Encumbrance Certificate – Complete Info EC in Home Loan

Encumbrance certificate (EC) is one of the most important documents required for selling or buying a property, therefore it is important to have adequate knowledge about this certificate, so in this article we will discuss in full detail, like what it is, and what it is used for, how to obtain it and all other crucial details.

Before selling or purchasing a property, how would you confirm whether the property is not pledged against a bank loan or that there are no legal implications associated with the concerned property? You can find the answer for this in the Encumbrance Certificate (EC). Although not the only requirement, but EC is one of the critical documents that you or your real estate agent must look into before purchasing a property. To provide clarity, here is a blog that will shed light on what the certificate entails, its purpose, and how to complete the application process. 

What is an Encumbrance Certificate?

An Encumbrance Certificate is a legal document that certifies that there are no financial or legal bindings on the property concerned is called an encumbrance certificate or EC. It includes records of all the transactions made on the concerned property. For example, if the owner has taken a loan against the property or the said property is caught in legal tussles, the specifics will then be reflected in the EC. Hence, the certificate declares that the property is free of pending dues and ensures that you are dealing with a genuine property seller. 

What Does the Certificate Entail?

Apart from the basic property details, the encumbrance certificate highlights information pertaining to the property owner, the mortgages or legal complications associated with the said property, and the transfer of ownership. What is important to note is that the certificate contains information of only those transactions which have been registered with the sub-registrar’s office. 

What is the Purpose of an Encumbrance Certificate?

An encumbrance certificate is issued by the sub-registrar office of the concerned jurisdiction. It is issued under certain circumstances, which have been given a rundown below:

1. Property Transactions: When buying or selling property, an EC is crucial. It acts as proof that the property is free from any encumbrances, such as loans or legal disputes, ensuring a smooth transaction process.
2. Loan Applications: Banks and financial institutions require an EC when individuals apply for home loans. This certificate provides them with a detailed record, often up to 30 years, of the property’s obligations, including mortgages, unpaid taxes, and legal issues. Furthermore, it also helps lenders assess the property’s value and any associated risks. 
3. Loans Against Property: Considering that EC reassures the lender about the property’s clear title, those seeking to avail loans against property will also have to submit an EC.
4. Using Provident Fund (PF) for Property Purchase: home buyers looking to make an upfront payment for acquiring property through their Provident Fund accounts are required to furnish an EC. 

By examining the EC, lending institutions can protect themselves and their clients against potential risks involved in the property’s sale or transfer. It ensures that all parties involved are aware of any legal or financial obligations tied to the property.

What does an EC for a Home Loan Include?

EC (Encumbrance Certificate), gives information about any legal burdens or liabilities on a property for a specific duration. Normally, this is within 30 years.

When a borrower requests a home loan from a bank/lender, they will require an EC on the property that the borrower plans to buy. This EC can display:

1. If there are any loans or mortgages on the property from its present or past owners.
   
2. If the property has been leased out or rented to someone else.
   
3. If there are any further legal obligations, disagreements, or court matters concerning the ownership of that property.
   
   An EC provides the lender with full details about all financial or legal encumbrances/liabilities on the property the borrower intends to buy using their loan.

Is EC Similar to a Completion Certificate (CC)?

EC and CC are often used interchangeably; however, they are 2 different sets of documents. The Encumbrance Certificate is issued by the sub-registrar office if the concerned property is free from legal or monetary complications.

A Completion Certificate (CC), on the other hand, is issued by the local authorities to a developer when the project is completed in compliance with the real estate laws and other specifications. Only after the issuance of a CC is an Occupancy Certificate (OC) issued. 

How to Apply for an Encumbrance Certificate?

In order to get an EC issued, the application along with a set of documents has to be sent to the sub-registrar’s office in the concerned jurisdiction. Given below are the details which a homebuyer must know before applying. 

1. List of Documents

• Application Form
• Proof of Address
• Property Owner Details
• Property Registration Document
• Copy of Deed 

2. Online Application Process

With the exception of a few states like Andhra Pradesh, Kerala and Odisha, the EC is generally issued physically. To provide clarity, we have elucidated the encumbrance certificate application process followed by the Kerala Government. 

STEP 1: Visit the official website of the Registration Department of the Kerala Government. 

STEP 2: Click the “Certificates” menu and move the cursor to “Encumbrance Certificate.”

STEP 3: Click on the “Submit Application for EC” menu. 

