Encumbrance refers to a charge created on a property. In case a property is purchased with borrowed money or if it is offered as a security for some loan, then a charge is created in the form of an encumbrance. The property is mortgaged as a security for any debt or obligation. In any transaction of sale or purchase of property, a 'no encumbrance certificate' is a very important document. This certificate is also issued for the purpose of mortgaging a property while seeking a loan. The certificate certifies that the property in question is not already mortgaged. If it is already mortgaged, the liability for the outstanding loan may also devolve on the new owner.
Procedure to obtain a no encumbrance certificate:
- Apply on Form 22, with a Rs 2 non-judicial stamp affixed, to the Tahsildar giving your complete residential address and the purpose for which the certificate is required
- Copy of ration card or any proof of residence address duly attested should be attached
- Furnish details of ownership 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 under which the property falls
- The requisite fee needs to be paid. The fee is to be paid year-wise, with any fraction of the year being taken as a full year
- The Tahsildar will seek 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. The time taken may be anywhere between 15 to 30 days.
A no encumbrance certificate is issued in either Form 15 or Form 16. In case the property does not have any encumbrance during the period, Form 16 is issued. In case the property has any charges registered against it, then 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
The 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 additional fees.
The certificate discloses the encumbrance status of a particular property. The certificate is issued for a particular period of time and does not cover any period prior to or following the period mentioned. The certificate is an extract of the register maintained by the sub-registrar's office, which in turn is based on the documents registered with the registrar's office.