How to Get an Encumbrance Certificate

As an investor or an individual who is interested in investing in the real estate sector, there are several legalities and paperwork you have to keep in mind to keep your property and you out of unnecessary trouble. 

One of the main aspects to keep in mind when buying and selling a property is ensuring that there are no dues, loans, or legal conflicts existing on the property. With pending dues or loans, it makes it hard to sell or buy a property. 

If you are looking to invest in property, one of the key pieces of paperwork you must be aware of is the Encumbrance certificate. 

This blog gives you a quick insight into: 

  1. What is an Encumbrance certificate? 
  2. Importance of getting one 
  3. Why you need it
  4. Different types of EC
  5. Documents require for an EC

What is an Encumbrance certificate or EC?

An encumbrance certificate or EC is a record that affirms that a property has no legal or monetary dues like uncleared debt, mortgage, or a loan.  

The EC consists of all registered transactions made on the property during the duration it was sought. These particulars include all encumbrance or claims on the land property. 

It’s important to note that an EC only reflects registered financial transactions on a property. 

An EC will not cover details of equitable mortgages on the property; nor does it record testamentary documents or leases for a period of less than one year. Also, an EC will not record oral arrangements such as tenancy, tax liabilities, and unregistered wills or family arrangements.

In November 2018, the Karnataka Government has launched the KAVERI Online services to make the registration process easier. You can enter all the necessary details of the purchased or rented property which gets uploaded and recorded on the website. 

Importance of getting an EC

The importance of an Encumbrance Certificate:

  • The Encumbrance Certificate is an important document when you want to purchase any land or property in India – it is proof of ownership title. Therefore EC is required for the transfer of property.
  • Apart from the purchase of property, an EC has to be produced when applying for a loan against the property in a bank or financial institution as it confirms that the property is free from any legal disputes and indicates you are eligible for a loan. 
  • The certificate requires updating the land tax record if the property or land tax is not paid for more than three years.
  • The Encumbrance Certificate is an important document for committing a mutation of property (Khata Registration/Khata Transfer/Patta).
  • If you wish to withdraw PF for a property purchase or house construction

Why you need it 

An EC is required in a property transaction as proof of free title, tenure, and possession. It is a certificate issued by the registration powers. 

While you purchase a property, it is essential to verify that it does not have any authorized dues. A potential buyer must make sure the property has a comprehensible and marketable title.

Furthermore, you also need it as an important document for Khata Registration/Khata Transfer/Patta. 

Different types of EC

There are two types of ECs;

a) Form 15:

Form 15 is issued if the sale, mortgage, or other deeds of the property and land are registered with the sub-registrar. The Form composed of registered property transaction details in the owner’s name for a particular period.

b) Form 16:

Form 16 is issued as an NEC (Non-Encumbrance Certificate) if no transaction has taken place or no transaction is registered for a sought period of time. When an NEC is issued on Form 16, it evidences that the property and land are free from all the liabilities and assets for the given period of time. This certificate does not constitute any unregistered property transactions.

Documents required for an EC

  • Application form
  • Attested copy of address proof
  • A photocopy of any previously executed deed of the said property such as sale deeds, gift deeds, partition deeds, release deeds, etc.
  • Details about the property and its title details
  • The registered deed number, date, book number, volume/ CD number, and signature of the applicant should be affixed with it.
  • Period for which the EC is required
  • The purpose for which the EC is applied for
  • Copy of Power of Attorney, in case of application, is made by the attorney holder
  • Aadhar card
  • Property card if available

Tips to getting your paperwork right: 

You need to be vigilant while procuring your EC.

  • Ensure the information fed about the property in the EC as well as the schedule page of the sale deed is exact and accurate 
  • Do thorough background checks on the property you intend to buy to know if there is any encumbrance on the concerned property.
  • As a buyer –  put a newspaper advertisement stating the intention of buying the said property and call for any disputes regarding the same, so that the courts do not entertain any later claims.

As a property management firm, we will help you stay informed about what kind of documents you will need to ensure you and your property remain legally safe. 

Furthermore, once you have made the investment and all the paperwork is done, our team of expert property managers will help you get the best returns on your property. 

Read more on the services provided by PropTech Solutions for your property management.

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