How can buyers confirm encumbrance status?

An encumbrance refers to any legal, financial, or third-party claim or liability on a property, such as mortgages, loans, leases, easements, liens, litigations, or attachments. Confirming the encumbrance status is a critical step in land due diligence to ensure the property is free from any burdens that could restrict transfer of clear title.

1. Apply for an Encumbrance Certificate (EC)

a. Purpose

• To verify whether any charges, mortgages, or registered transactions exist on the property.
  
• Reflects transactions that have been registered with the Sub-Registrar of Assurances.
  

b. Where to Apply

• Sub-Registrar’s Office where the land was registered.
  
• Online Portals in many states (e.g., IGRS portals for Telangana, Tamil Nadu, Maharashtra, Andhra Pradesh, etc.).
  

c. Details Required

• Survey number or plot number
  
• Property owner’s name (optional in some systems)
  
• Property address or document number (if known)
  
• Date range for the search (usually 13 to 30 years)
  

d. Types of EC

• Form 15 – Contains encumbrance entries (if any exist).
  
• Form 16 / Nil EC – Indicates no encumbrances during the period searched.
  

e. Review Points

• Names of parties in transactions
  
• Nature of transaction (e.g., sale, lease, mortgage)
  
• Dates of registration and document numbers
  
• If a mortgage by deposit of title deed (equitable mortgage) is registered, it will be reflected.
  

2. Bank or Financial Institution Verification

• If the property is mortgaged, especially in case of loans or credit facilities, banks may have a lien or charge over it.
  
• Buyers can:
  
  • Request a No Dues Certificate or Loan Closure Statement from the seller.
    
  • Ask for a release deed if a previous loan was cleared.
    
  • Approach the concerned bank (if disclosed) for written confirmation.
    

3. Search Court and DRT Records

• Encumbrances due to legal disputes, attachment orders, or debt recovery may not always be reflected in EC if not registered.
  
• Buyers can:
  
  • Search civil court records for injunctions or disputes.
    
  • Check with Debt Recovery Tribunal (DRT) for SARFAESI proceedings on the property.
    
  • Review public auction notices issued by banks or lenders under recovery laws.
    

4. Inspect Revenue Records and Mutation Status

• Revenue authorities record encumbrances like lease agreements or disputes in mutation registers.
  
• Buyers should:
  
  • Inspect mutation entries, which show historical changes in ownership.
    
  • Verify if the seller’s name appears correctly and if there are notes or remarks indicating disputes or attachments.
    

5. Examine Title Deeds and Past Transactions

• Review copies of:
  
  • Previous sale deeds
    
  • Gift deeds, partition deeds, or will probates
    
  • Any registered mortgage or lease deeds
    
• Ensure that all transactions are properly stamped and registered, and that the seller has clear authority to transfer the title.
  

6. Public Notice in Newspapers

• Buyers (or their legal counsel) may issue a public notice in local newspapers declaring the intent to purchase the property.
  
• This invites objections from third parties, including those with unregistered or pending claims.
  

7. Legal Due Diligence by Advocate

• Appoint a real estate lawyer to conduct a title and encumbrance search.
  
• The lawyer may access:
  
  • Registrar records
    
  • Encumbrance databases
    
  • Court records
    
  • Revenue documents
    
• A formal Title Search Report or Legal Opinion Letter may be issued confirming encumbrance status.