When you invest in real estate, it is necessary to ascertain that the property you intend to buy has a clear property title and zero pending dues. A non-encumbrance certificate, or NEC for short, ensures this paving the way for a hassle-free transaction. When you sell the same property at a later date, the new buyer will want to see this very document before closing the deal. Furthermore, lending institutions also require a non-encumbrance certificate before they acquiesce to Home Loans or property loan requests. Hence, NEC is a very important official document to the real estate sector.
What is a Non-Encumbrance Certificate?
Non-encumbrance means ‘without obligations or hindrances’. It indicates that a house is free of debts or mortgages and has a clear ownership title. A non-encumbrance certificate is used to verify that the property one wishes to purchase or offer as loan security to a lender holds no encumbrances. It is not linked to any legal or financial liabilities and is rightfully owned by the seller.
Similarly, encumbrances mean ‘burden or impediments’. They are charges imposed on a property. For example, if a house is bought with borrowed funds, is pledged as a loan collateral, is attached by the court, or has multiple ownership claimants – all this will reflect as encumbrances, which can severely impact real estate transactions and subsequent transfer of ownership.
Information Given in a Non-Encumbrance Certificate
A non-encumbrance certificate is issued by the area’s tehsildar, which typically contains as follows:
- Name of property owner
- Property-related documents
- Sale deed information
- Previous transactions
- Past owners
An NEC includes all previous transactions and history over a period of 12 years. One may request for information up to a maximum of 30 years. Remember, when you apply for an NEC, you will receive information for the specified period only.
Why Do You Need a Non-Encumbrance Certificate?
Before you buy a property, make sure it possesses no monetary and legal charges or lien. In this respect, a non-encumbrance certificate helps in the below-mentioned ways:
- Property sellers/owners still servicing Home Loans for the house that they plan to sell must first pay off their debts because they will need to furnish a non-encumbrance certificate to the buyer.
- As a buyer, if you do not obtain this document, you may be later straddled with legal and financial outstandings on the property.
- In the event that you apply for a Home Loan or a Loan Against Property, lending institutions will check the NEC for any existing loans on the house before approving loan applications.
- A non-encumbrance certificate also serves as title proof. Since it provides information on the property’s history and past owners, it helps settle ownership claims and disputes and safeguards against potential fraud.
- If the land or property tax has not been paid for more than three years, one has to present this document to the village or panchayat officer for updating the records.
- Individuals who withdraw funds from their Provident Fund to buy or construct a house are required to submit a non-encumbrance certificate as proof of clear title and lien.
Difference Between an Encumbrance Certificate (EC) and a Non-Encumbrance Certificate (NEC)
Details provided in both encumbrance and non-encumbrance certificates are pulled up from transactions registered in the state government records. Some of their distinguishing features include:
| Encumbrance Certificate | Non-Encumbrance Certificate |
|---|---|
| Presence of any lien - financial or legal liabilities or dispute - generates an encumbrance certificate | When there is no lien or registered encumbrances, a non-encumbrance certificate is created |
| Encumbrance certificate is issued through Form 15 | Form 16 is used to issue a non-encumbrance certificate |
| It normally takes 15 to 30 days to process an EC depending on property location and mode of application | You may receive an NEC within 20 - 30 days of submitting your application |
What are the Different Types of Non-Encumbrance Certificates?
Non-encumbrance certificates are of two types:
- Form 16 – If there are no encumbrances on a property, expect a nil or non-encumbrance certificate issued on Form 16. It means a house with clear title, no lien or other issues for that particular duration easing property selling and buying. Form 16 can fetch you a mortgage loan as well.
- Form 15 – In case there are outstanding dues or other liabilities on a property, you will receive an encumbrance certificate on Form 15. This document is a red flag and one should be wary of purchasing such properties. A Form 15 certificate impedes Home Loan and property loan approvals.
How Can I Get a Non-Encumbrance Certificate in Delhi?
Individuals who own a property in Delhi may apply for a non-encumbrance certificate either online or offline as per convenience. Both options are mentioned herein:
How to Get a Non-Encumbrance Certificate Offline
Here is the procedure to obtain an NEC in Delhi:
- Visit the sub-registrar’s office under whose jurisdiction your property falls.
- Collect Form 22 and accurately fill in your personal and property details.
- Submit this form with a Rs.2 stamp paper, requisite documents and purpose of application in the prescribed format.
- Pay the necessary fee at the time of submission. The fees generally range between Rs.200 to Rs.500 varying from state to state. The cost also depends on the time period for which you seek an NEC and size of the property.
- Thereafter, an inspector from the land records department will conduct a thorough assessment of the property.
- Upon verification, the department will issue an encumbrance certificate on Form 15 or a non-encumbrance certificate on Form 16 in case of zero encumbrances.
Note: You will receive SMS updates on your registered mobile number. The NEC can be collected from the sub-registrar’s office. This certificate is generated in the local language. To receive the English version, you will need to pay additional fees..
How to Get a Non-Encumbrance Certificate Online
If you wish to apply for an NEC online, follow these simple steps:
- Go to the official government portal. Access the Forms section and click on ‘Stamps and Registration’.
- Select the ‘Application Form for Encumbrance Certificate’.
- Download Form 22 and fill in the details as asked.
- Attach the required documents, pay the application fee, and submit.
- Once they receive your request, the authorities will inspect the property and verify the documents.
- If everything is in order, you should receive the non-encumbrance certificate within two to three working days. You can also track the status of your application online. Later, you can download and print out the NEC.
Apart from ease and convenience, online NEC processing is much quicker as compared to the offline mode. However, not all Indian states offer this digital facility. Non-encumbrance certificate proves invaluable when determining legal and monetary liabilities on a property. Further, you can swiftly establish previous ownership changes and title deeds aiding trouble-free transactions and ownership transfers.
*Terms and conditions apply.
