Finance

Why is an Encumbrance Certificate important for a property?

While availing a loan against property, most lenders demand an Encumbrance Certificate. In the context of real estate, an Encumbrance Certificate is a document that acts as proof of free possession of a property. In other words, an Encumbrance Certificate or EC means a certificate that states that the concerned asset is free from any legal or economic liabilities. 

Importance of an Encumbrance Certificate 

Before a customer applies for an EC online, he or she should go through the following benefits:

  • This certificate assures applicants that their properties are not facing any financial liabilities such as outstanding loans or legal rights. 
  • Providing an Encumbrance Certificate during a loan against property application helps in improving a borrower’s eligibility. 
  • Customers are required to submit this certificate during property mutation. 
  • In the case of land tax payment default for over 3 years, one must submit this certificate for updating land tax records. 
  • Moreover, while PF withdrawal during a property purchase, individuals might require showing an Encumbrance Certificate. 

After securing an Encumbrance Certificate, an individual can apply for secured credit options such as a loan against property.

Borrowers can secure a loan against property from reputed financial institutions that offer a high-value loan amount. 

There are some lenders that extend pre-approved offers to help customers enjoy a hassle-free loan application process. These offers are available on various financial products such as home loans. You can check your pre-approved offers by providing basic information like name and phone number. 

However, there is specific eligibility criteria for loan against property that a prospective borrower needs to fulfil. 

How to get Encumbrance Certificate?

 An EC can be obtained from sub-register’s office. However, candidates have to make an application at the Register’s office. For application, certain Encumbrance Certificate documents are needed, including property details, attested copies of address proof, title details, and others.

Applicants also have to pay a nominal fee during the application. After a successful application, an officer will index the concerned property, and then the certificate will be prepared. The EC will contain details of the transaction during a specific time frame, or if no transaction is made, a Nil Encumbrance Certificate is issued.

Steps to apply for EC online

Applicants can choose to apply for an EC online as online application is easy, fast and highly convenient. Steps to apply for an EC are as follows.

1: Visit the official website of the state’s land registration and navigate to the EC page. 

2: Fill up the form with all the details, then click save or update.   

3: Select the time frame for the EC and then calculate the fee.  

4: After successful payment of fees, individuals will be directed to the acknowledgement window. Users can print the acknowledgement for future reference.

Step 5: Then, an officer will inspect the property for a given time frame, and then the Encumbrance Certificate document will be provided.   

However, one must remember the steps to apply for an EC online differ from one state to another. 

Documents needed to obtain an EC

Customers willing to apply for an Encumbrance Certificate should present the following documents:

  1. Application form. 
  2. Documents mentioning property address which also includes the survey number. 
  3. Attested copy of address proof. 
  4. Registration document of property, including book and deed numbers, date and signature of the applicant. 
  5. A copy of the power of attorney.
  6. Release, sale or partition deed copy. 
  7. Purpose of application. 
  8. Aadhaar card

After arranging for these documents, one can proceed to the step-by-step guide of how to apply for a loan against property.  

Undoubtedly, an Encumbrance Certificate is a highly useful document for a one’s property that comes with various benefits.

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