STEP 4: Fill all the requisite details in the form and click on submit application. 

STEP 5: You will receive an acknowledgement slip upon submitting the application. 

STEP 6: The application will then be transferred to the concerned jurisdiction’s sub-registrar office. You can check the status of the certificate on the website itself. 

Note: The EC application process and list of documents varies from one state to another.

3. Offline Application Process

In the states where the offline route is followed for the issuance of EC, you need to visit the sub-registrar’s office and submit Form 22. Along with form, you need to furnish documents that verify the details of the property owner, buyer information, etc. 

Which States Issue Online Encumbrance Certificates?

EC, which stands for Encumbrance Certificate, can be obtained in these states, Andhra Pradesh, Telangana, Tamil Nadu, Kerala, Maharashtra, Gujarat, and Odisha. The application procedure is currently discontinued for Karnataka State though due to technical since 10 June 2020. To obtain the Online Encumbrance Certificate, you are required to fill out Form 22 with property details along with payment of a fee. After submission, it usually takes about two weeks (15–30 days) before receiving your certificate that confirms if there are any legal or financial liabilities on the said property during transactions, such as mortgages and other encumbrances.

How to Track Encumbrance Certificate Status

The ways of tracking your Encumbrance Certificate application can differ based on the website you used to apply. Many government websites where people submit their EC applications online, depending on the state, also have a function to track the status of their applications. A good example is the official Kerala Government Website; you can do this by following these steps:

1. Select “EC Status” under the “Encumbrance Certificate” option in the “Certificate” menu.
   
2. Input the Transaction ID given to you when you submitted the application. Then, type in the captcha code and press on “Check Status”.
   
3. The certificate status will be displayed on the screen, and you can download it in PDF format.

Relevance of Form 15 and Form 16

There are two forms on which the encumbrance certificates are issued, either Form 15 or Form 16. Form 15 entails the records of mortgage, sale, partition, lease, release, etc for a time period for which the EC is issued. On the contrary, the EC is issued on Form 16 if there are no transaction records in a given time period. 

A Nil Encumbrance Certificate: What Is It?

The time frame for which you require the information must be specified when you request for an encumbrance certificate.

A “Nil Encumbrance Certificate” will be provided in the event that no charges are made on the property within the required term. This indicates that during that time, no lender has imposed a lien on the property.

Other Details

Now that you have got an overview of what the encumbrance certificate entails and how the document is issued, here are a few important points that you must know as a homebuyer. 

• The time taken for the issuance of the encumbrance certificate ranges between 6-7 days in states which issue the document online.
• In states where the offline route is followed, it can take anywhere between 15-30 days. 
• Generally, an EC is issued for 13 years; however, you can also request details up to 30 years. 
• The application fee ranges from Rs. 150-200 (based on the state concerned). 

Apart from an Encumbrance certificate, you also need to verify other property documents before and after home purchase. For example, if you want to purchase an under-construction property, then you have to obtain an allotment letter from the builder. It is important to scrutinize these documents and certificates to ensure that the property is free from any legal or monetary hurdles.

FAQ

1. What is an Encumbrance Certificate(EC)?

EC is an official document issued to provide details about whether a property has any legal or financial liabilities. This document describes any encumbrances, such as home loans, court disputes, or other financial obligations that are against the property. This document serves the purpose of protecting the buyers and investors in the transaction of real assets with the absence of anything related to the financial or legal issues.

2. Why is an Encumbrance Certificate Important?

The EC is necessary as it determines the legal and financial status of a property to avoid any title issues that occur in the future. It is used for the proof of the validity of ownership, the number of times it has sold or bought or there are any loan payoffs or any disputes raised. This data is a must for a car purchaser to be able to deal with the correct landlord and confirm that the property is free from debts or law difficulties.

3. How Long Does It Take to Get an Encumbrance Certificate?

Generally it takes between 15 to 30 days to issue EC, this duration covers time needed to complete the application processing, the site inspection, and certificate issuance.

4. How Can I Get an Encumbrance Certificate Online?

You can file the online EC using the sub registrar’s office in the different states. It should also be noted that in some states, the eligibility criteria could still require applicants to go to the registrar’s office in person.

5. Is an Encumbrance Certificate Needed for Inherited Property?

Indeed, in order to guarantee that inherited property is free from any debts or legal issues before it can be given to the new owner, an EC is necessary.