Encumbrance Certificate

An encumbrance certificate specifies charges created on a property. A property may be mortgaged as a security for a debt or obligation. In any transaction of sale or purchase of property, a no encumbrance certificate is a very important document. It is also issued for the purpose of mortgaging a property to avail a loan. The certificate certifies that the property in question is not already mortgaged.

In case property is purchased with borrowed money or is offered as a security for a loan, a charge is created in the form of an encumbrance. If it is already mortgaged, the liability of the outstanding loan will also devolve on the new owner. The certificate discloses the encumbrance status of a particular property . It is issued for a particular period of time and does not cover any period prior to or after the period mentioned .

The certificate is an extract of the register maintained by the sub-registrar's office, which in turn is based on documents registered with the registrar's office. In case a particular document is not registered with the office of the registrar , it won't be captured in the encumbrance certificate .


These include:
Equitable mortgage: This is mortgage by deposit of title deeds, where the borrower deposits the original documents pertaining to the property with the bank and does not get it registered with the registrar's office.
Testamentary documents: These too need not be registered with the registrar.
Short leases: Leases for a period of less than one year need not be registered.

Procedure to be followed to obtain a no encumbrance certificate :
Application
Apply on Form 22 (with Rs 2 non-judicial stamp affixed) to the Tahsildar, giving your complete residential address and the purpose for which the certificate is required.

Proof of address
You need to attach a copy of your ration card or any residence address proof. It has to be attested.

Property details
Furnish details of property giving correct survey number and place where the property is situated. It is very important that the period , full description of the property, its measurements and boundaries are clearly mentioned in the application .

The application should be submitted to the jurisdictional sub-registrar's office. The requisite fee needs to be paid. The fee is to be paid year-wise , with any fraction of a year being taken as a full year.

Issue of report
The Tahsildar will ask the Patwari for a report on whether there is any entry in favour of any person or legal body. In case there is no such entry and the report is favourable, the no encumbrance certificate is issued after conducting a detailed inquiry. The time taken may be anywhere between 15 and 30 days.

The encumbrance certificate is issued on either Form 15 or Form 16. In case the property has any charges registered against it, Form No 15 is issued.

Form 15 discloses:
Nature of charges created Documents registered in respect of the property Amounts secured Registered numbers of the documents Registration details and references - book numbers In case the property does not have any encumbrances during the period, Form 16 is issued. The no encumbrance certificate is usually issued in the language in which the registers and records are maintained at the sub-registrar's office. However, an English translation can be obtained on payment of an additional fee.