When do you need an encumbrance certificate? 

An encumbrance certificate is a legally issued paper or document that certifies that a property is free of all financial and legal obligations. Aside from that, it displays the property’s condition and the total number and details of its previous owners. It also contains information on previous ownership transfers and all of the property’s mortgage obligations. The encumbrance certificate cannot be obtained for properties for which the mortgage has not been completed.

In general, an encumbrance certificate is required in the following situations: 

  1. EC for purchase: When buying a home, a non-encumbrance certificate is required to prove that you are dealing with the right person and that there are no outstanding loans on the property. 
  2. EC for loans: When you apply for a home loan to purchase a home, banks will often want an encumbrance certificate before accepting your application. 
  3. EC for the removal of PF: If you use your provident fund to make a down payment on a house, your employer will seek the EC. 
  4. For property mutation, use EC: Following the property purchase, the owner must have the ownership transfer recorded in the official records via property mutation. 
  5. EC for the sale of a flat: When selling a home, the seller must apply for and obtain the paperwork from the government’s records to display it to the buyer. 

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