Encumbrance Certificate – Everything You Need to Know About EC_Banner


Encumbrance Certificate – Everything You Need to Know About EC

Transactions related to real estate and mortgages call for a fair share of paperwork. Among the list of requisite documentation, one needs to furnish an encumbrance certificate or EC, also known as bhar-mukt praman in Hindi, which establishes clear ownership of the property in question. Simply put, when buying or selling a house, an EC is used to ensure it is free from any monetary or legal liabilities to facilitate smooth property transactions.

Definition and Purpose of an Encumbrance Certificate (EC)

Definition and Purpose of an Encumbrance Certificate (EC)

Encumbrance means impediment or hindrance to one’s legal claim on a property that can impact ownership transfer during a transaction. If a house is pledged or mortgaged, the lender will add a ‘lien’ or charge to the property. This is done to ensure that the borrower or homeowner does not sell the house until full repayment of the loan.

An encumbrance certificate is an official document which proves whether the house is free from any disputes or obligations. For instance, if the owner has acquired the house through a gift deed, you can check the details in the EC. Or, if the house is attached by the court, sold to anyone else or if there are other existing owners who could stake a claim on the property.

Before buying a house, one should ensure it has a clear title. If you find any charges on the EC, it is necessary to rectify them before proceeding.

Importance of EC in Real Estate Transactions

Importance of EC in Real Estate Transactions

An encumbrance certificate is an important document required while buying or selling real estate for the following reasons:

  • Homeowners or sellers can affirm that the house does not have any outstanding liabilities and effect hassle-free property sales.
  • Prospective home buyers can verify the legal status and ownership title which safeguards against potential frauds or disputes.
  • If you wish to apply for a Home Loan or a Loan Against Property, lending institutions will ask for an EC. It helps them assess whether the property can be placed as collateral before approving loan requests.
  • An encumbrance certificate is given to the village or panchayat officer for updating land tax records if the concerned property or land tax has not been paid for over three years.

Understanding Encumbrance

Understanding Encumbrance

An encumbrance certificate contains information on all registered transactions carried out on the property for a specified period of time, usually up to 30 years. The following charges come under the purview of encumbrances and find detailed mention in the EC:

  • Chain of ownership change/sale over the years
  • Third-party ownership
  • Lease rights
  • Lien for mortgage
  • Other contested charges

An encumbrance certificate is issued by the sub-registrar’s office where the property has been registered. When you request an EC for a particular number of years, you will receive information for that duration only.

If the house has no encumbrances, a nil-encumbrance certificate or non-encumbrance certificate (NEC) will be issued. This indicates a clear title and absence of lien for safe ownership transfer.

Significance of an Encumbrance Certificate

Significance of an Encumbrance Certificate

An encumbrance certificate is vital in the following instances:

1. Buying or Selling a Property

Home sellers need to furnish an EC to prove clear title so that the property may be transferred without any problems. On their part, homebuyers should carefully check the EC before purchasing a house to understand if there are any financial or legal obligations attached to the asset that may affect their ownership rights.

2. Availing a Home Loan or a Property Loan

When you apply for a Home Loan or a Loan Against Property, lenders will require an encumbrance certificate to ascertain any existing loans or liabilities before approving the loan.

3. ​Withdrawal of Provident Fund

Employees who wish to withdraw their Provident Fund (PF) money to buy a property are required to submit an EC to show that the house they want to purchase holds no legal disputes or financial liabilities.

4. Property Records Mutation

New homeowners must present an encumbrance certificate when carrying out mutation of property records after buying or inheriting a house. This will help them update their name and other details in the government revenue records.

5. Flat Sale in a Building

Individuals who seek to sell their residential flat in a building complex must arrange for an EC to indicate updated payment of all dues such as maintenance charges, property tax, water bill, and electricity bill.

Obtaining an Encumbrance Certificate

Obtaining an Encumbrance Certificate

An encumbrance certificate is issued by the sub-registrar in whose jurisdiction the property lies. This is the same office where the property was first registered at the time of its purchase by the current and previous owners.

What Are the Eligibility Criteria to Apply for an EC?

What are the Eligibility Criteria to Apply for an EC?

Individuals who wish to sell their property can apply for an encumbrance certificate offline as well as online in some selective states. You can fill out and submit the forms as instructed. You will also need to pay an application fee, depending on the location of the property and the time frame for which you seek an EC. The charges differ from state to state.

Those who own houses in any of the following states can easily apply and download their encumbrance certificate online:

  • Karnataka
  • Tamil Nadu
  • Telangana
  • Andhra Pradesh
  • Kerala
  • Uttar Pradesh
  • Gujarat
  • Madhya Pradesh
  • Maharashtra
  • Odisha
  • Delhi

What Are the Documents Required to Apply for EC?

