Get the Tata Capital App to apply for Loans & manage your account. Download Now


Equipment Finance

Avail Digital Equipment Loans
up to Rs. 1 Crore

  • Attractive ROIs
  • Customizable Loan tenure

Equipment Leasing

Avail Leasing solutions
for all asset classes

  • Up to 100% financing
  • No additional collateral required

New Commercial Vehicle Financing

  • First time user
  • Retail and strategic Clients

Used Commercial Vehicle finance

  • Repurchase
  • Refinance
  • Top up
  • Balance Transfer

Tata Capital > Blog > Loan for Home > Understanding Encumbrance Certificates- Types, Fees, and How to Apply

Loan for Home

Understanding Encumbrance Certificates- Types, Fees, and How to Apply

Understanding Encumbrance Certificates- Types, Fees, and How to Apply

Investing in a new property is a big decision, one that involves navigating a labyrinth of paperwork and legal formalities. From applying for a home loan to finalising the property deal, there are a lot of aspects to take care of – one of them is ensuring free title of the property you're going to buy.

The property you're interested in may have a loan against it or be tied up in legal complications, which can disrupt your buying process. An encumbrance certificate is a crucial document which ensures that the property is free from any legal or financial liabilities, such as an unpaid loan.

Whether you're navigating the real estate market, planning to buy or sell a property, or looking to apply for a home loan, understanding encumbrance certificates is a key step toward informed decision-making.

Wondering about the encumbrance certificate meaning? This article will explore EC meaning in property, its types, and the steps to apply for an EC.

What is an encumbrance certificate?

An encumbrance certificate is evidence of free possession of a property. It serves as a record of all transactions, mortgages, legal disputes, or financial liabilities associated with the property over a specific period.

Essentially, it assures the buyer that the property is free from any monetary or legal obligations, making it a fundamental document in property transactions, loan applications, and legal disputes. You can obtain an EC from the concerned sub-registrar's office.

What is encumbrance?

When a property is purchased by availing a loan, the lending institution will levy a "lien" or charge on the property as a security against the loan. This charge is known as an encumbrance that affects the property's transferability. It ensures that the borrower/owner does not sell the property until the mortgage is paid in full.

Before investing in a property or availing of a loan, you must ensure that it is free from any legal or financial obligations and understand EC's meaning in property. An encumbrance certificate will help you find this information. If you do not obtain this document before buying a property, you will have to bear any financial or legal obligations associated with the property.

So, it is crucial to obtain an EC and rectify any charges on it before purchasing the property.

Why do you need an Importance of an encumbrance certificate

1. It is a proof of ownership

The certificate of encumbrance is a proof of ownership title. If you're planning to buy a property, obtain an EC to ensure that no other person has claimed the legal title of the property.

2. It acts as a tax record

In case the land or property tax remains unpaid for over three years, you can file the encumbrance certificate with the Panchayat or Village administrator to update the tax records.

3. It is a necessary document for home loan applications

If you wish to obtain a home loan to purchase a property or a loan against property, you will need to provide the encumbrance certificate to the financial institution. The EC confirms that the property is free of any legal or financial charges and has a clear title, allowing the lender to approve your loan.

Types of encumbrance certificate

There are two types of encumbrance certificates issued by the sub-registrar office (SRO)-

1. Form 15: The SRO will issue an encumbrance on Form 15 if the property has had any encumbrances or transactions relating to sale, purchase, inheritance, loan, gifting, or partition during the period for which the applicant has sought a certificate.

2. Form 16: If there are no charges or encumbrances on the property for the specified period, as requested by the applicant, the SRO will issue an encumbrance on Form 16.

Application fees for encumbrance certificate

The application fees charged for obtaining an encumbrance certificate are determined by the number of years for which the certificate is issued. It typically ranges between Rs. 200 to Rs. 500 and differs from one state to another.

Here's an overview of the fees applicable in different states to get an encumbrance certificate-

DelhiThe minimum application fee is Rs. 200, which can increase depending on the locality and the number of years.
TelanganaThe application fee is Rs. 300 for 30 years and Rs. 500 for more than 30 years, plus an additional service charge of Rs. 25.
Andhra PradeshThe application fee is Rs. 300 for 30 years and Rs. 500 for more than 30 years.
Tamil NaduThe application fee is Re. 1. The fee for first-year information is Rs. 15, while for every additional year after that, you'll have to pay Rs. 5.

How to apply for an encumbrance certificate?

You can apply for an encumbrance certificate both online and offline.

Online application

1. Visit the official website for land registration of your state and click on the option to apply for EC.

2. Log in to the portal with your username or password.

3. If you have not registered yet, click on 'Register', fill in the form with your details, and save it.

4. Enter the search period for which you want the EC and click on 'Calculate Fee' to determine the applicable charges.

5. Pay the application fee online. You will receive an acknowledgement, which you can print out for future reference.

An inspector from the land resources department will inspect the property, after which the EC will be issued with the details of the transaction during the specified period. If there are no transactions during the period, you will receive a nil encumbrance.

Offline application

1. Go to the sub registrar's office and fill out form 22.

2. Provide details such as the name of the buyer and the seller, property details, the type of document requested, and more.

3. Pay the required fees.

4. Once you've submitted the application, you'll receive a reference number that you can use to track your application.

Buy your dream home with Tata Capital

If you're in the market for a new property or applying for a home loan, EC is a crucial document that you must obtain for a smoother process. An EC will help you ensure that the property is clear of any legal or financial charges and act as proof of ownership title for the property.

Now that you're aware of the encumbrance meaning in property and its importance, take your first step towards home ownership with a reliable home loan from Tata Capital. Featuring attractive interest rates, minimal documentation, flexible repayment tenure, and easy EMI payment options, your dream of owning a home is just a click away.

Check out our website for more details.

Leave a Reply

Your email address will not be published. Required fields are marked *