What is an Encumbrance Certificate? – Types, Fees & Application Process

Introduction

If you are planning to buy a property, it is crucial to ensure that it does not have any legal complications. An Encumbrance Certificate (EC) helps verify whether a property has any financial or legal liabilities associated with it.

The following sections provide an overview of the encumbrance certificate and the process of obtaining one online.

What is an Encumbrance Certificate?

When you purchase a property using a mortgage, the lender places a charge, also called a ‘lien,’ on the property. This lien prevents the sale of the property until the mortgage is fully repaid.

An encumbrance certificate is an official document that helps determine whether a property has any pending financial or legal claims against it.

Significance of an Encumbrance Certificate

Ensuring that a property has a clear title is a fundamental aspect of the purchasing process. An EC confirms whether a property is free from any legal or financial encumbrances.

If any charges are found on the EC, they must be cleared before finalizing the purchase. Additionally, the EC helps verify if any other individual has a legitimate claim over the property.

Moreover, if you intend to apply for a home loan, most lenders require an EC as part of the documentation process.

Types of Encumbrance Certificates

There are two types of ECs:

• Form 15: Issued by the Sub-Registrar’s office when encumbrances exist on a property for the requested period.
• Form 16: Also known as a Nil Encumbrance Certificate (NEC), it is issued if no encumbrances are recorded for the requested duration.

A nil EC indicates that no financial institutions or lenders have imposed any liens on the property during a specified timeframe.

How to Apply for an Encumbrance Certificate Online

The procedure for obtaining an EC online varies by state. The general steps are as follows:

• Visit the official land registration website of your state and select the option to apply for an EC.
• Fill in the application form with the required details and click on ‘Save’ or ‘Update.’
• Specify the search period for the EC and select ‘Calculate Fee’ to check the applicable charges.
• Pay the required amount online to proceed to the acknowledgment page. Click on ‘View Acknowledgment’ and print the receipt for future reference.
• A land records inspector will assess the property, and upon completion, the EC will be issued. If no transactions are recorded for the selected period, a Nil EC will be provided.

How to Apply for an Encumbrance Certificate Offline

If online application is not an option, you can apply for an EC by visiting the Sub-Registrar’s office. Follow these steps:

• Fill out Form 22, providing essential details such as the buyer’s and seller’s names, document type (EC), and property information.
• Pay the applicable fees.
• Upon successful submission, you will receive an acknowledgment/reference number, which can be used to check the application status.

Encumbrance Certificate Application Fees

The fee for obtaining an EC varies across different states. Below are the application charges in various regions of India:

1. Delhi:

• Request fee begins from Rs. 200. However, it will go up depending on the locality and years for which you ask.

2. Andhra Pradesh:

• Rs. 300 for information up to 30 years.
• Rs. 500 for more than 30 years.

3. Telangana:

• For 30 years information, the fee is Rs. 200.
• For more than 30 years, the fee is Rs. 500.
• In addition, there is a service charge of Rs. 25.

4. Tamil Nadu:

• The application fee is Re. 1.
• The fee for first-year information is Rs. 15.
• For every extra year, you will have to pay Rs. 5.

Final Word

Obtaining an encumbrance certificate is a crucial step in property transactions, ensuring transparency and safeguarding buyers from potential legal or financial complications. Always verify the EC before making a purchase to avoid future disputes.