What are the Documents Required to Apply for EC?

Given below is the list of documents required to apply for an encumbrance certificate:

  • Mandatory documents, that is, PAN card or Form 60
  • Identity and address proof such as Aadhar card, PAN card, voter ID, electricity bill, water bill, etc.
  • Property details such as survey number, plot number, location and boundaries
  • Sale deed, partition deed or gift deed; if any deed has been executed in the past
  • Property registration document, title or possession deed

Note: Additional documents may be requested by the concerned authority.

How Do You Download the EC Online?

How do You Download the EC Online?

There may be certain variations in the online process to apply and download an encumbrance certificate depending on each state’s website requirement. Generally, the steps include as follows:

  • Visit the official portal of the land registration department
  • Register and then log in with your user credentials
  • Select the option to apply for an encumbrance certificate
  • Enter all the details such as name, address, mobile number, email id, etc. and click ‘Save/Update’
  • Fill in the period for which you require the EC. Provide property details like survey number, plot number and location as asked
  • Click on ‘Calculate Fee’ and make the necessary payment using any of the methods specified
  • Next, you will be directed to the ‘Acknowledgement’ page where you may view and take a print of the acknowledgement
  • The land records department will conduct an inspection and verify the information for the given property and duration
  • You can also check the status of your EC application online using the application number
  • Once its ready, you may download and print out your encumbrance certificate

Online applications are normally processed much faster as compared to offline applications taking just two to three working days. Whereas, if you opt for the offline mode of application, it might take around 15 to 30 days.

Checking Property History and Transactions

Checking Property History and Transactions

Since an encumbrance certificate traces previous transactions and records its legal and financial history, it can prove ownership change and sales conducted over the years rendering it invaluable for minimising property-related frauds. Thus, it holds legal validity for all official purposes and in the court of law when settling title and ownership disputes.

​Utilising Encumbrance Certificate in Real Estate Transactions

​Utilising Encumbrance Certificate in Real Estate Transactions

In India, there are two types of encumbrance certificates used in real estate transactions. These are:

1. Form no. 15 – Encumbrance certificate is issued as Form no. 15 if there are encumbrances on the property for the given period. It provides a detailed look at all registered transactions such as sale deeds, gift deeds, mortgage deeds, lease deeds, court orders and so on, which can impact the title and ownership rights of property sellers.

2. Form no. 16 – A Form no. 16 encumbrance certificate is given when no lender has placed a lien on the property or there are no encumbrances for the specified duration. It certifies that the house holds a clear title and has no outstanding charges or claims.

​Encumbrance Certificate v/s Title Deed

Encumbrance Certificate vs Title Deed

Property transactions involve extensive paperwork. While an encumbrance certificate denotes pending legal dues, liabilities or disputes against a property; a title deed helps buyers verify whether the seller of the house is the true owner and has the right to sell it.

A title deed is a formal document that conveys how the property has been inherited, owned, transferred or allotted by an authority. It also contains information regarding how much land a person owns, its description and location. Land ownership rights are transferred from one person to another through title deeds, which are then registered and deposited with the sub-registrar’s office.

In addition to ensuring that sellers provide an encumbrance certificate, homebuyers must conduct personal checks on the property to see if it is clear of encumbrances. Make sure that all the paperwork like title deeds, sale deeds, registration documents, occupation certificates, possession certificates, etc. are in order to eliminate snags at a later date, especially if you wish to avail of housing finance for buying a house. Having the right documentation, credit profile and eligibility will guarantee that you secure Home Loans at the most competitive interest rates and terms bringing down your overall cost of credit.

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​Frequently Asked Questions (FAQs):

​Frequently Asked Questions (FAQs):

Both encumbrance certificates and property tax receipts are important documents required for undertaking property transactions or mortgages. While an EC assists in proving clear ownership title free from legal and monetary charges, a property tax receipt indicates regular payment of a specific tax to the concerned authorities for owning the house.

Yes, you can obtain an encumbrance certificate online if your state supports it. Currently, only a few states offer digital EC application forms and downloads through their official land records and registration portals. Some of these states include Andhra Pradesh, Gujarat, Karnataka, Maharashtra, Kerala, Tamil Nadu, Madhya Pradesh, Uttar Pradesh, Odisha and Telangana. However, if your property is located in any other state, you will need to apply for an encumbrance certificate offline through the sub-registrar’s office.

Yes. Anytime you wish to sell or buy a property, you will be required to submit an encumbrance certificate that will mention how the house came into your possession – either through inheritance, gift, resale or new purchase. You will need to furnish other relevant documents as required for enabling easy property transactions and/or mutation.

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