Make your Buying Process Smoother with the help of a Non-Encumbrance Certificate

If you are in the real estate sector, then the term non-encumbrance certificate should not be unfamiliar. If you are looking to invest in property or wish to avail of a home loan, you will need to furnish your lending institution with this certificate. The non-encumbrance certificate lists all the legal and financial transactions associated with the property for the last 12 years. This is done to ensure that whatever property you are interested in does not have any financial liabilities. The non-EC certificate is a mandatory requirement before applying for home loans. Read on to know more about how this certificate works and why you need it.

What is a Non-Encumbrance Certificate?

To truly understand the concept of a non-encumbrance certificate, you need to know the meaning of encumbrance. In real estate, non encumbrance meaning refers to any charge levied on an asset in the form of security. To explain it further, suppose you have taken out a loan to buy a house. Until the time you do not repay the loan, the lender will levy some charges(interest) against the loan. This goes on for the duration of the loan. During this time, the property also remains mortgaged to the lender.

This certificate is necessary whenever you take an advance for a home loan to ensure that the property in question does not have financial and legal obligations. A non-encumbrance certificate lists all previous transactions associated with the property within a specified period.

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Types of Non-EC Certificates Issued.

There are primarily two types of non-EC certificates issued against your property. 

#1 Form 15- This is issued if the property has some pending encumbrances from its earlier transactions for when the applicant is requesting the EC.

#2 Form 16 or Nil Encumbrance Certificate- This is issued when the property in question does not have any monetary or legal liabilities. There will be no charges placed on the property till the duration of the non-EC certificate, and the homeowner has a free title. One can quickly obtain a home loan for these properties in any part of the country.

Contents of a Non-EC Certificate

A Non-encumbrance certificate should have the following property details:

1. All details of the previous and current property owners
2. All-important property-related information (location, size of the property, age of the property etc.)
3. A detailed history of all previous transactions associated with the property
4. Mortgage details (if any)
5. Details of the property received as a gift
6. All further information about the release deed

Non-Encumbrance Certificate Fee

There are no standardized rates for non-EC certificates. It largely varies depending on the state the property is in. Also, they are calculated based on the size of the property and the duration for which the certificate is applicable. Additionally, applicants must pay application fees and service charges in certain states ranging from Rs 1 to Rs 200. 

Usually, non-EC certificates will hold all property transaction-related information of the last 12 years. However, if you wish to have it recorded on your EC certificate before this duration, you can apply for it at a specific charge. This charge again varies state-wide. For example, in Tamilnadu, for the first year, fees are RS 15 and then Rs 5 for every additional year. On the other hand, Telangana and Andhra Pradesh charge Rs 200 for information of the last 30 years which then goes up to Rs 500 for the additional years. 

Non-Encumbrance Certificate Importance

When you wish to take a loan, it is essential to ensure that the property does not have any monetary complications. For example, if a loan against the same property was sanctioned before or mortgaged to a lender, these have to be cleared, and the property should have a free title. Only then you can apply for a housing loan. This is a mandatory requirement, and the ownership and completion certificate must be presented to banks and financial institutions while applying for a loan. The lender will automatically ask for this certificate to ensure that you have a clear title to the property in question. 

If there are any existing monetary liabilities and a transaction is done without the non-EC certificate, then the buyer is responsible for handling the legal and financial obligations.

How to Apply

If you are wondering how to get non encumbrance certificate, you can get your handwritten physical copy of the non-encumbrance certificate from your local Tehsildar or sub-registrar’s office. There are also provisions for online non-EC Certificates in a few select states like Telangana, Andhra Pradesh, Orissa, Puducherry, Tamilnadu and Kerala. 

Steps to Get a Non-Encumbrance Certificate Online

Just follow these few steps to obtain the certificate online smoothly:

• Visit the official state government portal and click on the Government Forms section.
• Click on Stamps and Registration> Application form (Encumbrance Certificate)
• Now you can get a non encumbrance certificate downloaded by filling out form 22 with all the required details. Remember to directly affix a Rs 2 non-judicial stamp on it.
• Attach all the required documents along with the filled-up form.
• Now visit your nearest sub-registrar or Tehlsildar’s office and submit this application form. You will receive an acknowledgement slip.
• The sub-registrar’s office will conduct a thorough inspection and check for previous transactions and deeds.
• Once cleared, they are usually processed within 2-3 working days. You will receive the EC from the sub-registrar’s office within 30 days max.

Non-Encumbrance Certificate Format

Take a look at this non-encumbrance certificate sample pdf to have a clear understanding of the standard non-encumbrance certificate format.

Unlocking the mystery: Who issues Non Encumbrance Certificates?

As a property buyer, you want to make sure that the property you're investing in is free from any financial or legal liabilities. This is where a Non-Encumbrance Certificate (NEC) comes into play. 

To put it simply, a NEC is a document that certifies that a property is free from any outstanding debts, mortgages, or legal disputes. It's like a clean chit for the property that you're planning to buy. This certificate is an essential document for any property transaction and is often required by banks for home loans. But who exactly issues this certificate of non encumbrance? Let's dive in to find out!

Government bodies to the rescue

The issuing authority of a Non-Encumbrance Certificate varies from state to state in India. In most states, the Sub-Registrar's office is responsible for issuing the NEC. The Sub-Registrar is a government official who is responsible for registering property transactions in a particular jurisdiction.

Your bank can help too

If you're applying for a home loan, the bank that you're taking the loan from can also issue a NEC on your behalf. Banks have a tie-up with the Sub-Registrar's office, and they can obtain the certificate for you after conducting a thorough background check on the property. This process usually takes around 7-10 working days.

Note that, while obtaining a NEC, it's crucial to keep the following in mind:

• Ensure that the NEC is obtained from a credible source like the Sub-Registrar's office or a reputed bank.
• Check the validity of the NEC, as it's only valid for a specific period.
• Keep in mind that the NEC is only a reflection of the information available at the time of issue, and it may not reflect any subsequent changes.

Untying the knot of Non-Encumbrance Certificates with NoBroker

To sum it up, a Non-Encumbrance Certificate is a crucial document for any property transaction, and it certifies that the property is free from any financial or legal liabilities. The issuing authority of the NEC varies from state to state, with most states having the Sub-Registrar's office as the responsible party. Banks can also issue the NEC on behalf of the property buyer. So, now that you know who issues a Non-Encumbrance Certificate, you can take the necessary steps to ensure a smooth and hassle-free property transaction. And don't forget, NoBroker is here to help with all your real estate and home loan needs!

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