Encumbrance certificate: Why it must be checked while buying property in India?

Planning

oi-Sunil

By Sunil Fernandes

Published: Wednesday, August 27, 2014, 9:55 [IST]

If you are planning to buy an existing property, one of the most significant documents that you should seek is the encumbrance certificate (EC). This document would show you whether the property is free from legal and financial liabilities. In short, what this means is that first, the property is in the name of the owner from whom you intend buying the property and it is free from disputes, liabilities etc.

How and where to procure the same?

The Encumbrance Certificate should be procured from the registration office where you intend to buy the property. Check with the locals where the registration office is and if you have worries on the certificate meet the registrar. You need to make an application and depending on the registration office, you should receive the same either on the same day or the next day.

A small fee needs to be paid

You need to pay a small fee after which your application will be processed and the Encumbrance Certificate issued.

Check all the details

Please make sure you check all the details carefully. Sometimes, you may have it issued in the local language and may need help. Seek expert opinion if you do not understand anything in the document.

What details are available?

You need to specify a period of the encumbrance certificate. For example, home loan companies may ask for a 20-year period encumbrance certificate. This will give them a clear idea if there have been disputes in the past with regards to the property and whether the title has been clear. All the details that are specified in the Encumbrance Certificate are drawn from the register at the registrar's office and are basically from the documents that are registered with the registrar.

Drawbacks of the Encumbrance Certificate

While it is important to check the document, please note that there are certain drawbacks in the sense, that some crucial details may not be mentioned in the EC, as they are not required under the Registration Act, 1908. Some of these include:

1) Mortgage Details

Under a mortgage the title deed and other original documents are deposited with the bank and hence it does not get registered at the registrar's office.

2) Lease

If the lease is for less than one year it will now show in the EC.

3) Testamentary documents

These documents need not be registered with the registrar.

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