The Encumbrance Certificate is a document issued by the local sub-registrar’s office, under whose jurisdiction the property lies. The Certificate contains details of the sale, gift, or any loan transactions relating to the property for a given time period. The time period is selected by the party applying for the Encumbrance Certificate.
Encumbrance, by definition, is an impediment or burden in the form of a legal claim that a property may carry with it, and which may have a material impact on the value of the property or its translatability. The encumbrance may be in the form of problems in ownership or remaining dues to banks and other financial institutions. Hence, before making any significant decision on a property, one is required to obtain an encumbrance certificate. If there are no encumbrances on the property, then it becomes a ‘Nil Encumbrance Certificate’. The Encumbrance Certificate is important to any party that will be financially involved with the property, including the potential buyers and financial agencies providing loan against the property.