HOME SWEET HOME…the sweetness increases by four fold when it is our own. But this pleasure of owning a home comes with its own procedure. Apart from having the funds for the property, it is very important to check if there are any legal complications associated with it. But as a common man, you must be wondering how you can get access to this information. There is a legal document known as Encumbrance Certificate which provides the information about the charges created, if any, on that property. One should know all about Encumbrance Certificate before going for a property deal.
1. What is an Encumbrance Certificate
An Encumbrance Certificate is a legal and a crucial document used as evidence of free title/possession of a property. A “Lien” or a charge will be added by the lender on the property if it is purchased by availing a mortgage or if it has been pledged. If there is a loan on a property, then that property has a financial encumbrance and getting a nil-encumbrance certificate for such a property would not be possible till the loan is fully repaid. An encumbrance certificate, stating the liabilities, will be issued by the municipal body, if that property is caught in a legal dispute. This is a way to ensure that the borrower/property owner should not sell the property until the mortgage is paid in full. This legal document declares that there are no charges on that property, be it financial or legal.
An Encumbrance Certificate can be acquired for a maximum time span of 30 years and will display transactions only for the specific period. It is necessary to know that this legal document does not keep track of all previous property transactions. It does not provide any information before or after that specific time period. Any litigation on that particular property will not be reflected in the encumbrance certificate.
This legal document is issued by the sub-registrar’s office. It holds all the details of the property, its owner, transfer of ownership, mortgages, etc. Some states issue it online while others want you to collect from the Sub-Registrar’s Office. In Telangana, you can get the Encumbrance Certificate online.
2. What is there in Encumbrance Certificate
An Encumbrance Certificate, as we know by now, is a legal document that clarifies whether or not a particular property is free from legal or financial burdens. This document is made for a particular time frame that includes the list of every registered transaction identified with that specific property which happened during the mentioned time period. This document gives you the details of the loan taken against the concerned property, if any and also tells how many times the ownership changed during the mentioned period. It also includes the documentation of any legal claim if made on the property. But all this information will be limited to the mentioned period and not more and it can be for a period of 30 years.
3. Types of Encumbrance Certificates
You should know that Form 15 and Form 16 are the two types of encumbrance certificates. This legal document is given for a period for which the applicant seeks the certificate and the maximum period is 30 years. Both the types of Encumbrance certificates are issued by the sub-registrar’s office. An Encumbrance will be on Form 15 if a land/property has any legal liability for the duration of the period for which the applicant has required a certificate. Form 16 is issued by the same office if a property/land doesn’t have any legal liability during the period for which the applicant has sought a certificate. Form 16 is also known as Nil Encumbrance Certificate.
4. Documents Required to Obtain an Encumbrance Certificate in Telangana
This legal document obtained in Telangana proves that your property is free from all kinds of liabilities and a few essential documents need to be submitted to get this legal document. One has to submit the details of your property, as well as the title deed, the number of the deed that contains the book number as well as the date of the deed and the Address details of the applier along with the Registration papers of the property.
An Encumbrance Certificate can be obtained online in Telangana, with just a few clicks but if anyone wishes to get it done in person, then he will have to walk to the Sub-Registrar’s Office located nearby.
5. When is an Encumbrance Certificate Required
An Encumbrance Certificate declares that the property you are interested in has a clear title and free from financial or legal liability. If an Encumbrance Certificate has a charge on it, then it is important for you to rectify it before you make the deal. This legal document will show if there are any existing owners who can legally claim the property. An Encumbrance Certificate is required in the following conditions:
5.1. To avail a Home Loan
This document is required if you plan to avail a loan to purchase the property. To ensure a successful approval of the loan, Banks and financial institutions have their set of guidelines that are to be followed and submitting an encumbrance certificate is an essential requisite in the process of applying for a home loan.
5.2. Needed while Purchasing or Selling a Property
It is used as evidence of free title/possession of a property and also needed while purchasing or selling a property. This document is considered to be an assurance of the fact that the property is clear and free from any liabilities. It is considered as an important document and has to be made available as part of the records. The seller has to provide an Encumbrance Certificate to the buyer. It is also the duty of the buyer to cross check this document to avoid any hiccups during or after the process of property transfer.
5.3. Employees Provident Fund (EPF) Withdrawal For Property Purchase
If an EPF withdrawal is being made for the purpose of purchase of the property, then it is mandatory to submit the encumbrance certificate. This is a part of the process of withdrawal of EPF.
5.4. Property Mutation
The change of title ownership, when a property is sold or transferred is known as Property Mutation and this is recorded in local municipal records. An Encumbrance Certificate plays a major role in the Mutation of a property.
Written by Nikhil Gattu
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Written by Nikhil Gattu
