In Q3 2021, India witnessed growth in property sales by almost 113% across the top seven cities. However, buying or selling property involves several legal procedures and documentation. Among this paper, the encumbrance certificate (EC) is one of the most crucial documents required while buying or selling a property. Therefore, it is necessary for individuals to know more about this certificate, its importance and the procedure to obtain it.
What is an encumbrance certificate?
An encumbrance certificate is a statement that declares that a particular property is free from any financial or legal liability. The term ‘encumbrance’ refers to any charge levied on a particular property that is pledged to avail a loan or mortgage.
This encumbrance certificate can be of two types based on encumbrance:
Form 15: In case of property’s registration related to mortgage, sale and other deeds are recorded at the respective office, the registrar issue this certificate. It also includes encumbrance nature like lease, gift, partition and likes.
Form 16: Registrar issues it as a non-encumbrance certificate. In case a property does not involve any liability for a particular period, the authority issues this certificate.
However, in any case, this certificate does not contain any unregistered transactions. In simple words, this document implies that the said property has free ownership or title. Hence, knowing the encumbrance certificate meaning is essential as individuals often mistake it with completion and occupancy certificates.
How to get an encumbrance certificate?
An encumbrance certificate entails all property details like its owner, mortgages, transfer of ownership, etc. The application process for this certificate varies with states. Selected states like Odisha, Andhra Pradesh, Tamil Nadu, Uttar radish, etc., allow individuals to apply for EC online.
However, for other states, individuals need to collect encumbrance certificates from Sub-Registrar’s office where the said property is registered.
Following is the process to obtain this certificate:
- Apply for an encumbrance certificate at the respective registrar’s office along with Form 22. This form is also available on the land registration site of selected states.
- Submit the form with Rs.2 stamp paper, attested copies of address proof, purpose of getting this certificate, property title and other details.
- Pay specified fees while submitting it.
- After receiving the application, an inspector will check all the transactions against this property for a particular period.
- Once this inspection is over, sub-registrar will issue an encumbrance certificate in Form 15 with all transaction details for that period. In case of no transactions, a NIL EC will issue in Form 16.
It takes nearly 15 to 30 days to get an encumbrance certificate document. Hence, individuals planning to apply for a loan against property soon need to collect it beforehand to avail funds on time.
The fee for an EC starts from Rs.100 and goes up as the number of years one asks for the certificate. It also varies with different states.
Encumbrance and possession certificates are very necessary. These are some of the essential documents needed to apply for a loan against property.
Importance of encumbrance certificate
Besides, property owners should also know the importance of this certificate. Following are the instances where individuals need to present an encumbrance certificate:
- Purchasing a property.
- Taking a home loan to finance a property purchase.
- Opting for a loan against property.
- Selling a property.
- Withdrawing from PF to finance a property purchase.
- Property mutation.
However, besides submitting this certificate, individuals can qualify for a loan against property by meeting these simple eligibility criteria.
Top financiers offer LAP at affordable interest rates and easy-to-meet eligibility criteria.
They also extend pre-approved offers to make loan processing hassle-free and quick. These are also available on various credit products like loans against property, home loans, etc. You can also check your pre-approved offer in seconds by entering your name and contact number.
Hence, it is evident that an encumbrance certificate plays a vital role in property sales or purchases as well as helping raise funds against property. However, individuals should also have a clear idea of occupancy and completion certificates while dealing with real estate.