer should confirm that the property he intends to buy has no claims on it. The encumbrance certificate(EC) is important when purchasing or selling a property, when applying for a home loan or mortgaging the property. This document ensures that the property does not have any existing mortgages against it.
Banks ask for around 13-15 years of EC when providing home loans. However, it is possible to obtain ECs containing details of the past 30 years. Possession certificate, in addition to EC, can act as a proof of ownership of the property. The possession certificate can be obtained from the village office.
The EC is issued in forms 15 and 16. If the property has no encumbrance during the period for which EC was applied, then Form 16 will be issued. Otherwise, form 15 shall be issued. The form 15 gives details on the property, the parties who are involved in encumbrance, nature of encumbrance, registered document number and amount transferred in the sale deed.
Generally, encumbrance certificate(EC) is considered to be the final proof of ownership of a property. However, EC has some limitations to its usage. EC gives information about the encumbrance on a property that occured during the search period. However, any encumbrance that came into existence before or after the search period cannot be determined. Also, EC contains details only on those documents that have been registered in the sub-registrar's office. In case a document is not registered in the sub-registrar's office, it would not be captured in the EC. Examples of some such transactions are
- Short leases that are for a period shorter than 1 year need not be registered at the sub-registrar's office.
- Creation of equitable mortgage: Some mortgages are obtained by depositing the title deed with the bank. These mortgages are not registered at the sub-registrar's
- Testamentary documents that need not be registered with the registrar.
Hence, prospective buyers should not rely on EC as a proof of title of the property.
Procedure for obtaining EC
When purchasing a property, make sure that you obtain EC before finalising the transaction. Generally, banks ask for ECs of the past 13 years. However, you can request for an EC that tracks a period of 30 years. If the owner fails to request for an EC when purchasing the document, the onus of repaying any existing mortgage on the property shall fall on the new owner. The following steps outline the procedure to obtain a no encumbrance certificate or encumbrance certificate.
- The application should be made on form 22. with a Rs. 2 non judicial stamp fixed on it. This application should be handed to the Tahsildar along with your complete address and reason for applying for EC. You would also need to provide particulars about the size of the land, measurement, full description of the property, survey number of the property, place where the property is situated, the boundaries, etc.
- Next you would need to pay the year-wise search fees. The EC usually begins from April 1 upto March 31st of the next year. Search fees is applicable for the whole year and any partial year search would entail 1 year's search fee.
- Make sure to enclose an attested copy of ration card or proof of residence address.
- The application form needs to be submitted at the sub-Registrar's office under which the property falls.
- In case the property has an encumbrance against it, form 15 shall be issued. In case it has no encumbrance against it, form 16 shall be issued.
- Form 15 gives information on the amount secured, registration details with reference numbers, book numbers, documents of the property registered, and nature of the charges created.
- The time required for this procedure may be between 15-30 days.
The encumbrance certificate is normally issued in the language in which the records are maintained at the sub-registrar's office. An english translation of the EC can be obtained by paying an additional fee.