As the word suggests, Encumbrance means impediment or liability. In our context of Property or Real estate, the Encumbrance certificate or EC is evidence that the property under discussion is free from any liabilities or not. The liabilities could be monetary or legal in nature. The EC has details of all transactions about the property like loan or mortgage of the property. The EC is always issued for a period of time and all transactions during that period are captured in the EC.
In reality, EC is the extract of details captured in sub-registrar’s register in whose jurisdiction property is located. It captures only the list of documents or facts registered with sub-registrar’s office during a period of time and nothing more or nothing less.
There are a few documents that need not be registered, hence these will not be present in the encumbrance certificate. Such documents that are excluded do not fall under the scope of the Registration Act 1908. These excluded documents are:
- Equitable mortgage papers, where all the original documents are kept with the bank and are not registered with the registrar's office.
- Testamentary documents and leases, which are for a period less than a year.
- Others: Some other documents that can be excluded are those related to oral tenancy, tax liabilities as well as prior unregistered agreements like documents based on a family arrangement or an unregistered will.
Significance of EC in Property transactions
In any transaction of sale or purchase of property, EC is considered to be of prime importance. The encumbrance certificate is asked by multiple authorities like banks for home loan approvals, the prospective buyer of property or when you want to avail loans on property etc. Typically government institutions ask for EC of 13 years to 30 years period.
Types of EC
Encumbrance Certificate on Form No. 15 will contain a record of sale, lease, mortgage, gift, partition, release etc. All of this will have to be registered with the registration authorities and placed on record in Book I that is maintained by the registering authorities for the specific period that the certificate is being asked for.
- Nature of charges created
- Documents registered in respect of the property
- Amounts secured
- Registered numbers of the documents
- Registration details and references - book numbers
You will get your encumbrance certificate in a Form No. 16 only when there are no transactions for the time frame that the certificate is being sought for.
The encumbrance certificate is issued by registration authority’s office in whose jurisdiction the property falls. The application is made on Form 22 (with Rs. 2 non-judicial stamps affixed). The application should be submitted to the jurisdictional sub-registrar's office. The requisite fees need to be paid. The fee is to be paid year-wise, with any fraction of a year being taken as a full year. The Tehsildar will seek a report from the Patwari on whether there is any entry in favour of any person or legal body. In case there is no such entry and the report is favourable, the no encumbrance certificate is issued after conducting a detailed enquiry. The time taken may be anywhere between 15 to 30 days. The application is made to the registering authority along with below documents as well as the purpose of the EC:
- Address Proof: Certified copy of any government issued address proof.
- Details of property: Property details (full description of the property like measurement and the time period for which certificate is required), address and survey number.
- Fee: Fee for charging is charged per year and fraction of the year is charged for the full year.
The encumbrance certificate is usually issued in the language in which the registers and records are maintained at the sub-registrar's office. However, an English translation can be obtained on payment of additional fees.