Encumbrance means what
The term encumbrance refers to the charge created on any property, particularly the immoveable property.
An Encumbrance Certificate (EC) discloses whether the property in question is free from any liability or is with liability such as a mortgage or an un-cleared loan. The certificate is issued by the Department of Registration. It contains all the transactions registered relating to a particular property for a period requested for. It will show the proper entitlement of the particular property.
The Certificate is usually issued for a specific period. The transactions relevant to that period alone will be mentioned in the Certificate. That means the EC will disclose only those transactions and documents that have been registered with the registration office alone.
Some documents need not be registered
Some documents such as testamentary documents and short-term lease deeds need not be registered under the law.
Therefore such documents are excluded from the purview of the transactions recorded at the sub-registrar’s office. The liabilities which do not require registration, do not find a place in the EC.
Liabilities that do not appear in EC
Some of the liabilities that may not reflect in the Encumbrance certificate are as follows:
If the property is mortgaged by deposit of title, it may not appear in it
Oral gift of immovable property by a Muslim needs no registration and hence it may not appear in EC
Civil Court decree charged on immoveable property need not be reported to the Sub Registrar Office. Hence such charges will not appear in the EC.
Easement rights over the immoveable property may not reflect in any registered document in the Sub-Registrar Office. Hence such rights may not be included in the EC.
Pending civil cases need not be reported to the Sub Registrar office concerned. The charges and liabilities associated with pending civil court cases may not appear in the EC.
This is not an exhaustive list, but an indicative one only.
How to apply for the Certificate
Application for EC, along with an attested copy of proof address, details about the property, details of its title, and the fee applicable, should be made to the registration office.
In some states like Kerala online facility exists for making application and receiving the Certificate.
The officer will inspect the details of the encumbrances for the specified period. The certificate would be issued around a fortnight from the date of application.
Encumbrance certificates are of two types
If a property has any encumbrances during the period for which the applicant has sought a certificate, the Sub-Registrar’s office issues an Encumbrance Certificate on Form 15 showing the transactions therein.
If a property has no registered encumbrances during the period for which the applicant has sought a certificate, the Sub-Registrar’s office issues a Nil-Encumbrance Certificate in Form 16 indicating that there was no transaction in regard to that property during the period.
Typically, Forms 15 will contain each piece of information pertaining to inheritance, sale, purchase, lease, mortgage, gifting, relinquishment, partition of the property in question, if the transactions are registered.
Precautions one can take
The precautionary measures one can take to see the charges or liabilities on a property is to Insist on production of original title deed, current tax receipt, encumbrance certificate for 12 years, possession certificate etc.
In addition, obtain from the seller an undertaking in the sale deed itself that the buyer is made to believe that the property is free from any liability or charge, no suit is pending in respect of the property, and that no agreement in regard to that property has been entered into with any other person.
Visiting the plot a few times before the execution of the sale deed is yet another precautionary measure the buyer can take. By doing so the buyer may perhaps get to know some details about the inheritance of the property from the people he meet there.
Above all, dealing with the property owner directly is a must for the buyer. That may avoid some problems that the intermediaries bring in unnecessarily.