Applying for a home loan includes due diligence of the financial documents as well as the property. You may be able to understand easily the financial documents bit, however, the legal aspects involved in property documents tend to confuse a home buyer.
There are multiple documents required to validate the legal and technical part of the property including but not limited to Sale Deed, Society NOC, OC, CC, EC. All these documents confuse a home buyer. Not many laymen can identify whether the property in question is legally clear or not, whether the property is mortgage free or not. To bridge this gap quite a few home buyers take the home loan route. They apply for a home loan primarily to validate the legal clarity of the property.
An encumbrance certificate is one such document. The encumbrance certificate is also known as bhar-mukt pranam in Hindi.
What is an Encumbrance Certificate?
It’s a legal document that clarifies if the property is mortgage free or not. The EC also has details about the inheritance of property along with any legal cases involved for the property under question. Encumbrance as per Law is “a general term for any claim or lien on a parcel of real property. These include mortgages, deeds of trust, recorded abstracts of judgment, unpaid real property taxes, tax liens, mechanic’s liens, easements, and water or timber rights.”
Why is the Encumbrance Certificate Important?
The encumbrance certificate determines whether the property is free or not from mortgage or any legal disputes. The sellers are expected to possess the encumbrance certificate to justify their word to the buyer in regards to mortgage and legal disputes if any. The buyer should demand an Encumbrance certificate from the seller if already not provided. It is suggested to rethink purchasing a property whose encumbrance certificate is not available.
If EC is Available do Sale Deed, OC, CC hold the Same Importance?
The answer is yes. All documents have their own importance. They might sound similar but they guide you differently for the property.
The sale deed or agreement to sell is the legal document created to initiate the sale of the property. It bears the total value for which the property is getting sold. Also, it frames the timeline in which the payment has to be made for the property.
OC or occupancy certificate as the name suggests is the certificate issued by the authorities giving the building clearance and declaring it fit for possession. This certifies the property has all legal clearances like water supply, sewage, fire safety etc.
Completion certificate or CC goes by its name. It is issued by the authorities to certify that the property is fully constructed.
Who issues EC?
The seller before putting the property in the resale market should fetch the EC on his property. In case a seller is not providing the EC, buyers can forcefully ask for it before taking the final decision. An encumbrance certificate is issued by the sub-registrar office of the area. It details the inheritance, existing lien or mortgage on the property, legal cases running against the property, current owner of the property.
How to Apply for an Encumbrance Certificate?
To apply for EC the following documents are required by the sub-registrar office –
- Address proof of the applicant
- Property details for which EC is applied for
- Copy of deed
Are the Various Kinds of ECs?
ECs are issued in two types –
- Form 15 – if sub-registrar issues Form 15 on the property that means encumbrance exists for that particular time period on the property.
- Form 16 – If the sub-registrar issues Form 16 it means encumbrance is nil on the property.
EC in various states can be applied online. The fee can be paid digitally along with a soft copy of documents and applied for. Its important one ensures the availability of EC on the property before purchasing it.