The importance of encumbrance certificate for property buying
BY S SELVAKUMAR
ENCUMBRANCE in general parlance means difficulties faced by someone in moving easily or hurdles or impediments or obstacles.
In legal parlance it means the charges or liabilities created on a property. In simple words, the property in question may be alienated, subject to the terms and conditions contained in the agreement/document, whereby it is held as a security for any debt or obligation of its owner which has not been discharged as on date.
Public in general frequently use encumbrance certificates in property transactions as the sole evidence of free title/ownership. They are under the impression that the encumbrance certificate would disclose all the encumbrances that a property may have, however, the truth is that there may be several types of encumbrances, which will not be reflected in the said encumbrance certificate.
It is very important that the period for which the encumbrance certificate is required, the detailed description of the property, its measurements, and boundaries are clearly mentioned in the application for encumbrance in order to get a proper and valid certificate.
The prescribed application form for obtaining an encumbrance certificate is form No. 22. The full details of the property, the period and the person who is applying should be disclosed in the said application. The encumbrance year commences from April 1 of a calendar year and closes on March 31, of the next calendar year.
Any fraction of the said encumbrance year attracts fee for the full year. The application has to be submitted at the jurisdictional Sub-Registrar’s office under whose jurisdiction the said property falls. A central record room is established in Bangalore at Seshadripuram, where records are available up to 31.3.2004. The copies of records from 1.4.2004 are available at respective Sub-Registrar’s Office.
The fee prescribed is for single property and per individual application form, however, if there are more than one property belonging to a single individual or jointly owned by more than one individual or under single survey number/village, no extra fees need to be paid.
The encumbrance certificates are issued in Form No. 15 or 16. If the property does not have any encumbrance during the said period, Form 16 will be issued i.e. certificate of Nil encumbrance. If the property has any encumbrance registered during the said period form No. 15 will be issued. The certificate in form 15 discloses the documents registered in respect of the property, the parties to the deed, nature of the encumbrance, amounts secured or transacted in the said deed, the registered number of the document, Book No. Volume No. date-wise. The encumbrance certificate, issued always will be in the language in which indexes are prepared in particular Registrar or Sub-Registrar’s office. If the indexes are not in English and the applicant wants certificate to be prepared in English, this request will be complied to the extent possible.
Though encumbrance certificates discloses all registered encumbrances on a particular property for the specified period, it has certain limitations and public should not completely rely on the certificates issued by the Registrar or Sub-registrar office for tracing the clear title of the
The encumbrances disclosed in the certificate are for the period for which certificate is issued and any encumbrance created at a prior date or at a later date are not included in the said certificate.
Omission and commission
The encumbrance certificate is issued in respect of the property whose detail is furnished in the application form and not as per the registered documents in respect of the said property. Thus, if the description of the property in any of the registered documents does not match the details of the property described in the application, such documents are not reflected in the said certificates. The issuing office also makes it very clear that, though search in the records for any given period is made with due diligence, the issuing office is not responsible for any omissions and commissions committed by it in issuing the said certificate.
The encumbrances certificate discloses the encumbrances created by the documents, which are registered in the particular office. In other words it is an extract of the register and any document by which the change is created but not registered does not find place in the certificate.
There are various documents for which registration is not compulsory and only optional. Most important is an equitable mortgage or mortgage created by deposit of title deeds a mode of mortgage utilised by banks to finance loans against deposit of the original documents. The borrower or guarantor delivers to bank the original title documents of the property. This creates a valid mortgage, which need not be registered. The document creating lease for a period of not exceeding one year is not compulsorily registerable. Any decree or order of a court, any award need not be registered. Testamentary documents will, also need not be registered. Such documents, which are not registered do not find place in Encumbrance certificate.
Therefore, it is always advisable to inspect the property personally and to verify and confirm that the original title documents are available with property owner. Some additional safeguards like paper notification, searching in jurisdictional courts for any pending cases would be useful.
In case of agricultural lands, they are generally inherited. The change of ownership is recorded in revenue records, mutation register of village panchayat. Such changes of ownership are not registered. As such encumbrance certificates does not reflect the true nature of the agricultural land. RTC, mutation extracts give complete details of change of ownership, the details of possession, the conversion of agricultural land to non-agricultural purpose. As such it is better to insist and rely on RTC and mutations extracts in addition to the encumbrance certificates in case of agricultural lands.
It is always prudent to verify the encumbrance certificates for a minimum period of 43 years, because the maximum limitation period of 30 years and adverse possessory rights. Always verify that the encumbrance certificate are issued as per your requirement in respect of the period, and that it contains the boundaries and the measurements of the property, the signature of registering authority and the office stamp apart from disclosing the names and the signatures of the persons who have searched and verified the records of the property.
The author is an advocate who is specialises in property laws. E-mail: firstname.lastname@example.org