All about an encumbrance Certificate (EC), an Occupancy Certificate (OC) and a Completion Certificate (CC)

Encumbrance Certificate (EC), Occupancy Certificate (OC) and Completion Certificate (CC)

 

Summary

  • An encumbrance certificate serves as proof of possession of the property.
  • When applying for a home loan or obtaining a loan against a property, an encumbrance certificate is crucial.
  • There are two types of ECs: Form 15 and Form 16
  • To obtain an Encumbrance Certificate, a person must determine the period for which the certificate is needed.
  • The occupancy certificate is granted upon issuance of the completion certificate. A builder cannot give possession of a flat to a buyer until the occupancy certificate has been granted.
  • The occupancy certificate is awarded only after the inspection authority is satisfied that the project has been constructed under the approved building plan and mandatory norms.
  • The completion certificate is issued to the builder/developer when the project has been completed as per the approved sanctioned plan.

Encumbrance Certificates (EC), Occupancy Certificates (OC), and Completion Certificates (CC) are some essential documents when buying property in India. As a result, the buyer must have complete knowledge before purchasing a property. However, it can be challenging to determine whether a property is free from all legal issues. A buyer who wishes to buy a property must still confirm that the property is free from legal complications. Encumbrance Certificates confirm that the proposed property is free from any lien and has no charge. (A lien is a legal right to keep possession of property that belongs to another until the debt owed by that individual is discharged.

Generally, an encumbrance is a non-financial or financial claim on land/property, apart from title rights. An EC serves as proof of possession/title of the property. In addition, it serves as a document that assists buyers in identifying pending or mortgaged debts associated with the property in question.

It is necessary to obtain an encumbrance certificate when buying a property, applying for a loan against a property, or applying for a mortgage to validate that the property has no legal liabilities.

A certificate of encumbrance can be obtained from the sub-registrar’s office, while some states, including Tamil Nadu, Uttar Pradesh, Kerala, Andhra Pradesh, and Telangana, provide the certificate online as well.

Table of Contents

Encumbrance Certificate

Why is an Encumbrance Certificate required?

Before purchasing land/property, buyers must thoroughly check for legal or financial liabilities or encumbrances. An EC assures a buyer that the property has no non-monetary or monetary penalties, including liens, outstanding leases, or loans.

In the following cases, an encumbrance certificate is required:

  • It is a compulsory document used in land and property transactions to prove free ownership.
  • This Certificate is crucial when applying for a home loan or obtaining a loan against a property.
  • This certificate is required when buying or selling a property. This document assures the buyer of the property’s legal title and that they can obtain a loan on the property.
  • An EC covers all the registered property/land transactions for a definite period for a buyer to determine the actual status of the property.
  • The EC is required to get property mutations, such as a khata transfer, a khata registration, or a patta.
  • Encumbrance certificate is required by the local panchayat or village officer if land/property taxes are not paid for more than three years. This reinstates the property tax records.
  • An EC is required when someone withdraws money from PF to buy real estate. Furthermore, the company or employer may require an encumbrance certificate if someone withdraws money from the provident fund account to pay for the property purchase.
  • A property/land owner must transfer ownership to their name by registering the property in the state government record via a property mutation. An EC is needed at the time of registration.

Encumbrance certificates: types and uses

In general, there are two types of ECs:

  • Form 15:  This can be acquired from the sub-registrar’s office of the region to verify whether the land/property has any legal liability during the critical period.
  • Form 16: When the property/land has no legal liability, the sub-registrar issues a nil-encumbrance certificate to the applicant.

Documents required for an Encumbrance Certificate

When applying for an EC, buyers need the following documents:

  • Document of property registration
  • Details about the property and its title/possession deed
  • A sale deed, a partition deed, or a gift deed for the property, if any, have been completed previously.
  • An address proof.
  • Reference or letter from the authority to whom the certificate is to be submitted

How does the Encumbrance Certificate work?

An encumbrance certificate for every property shows a list of transactions that occurred during the specified time period. This certificate will confirm details such as loans taken against the property or changes of ownership during the period mentioned.

This certificate also includes documentation of any legal claims made against the property. The person will receive the details only for the specified period if they request an encumbrance certificate. Applicants can get the encumbrance certificate of land or property for up to 30 years.

How much does an Encumbrance Certificate cost?

An encumbrance certificate costs nominally and varies from state to state. For example, the fee for an encumbrance certificate might be between Rs 200 to Rs 500. It may also vary depending on how long the applicant has been seeking information.

How to obtain an EC?

Property encumbrance certificates are issued by the sub-registrar office of the region in which the property is registered. An application for an EC must be submitted to the registration office with proof of address, title details, property details, and the appropriate fee.

The officer will verify the indexes based on the information requested in a specific period and issue an EC detailing the transactions during that period. In addition, a Nil Encumbrance Certificate (NEC) is issued if no transaction occurs at a particular time. As per the rules of each state, EC applications are made in Form No. 22, ECs are given in Form No. 15, and NECs are issued in Form No. 16.

Procedure for applying for an encumbrance certificate

To apply for an EC, an applicant must follow these steps:

  • The applicant must visit the Sub-Registrar’s regional office where the property is located.
  • Form 22 with complete information, such as the address of the property, the name of the buyer and seller, and the type of document you would like, such as an EC or CC.
  • Complete Form 22 and submit it along with the application, which must include all the necessary information.
  • At the fee counter, pay the required fee. EC fees vary depending on the period for which the certificate is required.
  • Once the application is submitted, the officer will check the indexes for details and reply within the appointed timeframe. After applying, the applicant will receive an encumbrance certificate within 15-30 days.
  • The encumbrance certificate is issued physically, offline, throughout the country. In some states, however, an EC can be obtained online, like Andhra Pradesh, Puducherry, Telangana, Kerala, Odisha, and Tamil Nadu.

