Encumbrance Certificate: Purpose & Application Process

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Encumbrance Certificate

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?

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.

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. 

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. 

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.

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