What is Encumbrance Certificate in real estate?

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It is important to understand the meaning of Encumbrance Certificate (EC) for anyone involved in a property transaction. This article explains the meaning and the importance, as well as how to get it and how long it takes.
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What is an Encumbrance Certificate?

  • ‘Encumbrance’ essentially means claims/liabilities against a certain property. Meaning that it it held as a security for any debt of its owner, which has not yet been discharged.
  • An Encumbrance Certificate shows all the registered transactions regarding a certain property for a specific period of time.
  • This includes any liabilities/encumbrance attached to the property.
  • So it will show if there is any loan or mortgage against the property, if it was a gift, if it was sold recently, etc.

When do you need an Encumbrance Certificate?

You need to get an EC of a property in the following situations:

  • If you are applying for a home loan.
  • Or if you want to get a loan against some property.
  • If you are buying a property.
  • Or if you are selling a property.

Period of EC

You can get an EC for different lengths of time. When you apply for an EC for a particular length of time, you will receive the details for only that period (and not more).

  • Banks and financial institutions generally need 15 years.
  • You can also get the EC of a property covering 30 years.

Why is an Encumbrance Certificate important?

  • An EC is a proof of free title. It shows the ownership of the property, and attached legal or monetary dues (if any).
  • An EC is required because before buying a property, it is very important to ensure that the property does not have any monetary or legal dues.
  • It helps to make sure that the title is clear, and there is complete ownership. And that there are no attached liabilities.
  • Hence an EC is mandatory in all property transactions.

What are Form no.s 15 and 16?

An EC is issued in either of the two forms:
Form no. 15

  • The EC is issued in Form no. 15 if the property has some encumbrance during the specified period.
  • The EC in Form no. 15 also shows – nature of the encumbrance (gift, lease, partition, mortgage), the parties involved, the documents registered with respect to the property, the registered number of the documents, and additional details.
  • All the details are mentioned in a date-wise manner. 

Form no. 16

  • The EC is issued in Form no. 16 if the property has no encumbrance during the specified period.
  • Hence it is a certificate of nil encumbrance.

How to get the Encumbrance Certificate?

You have to get the EC from the office of the sub-registrar where the property is registered. Please follow the given steps:

  • Download Form 22 (link given below).
  • Affix a Rs.2 non-judicial stamp.
  • Address it to the Tahsildar.
  • Fill up the form. Provide all the details of ownership, survey number, address, proper description, and duration.
  • Pay the required fee. The fee depends on the period of encumbrance.
  • Attach an attested copy of your residential address, and the purpose for which you want the EC.
  • Submit the application at the sub-registrar’s office where the property is registered.

Notes

  • An EC is usually in the regional language. You can get an English translation by paying an additional fee.
  • An encumbrance year starts on 1st April of a calendar year, and ends on 31st March of the next calendar year.
  • The fees vary according to the state. Generally the fee is very nominal. Approximately Rs.15 – Rs.50 for the first year, and Rs.5 – Rs.10 for every additional year.
  • In some states (for example Andhra Pradesh), you can download the EC online for free. But it is not signed.

Download Form 22 to get EC

Please click here to download the form.


How long does it take to get an Encumbrance Certificate?

After applying for the EC, you usually get in in 15-30 working days. The format of the EC may change according to the state, but the basics covered remain the same.


Please note that there are certain documents which are exempt from being registered at the sub-registrar’s office. And so details about those won’t show in the EC. So it is better to get both an EC and a Possession Certificate. That will help you get proof of complete ownership. 


To read about a comparison of personal loans from different banks, please click here.

 

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