Encumbrance Certificate: What Is It and Why Do You Need It for a Home Loan?

Homebuyers must have their paperwork complete. This is crucial to ensure the safety of their money as well as the property. One of the key documents that homebuyers must ask for and keep safe is the Encumbrance Certificate.

The Encumbrance Certificate, also known as EC, is a document that states whether a property is free from all kinds of legal and financial liabilities. For example, any property that is mired in any kind of legal trouble will have an encumbrance over it. Similarly, a property bought with loan money for which the borrower is still repaying the loan will have a financial encumbrance over it. Whether or not the homebuyer plans to sell this property in the future, they must get the no-encumbrance or nil-encumbrance certificate from their lender after they have repaid their loan.

So, what does the Encumbrance Certificate contain? Also, who prepares or assigns the Encumbrance Certificate? It is the Sub-Registrar’s office that issues an encumbrance certificate. Homebuyers must keep in mind that the Encumbrance Certificate is released only for a limited period. For instance, if one has asked for an EC certificate for the period 2015 to 2022, then the EC certificate would show details only for this period. These details will include information on how many times was the property bought and sold during the mentioned period. Were there any loans taken against the property? Have these loans been repaid or does the property still have a financial encumbrance?

The next question is: How does one get an EC online?

Obtaining an EC is quite easy. However, if you need the EC urgently, it is best that you apply for the certificate online. Online applications for EC are processed within 2 to 3 days. On the other hand, applications made offline can take up to 30 days.

If you want to obtain the Encumbrance Certificate for the property you wish to buy or already own, you can do so by following these simple steps:

- Go to the Sub-Registrar’s office (SRO) and ask for an Encumbrance Certificate application. You will have to pay a small fee for the form.

- Once you have submitted the form, the assigned officer will check the property and all details related to it for the specific period you have mentioned in your request.

- The Sub Registrar will then issue an Encumbrance Certificate. If the property is free from all kinds of legal and financial liabilities, the Sub-Registrar will issue a Non-Encumbrance Certificate.

The last question is: Why is it important to obtain the EC certificate? The EC certificate is an important document because it lets a buyer know whether the property is mired in any kind of legal or financial trouble. Thus, the EC certificate provides the information a borrower needs to make the right decisions regarding a property. Further, home buyers who have availed of a home loan and have repaid it must also apply for the EC. On doing so, they will be provided a non-encumbrance certificate by the Sub-Registrar. The Non-Encumbrance certificate is an important document because it will not only help you when you are trying to resell your property, but it is also the document that will prove helpful in case there is ever a conflict between you and your lender or if ever you need to avail yourself of the insurance premium on your property.

In conclusion, if you are planning to buy a property, you must avail yourself of the Encumbrance Certificate and once you have this document, you must keep it safe with you.