Understanding the Encumbrance Certificate
Understanding the Encumbrance Certificate: A Must-Have for Property Buyers
When you're gearing up to purchase real estate, one crucial document you should not overlook is the Encumbrance Certificate (EC). This certificate is essential for verifying that the property you are interested in is free from legal and financial liabilities, such as mortgages or outstanding debts.
What Exactly is an Encumbrance Certificate?
An encumbrance signifies any claim or liability attached to a property. The Encumbrance Certificate is a key document that confirms the property is not burdened with any legal liabilities. Obtaining this certificate is not only vital for clarifying the legal title of the property but is also typically required by banks and financial institutions if you're planning to secure a loan.
Steps to Acquire an Encumbrance Certificate
To obtain an EC, follow these steps at the sub-registrar’s office where the property is registered:
1. Submit an application along with a copy of your proof of address, property details, title information, and the necessary fee.
2. The sub-registrar will check the indexes to verify any transactions recorded for the property during the requested period.
3. Depending on the findings, either a standard Encumbrance Certificate or a Nil Encumbrance Certificate (if there are no transactions) will be issued within 15 to 30 days of the application.
4. The application and issuance of the EC adhere to the formats prescribed in the annexures to the Registration Acts of the respective states—typically, Form No. 22 for application and Form No. 15 or 16 for issuing the EC.
What Does the EC Include?
As per significant legal precedents, such as one by the Karnataka High Court, an Encumbrance Certificate encompasses all registered acts and transactions affecting the property. It reflects all the transactions registered with the registrar during the specified period, helping prospective buyers understand any past dealings related to the property. Importantly, only those documents that are legally required to be registered appear on the EC, excluding unregistered documents like short-term leases and wills.
Distinguishing EC from Completion and Occupancy Certificates
It’s important not to confuse an Encumbrance Certificate with a Completion Certificate (CC) or an Occupancy Certificate (OC). The CC is granted by the local municipal authority upon the completion of a building that complies with all relevant building codes and regulations. Following this, an OC or a Possession Certificate (PC) is issued, which certifies that the building is fit for occupancy.
Therefore, when purchasing a house, ensure that the property not only has a clear Encumbrance Certificate but also the necessary Completion and Occupancy Certificates, as these are critical to establishing the legality and habitability of the property.