An article " ENCUMBRANCE CERTIFICATE "

ENCUMBRANCE CERTIFICATE

Encumbrance in general parlance means difficulties faced by some one in moving easily orhurdles, impediments, obstacles. In legal parlance it means the changes, or liabilities that are created on a property. In simple words, the property in question is not free, but has been a security for any debt, obligation, transfer of the owner of the property.

Public in general frequently use encumbrance certificates in property transactions as routine subject. They are under the impression that encumbrance certificate discloses all the encumbrance on the property. It is very important that the period of the encumbrance certificate, description of the property, its measurements, boundaries are clearly mentioned in the application for encumbrance.

The prescribed application form is No.22. The full details of the property, the period and the person who is applying should be disclosed in the application. The year commences from 1st April and closes on 31st March will be considered as one year. Any fraction of year attracts fee for the full year. The application has to be submitted to the jurisdictional sub-registrar officeunder which the property falls. The fee prescribed is for single property/individual. If the properties belong to a single individual or jointly owned or under single survey number / village, no extra fees need to be paid.

The encumbrance certificates  are issued in Form No.15 or 16. If the property does not have any encumbrance during the period, the Form 16 will be issued. This is called Nil encumbrances. If the property has any encumbrances registered during the period, form No. 15 will be issued. The certificate in form 15 discloses the documents registered in respect of the property, the parties to the deed, nature of the encumbrance, amounts secured or transacted in the deed, registered number of the document, Book No., Volume No., datewise. The encumbrance certificate, issued always will be in the language in which indexes are prepared in particular Registrar or Sub-registrar’s office. If the indexes are not in English and the applicant wants certificate to be prepared in English, this request will be complied to the extent possible.

Limitations of Encumbrance Certificate

Though encumbrance certificates discloses the encumbrance on a particular property, it has certain limitations. Public should not completely rely on the certificates issued by the Registrar or Sub-registrar office.

The encumbrances disclosed in the certificate are for the period for which certificate is issued. Any encumbrances created prior or later are not included in the certificate. The encumbrances relate to the property details of which as furnished in the application. If the description of the property in any of the registered documents is different from what is described in the application, such details are not reflected in the certificates. The issuing office also makes it very clear that, though search in the records for any given period is made with due diligence the issuing office is not responsible for omissions and commissions.

The encumbrance certificate discloses the encumbrances created by the documents which are registered in particular office. In other words it is an extract of the register. Any document by which the change is created, which is not registered does not find place in the certificate.

There are various documents for which registration is not compulsory and only optional. Most important is equitable mortgage or mortgage by deposit of title deeds. Many banks finance against deposit of original documents. The borrower or guarantor delivers to bank the original title documents of the property. This creates a valid mortgage which need not be registered. The document creating lease for a period of not exceeding one year is not compulsorily registerable. Any decree or order of a court, any award need not be registered. Testamentary documents will, also need not be registered. Such documents which are not registered does not find place in Encumbrance certificate.

It is always advisable to inspect the property personally and to verify whether original title documents are available with property owner. In case of agricultural lands, they are generally inherited. The change of ownership is recorded in revenue records, mutation register of village panchayat. Such change of ownership are not registered. As such encumbrance certificates does not reflect the true nature of the agricultural land. RTC, mutation extracts give complete details of change of ownership, the details of possession, the conversion of agricultural land to non – agricultural purpose. As such it is better to insist and rely on RTC and mutations extracts in addition to the encumbrance certificated in case of agricultural lands. It is always practicable to verify the encumbrance certificated for a minimum period of 43 years.

Always verify that the encumbrance certificate are issued as per your requirement of period, and it contains boundaries and measurements of the property, signature of registering authority and office stamp apart from disclosing the names and signature of persons who have searched and verified the records.