Understanding the encumbrance certificate

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An encumbrance certificate is evidence that the property in question is free from any monetary and legal liabilities. It is evidence that the property can be sold as a free title and the ownership will come to you without any associated baggage.

This is a document that you will be able to procure from the registration authority’s office.

It is your assurance that the property you are about to invest in is clear of any legal dues and has a marketable title.

Reference

Encumbrance is simply a reference to any liabilities in the form of a mortgage or a loan against the property that has not been cleared. The encumbrance certificate is provided from the sub-registrar’s office where the particular property is registered.

All the details of any transaction on the property will be listed in it. It is important for you to get this certificate if you plan to buy the property, take out a home loan for it or take a loan against it. In all cases, governmental authorities will insist on a 13-30 years encumbrance certificate.

The information

When issued, the information will pertain only to the period that is specified and not more. All the details mentioned in the certificate will be based on the extract from the register with the sub-registrar. This in turn is based on the documents that the registrar had registered with him.

There are, however, a few documents that need not be registered and the essence of 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 the equitable mortgage papers, where all the original documents are kept with the bank and are not registered with the registrar's office.

There are also testamentary documents and leases which are for a period less than a year. Some other documents that can be excluded are related to oral tenancy, tax liabilities as well as prior unregistered agreements like documents based on a family arrangement or an unregistered will.

You need a 'no encumbrance certificate' if you want to mortgage the property for a loan. If you want to get your certificate you will need to apply for it with a Form 22 with a Rs. 2 non-judicial stamp affixed.

This is addressed to the tahsildar and will have to provide the residential address and the purpose for which the certificate is needed.

The essentials

You will also need to

* Attach an attested copy of your address proof.

* Mention all the title details, the ownership details and survey number etc.,

* Mention the period, give a detailed description of the property, the area it covers and all the boundaries.

* The fee applicable is on a per year basis. Any fraction of the year is considered a complete one.

15 to 30 days required

All of this has to be submitted at the jurisdictional sub-registrar's office. In turn the tahsildar will request a report from the Patwari on the particular property.

If the property is clear, and the enquiry conducted comes out clean then the “no encumbrance certificate” is provided. It generally takes between 15 to 30 days from application to receiving your encumbrance certificate.

Two categories

You will get your encumbrance certificates either on Form No 15 or Form No 16.

Form No. 15

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 competent 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.

Form No. 16

You will get your encumbrance certificate in a Form No. 16 only when there is nothing by way of transactions for the time frame that the certificate is being sought for.

( Courtesy: http://www.thehindu.com/ )

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