When purchasing a property, it is essential to ensure that it is free from any financial encumbrances. A common question many buyers ask is: How do I verify if a property has a loan or mortgage attached to it?
There are two primary methods to determine whether a property has a loan:
- ENCUMBRANCE CERTIFICATE (EC)
An Encumbrance Certificate, commonly referred to as EC, is a crucial legal document used to confirm the ownership and legal status of a property. It provides a detailed record of all registered transactions related to the property, including any mortgages or loans.
HOW THE EC REFLECTS A PROPERTY LOAN
To help you understand better, here is a real-life example from my own experience:
- On 12–11–2021, I availed a home loan of ₹40,00,000 from State Bank of India to purchase a 1200 sq. ft. plot in Bangalore.
- The loan agreement between the bank and me was registered at the sub-registrar's office, and the transaction was duly reflected in the Encumbrance Certificate.
- In the EC, the bank's name appeared in Column 6, indicating that the property was under mortgage.
Refer to below EC
Later,
- On 17–02–2023, I repaid the loan in full and executed a Discharge Deed, which was again registered with the sub-registrar.
- In the updated EC, the discharge of the loan is reflected in Column 5, confirming that there is no existing mortgage or lien on the property.
KEY POINTS TO REMEMBER:
- If the loan is active, the bank’s name appears in Column 6 of the EC.
- If the loan is closed and a Discharge Deed is registered, the bank's details are shown in Column 5.
- Always obtain the latest EC, covering at least 13 years or more, to ensure a complete record of transactions.
- TITLE DOCUMENTS
Title documents are the legal papers through which ownership of the property is transferred from the seller to the buyer. These documents include:
- Parent Deed
- Sale Deed
- eKhata Certificate
- Property Tax Receipts
IMPORTANCE OF VERIFYING TITLE DOCUMENTS
Some private lenders or financial institutions do not register the mortgage with the sub-registrar's office. Instead, they retain the original title documents with them as security until the loan is repaid.
Therefore, if the EC does not reflect any loan details:
- Request to inspect the original title documents.
- If the seller is unable to produce the originals, it could mean that they are currently held by a lender against a loan.
- Avoid relying solely on photocopies; insist on verifying the original documents.
NEED PROFESSIONAL HELP?
We offer personalized property consultation services to help you verify ownership, check for existing loans, and ensure a legally sound transaction.
- Email us at: pgnproperties@gmail.com
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