Those looking to buy a new property must make note of the requirement of an Encumbrance Certificate during purchase, which is an extremely important document that can safeguard their investment.
During the purchase of a residential property, it is important to check if the property is associated with any sort of legal complications. As a buyer, one must know if the property he/she is investing in comes with legal liabilities, which if unchecked, may have to be borne by the owner. This is where an Encumbrance Certificate (EC) comes in handy.
An EC is a legal document that states whether or not a particular property is free from any kind of legal or financial liabilities. The certificate would reflect all sorts of financial and legal associations of the property, for instance, if the owner has taken a loan against the property, or if there is any form of legal tussle – the certificate of encumbrance on property would reflect the same.
Given the crucial status of the certificate for all property investments, it is significant to know that an Encumbrance Certificate can be needed in the following instances:
- When one is buying a property, in order to ensure that they are dealing with a legitimate property owner.
- When one is taking a home loan for property investment, as banks require an EC before accepting your application.
- When one withdraws money from a provident fund to invest in the house, as your employer will demand to check the EC to verify if the payment is being made upfront.
- When one is selling a property, in order to present it to the buyer during the property transaction.
For example, if you wish to buy a house in Chennai or sell a house in Chennai, you will require an EC in both scenarios.
What are the documents needed to get an Encumbrance Certificate?
Anyone applying for an EC will require the following documents:
- Address proof
- Legal signature
- Details of the property for which the EC is needed/ registration papers
- Copy of the deed (if a deed has been created for the property)
Some states even have the facility of applying for an EC certificate online, including Tamil Nadu, Kerala and Delhi. The online application gets processed in 3 to 4 days, wheras the offline application takes 15 to 30 days. Most government websites that allow you to apply for an EC online, will also let you track the status of the application. For instance, those who apply for an Encumbrance Certificate in Tamil Nadu, can view, track and download their application online.
An Encumbrance Certificate has become a mandatory document for all property transactions, in order to act as proof that the property is free from any legal burdens. It also ensures that the buyer has complete ownership of the property, and if you notice any charges on the EC, it must be rectified before final purchase.