Process to get encumbrance certificate
S.C. Dhall
Q.I have to raise a loan against property owned by me. The bank is insisting on an encumbrance certificate. Is it mandatory to get this certificate?What is the procedure to get it? — Promode K. Uppal
A.If you are planning to buy an existing property, then 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 the property is in the name of the owner from whom you intend buying the property and there are no disputes pending in a court of law.
Encumbrance Certificate can be procured from the registration office. You need to make an application and pay a small fee after which your application will be processed and the certificate will be issued either the same day or the next day.
You need to check all 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. 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 EC are drawn from the register at the registrar’s office and are basically from the documents that are registered with the registrar.
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.
