Understanding the Importance of Encumbrance Certificate in Home Purchase

Introduction to Encumbrance Certificate (EC)

An encumbrance certificate (EC) is a document issued by the sub-register office of the revenue department. It is a crucial piece of paperwork that helps potential home buyers to verify various aspects of a property before making a purchase. An EC serves to provide information on mortgage liability, court attachment, ownership, property schedule, registration date, allotment number, market price, as well as the history of registered transactions including change of ownerships and deeds acquired through sale, gift, or inheritance.

Why You Should Apply for an Encumbrance Certificate

When you are buying a home, it is essential to have a clear understanding of the property you are purchasing. An EC can save you from potential legal and financial complications. For instance, if a property has an unresolved mortgage or court attachment, it might not be permissible to sell the property. On the other hand, a property without any encumbrances will have a clear market title, making it easier to sell or buy.

In addition to property verification, an encumbrance certificate is also useful for several other purposes, such as loan applications, drafting sale agreements, property tax applications, and khata transfer applications. It is a mandatory document for every part of property dealing, including verification, drafting deals, obtaining property tax khata, and submitting ownership proof to tenants.

The Two Forms of Encumbrance Certificate

An encumbrance certificate is usually issued in two forms: Form 15 and Form 16. Form 15 is issued when the property has any encumbrance during the specified period. The nature of encumbrance could include gifts, partition, loans, leases, and disputes. Form 16, also known as a Nil Encumbrance Certificate (NEC), is issued when the property has no encumbrances during the stated period. This ensures that the property has a clear marketing title to sell or buy.

How to Obtain an Encumbrance Certificate

An encumbrance certificate can be obtained online for properties registered after 2004 in Karnataka, including Bangalore. Here’s a step-by-step guide to obtaining an encumbrance certificate online:

Step 1: Open the website Kaveri Online Services. Step 2: New users should register by clicking “Register as new user.” Step 3: Fill out the registration form with your name, gender, county, permanent address, mobile number, email ID, and ID proof number (PAN, driving license, or Aadhaar number). Step 4: Set a password and provide a password recovery question. The user name, password, and activation code will be sent to your mobile number via SMS. Step 5: Auto-direct to the activation page and enter the activation code received via SMS or email. Step 6: Log in and click on “Online EC” from the options. Step 7: Choose to fill the application form by property number or by party name (buyer or seller). Step 8: If using the party name option, input the registration date from the sale deed, district name, and village name from the sale deed's schedule section, and the party name (buyer or seller). Step 9: Click “Check to apply for digitally signed EC” and then click “Search.” Step 10: An application number will be generated, and click “Proceed.” Step 11: Make the payment of Rs. 40 via the payment interface. Step 12: Submit the application. Step 13: Within a day, you will receive an SMS confirming that your application has been accepted. Step 14: Two days later, another SMS will inform you that your EC has been signed and uploaded. Step 15: Finally, download your encumbrance certificate from the Kaveri Online Services home page or pending and saved application section.

It is important to have a clear encumbrance certificate for the property you are purchasing. When verifying a property, there may be issues that are not covered by the EC. Therefore, it is crucial to check all the possible documents and verify the property adequately. This includes documents such as the mother deed, sale deed, khata transfer, occupation certificate, tax paid receipt, RTC extract, layout plan, development authority approval, and no objection certificate from the bank if the property was bought on loan. It is also recommended to inspect the property at multiple times and consult a lawyer for critical deals.

Conclusion

Verifying the encumbrance certificate is just one step in the home purchase process. It is important to conduct a thorough inspection of the property, check all possible documents, and seek legal advice to ensure a smooth transaction. If you need assistance with obtaining an encumbrance certificate, our team at PGN Property Management in Bangalore can provide professional services. For more information, please contact us.