What is a Nil-Encumbrance Certificate?

To obtain an Encumbrance Certificate, an applicant must determine the period for which the certificate is needed. A Nil Encumbrance Certificate is issued if no charges have been levied on the questioned land/property during the period mentioned. During the specified period, the document ensures no lien was placed on the property.

When Applying for an Encumbrance Certificate, Keep These Things in Mind

  • Ensure that you provide all the correct information so your application for an encumbrance certificate will not be rejected.
  • There is no refund for the application fee.
  • Ensure you have the required documents when applying for an encumbrance certificate.
  • If you applied for an encumbrance certificate online, checking and tracking the status of your application can be done on the same portal.
  • You may receive a confirmation message on your registered mobile number when your encumbrance certificate has been generated.
  • If you want an encumbrance certificate offline, you can visit the nearest Sub-Registrar’s office.

Occupancy Certificate

What is Occupancy Certificate?

An occupancy Certificate (OC), sometimes called a ‘Certificate of Occupancy,’ is a document issued by local government agencies or development authorities certifying that buildings meet the national building codes. OC is required for any real estate transaction, whether the buyer intends to use or resell the property.

Importance of an Occupancy Certificate?

Buildings without an Occupancy Certificate may not comply with mandatory regulations and may not have been constructed as per sanctioned plans. As a result, these buildings are not approved for habitation and can be demolished because they are considered unauthorized structures.

There are several reasons why occupying a building with an OC is illegal under Indian law.

  • Buildings may be technically unsafe to occupy due to construction, electrical and fire safety, stair and lift safety, etc.
  • The building could have unauthorized extensions, walls, and floors and not adhere to the approved plan.
  • If there is a mishap/accident, occupants cannot hold anyone liable, and insurance claims may not cover the damage.
  • A building may be demolished, and the authorities may cut off the connection to utilities like water, electricity, and drainage at any time.

How to obtain an occupancy certificate?

A builder-buyer must submit an application form to the concerned municipal or local development authority to obtain an OC when the building is completed. After the completion of construction, submission of an OC application form must be made within 30 days.

The following documents need to be submitted:

  • Commencement certificate
  • Completion certificate
  • Built plan with elevation, site, and section plan
  • No objection certificate from the fire department
  • Area calculation of floor signed by an architect
  • Tax assessment with tax-paid receipt
  • Photographs of the completed building
  • Photographs of rainwater harvesting and solar panels
  • Copy of the sanctioned plan

Authorities will conduct a physical inspection of the building and determine the building construction according to the approved plan before issuing the certificate.

In the case of deviations of up to 5% from the approved plan, there will be a fine based on the extent of the deviation. After paying the fee, the OC will be issued.

Can anyone apply for a certificate of occupation?

An occupation certificate is required for the builder, but the flat owner may also apply for an occupation certificate. If the flat-owner already has a certificate of occupation, they can apply to the municipality or local corporation. The occupancy certificate can be obtained within 30 days if the building has been constructed according to the approved plans and standards and the completion certificate has already been acquired. However, the occupation certificate may only be issued if the building has been built as per the essential requirements necessitated by the appropriate government bodies.

What are the required documents for OC?

The builder must submit the following documents to obtain OC:

  • Copy of building sanction plan
  • Building commencement certificate
  • Copy of building completion certificate
  • A copy of the most recent property tax receipt
  • A copy of the No Objection Certificates (NOCs) from the airport authority and the pollution control board

Within 30 days’ time period of the completion of a project, a builder should submit the OC application to the Municipal Corporation. However, buildings that violate the approved building plans and have certain design deviations are not eligible for occupancy certificates.

How does OC protect a homebuyer?

OC is an important document that certifies the livability status of the building as per civic standards. Therefore, a buyer should extract it from the builder to affirm its suitability for possession. Additionally, it seals the legal status of the building and preserves your ownership right.

What if the builder refuses to provide OC?

The buyer has the right to take the builder to court if they refuse to provide OC and file a complaint in the consumer forum, along with an application fee. It is also possible to issue a written notice to the builder asking him to hand over the document within a month. In addition, homebuyers can file grievances with their state’s regulatory authority on the official website under the Regulation and Development Act, 2016 (RERA). The minimum fee for filing a grievance is Rs 1000; however, the amount varies from state to state.

Ensure you receive the original document from the builder, not a copy or receipt of the OC. When you resell the property or apply for a home loan, you must have an authentic OC.

Completion Certificate

What is a Completion Certificate?

A completion certificate is issued when a building plan has been approved, and a housing project has been completed. The completion certificate is given to any housing project after the authorities visit the site and check the documentation to ensure it does not violate any applicable building codes/laws. An individual, i.e., a property developer who develops a housing project, is responsible for obtaining a completion certificate.

The completion certificate includes all the essential details, such as the location of the building, identification of the land, and information about its developer or owner. It also contains the height of the building and a description of the materials used to construct it. A completion certificate also indicates whether the project was built according to the building plans and the local municipality’s rules and regulations, such as the distance from the road and between neighbouring buildings.

The completion certificate provides the following details:

  • Complete details of the property/land
  • Every detail regarding the building plan
  • All details concerning the real estate builder
  • Approved height of the building
  • The location of the project and also its distance from the other buildings in the nearby area.

Why is a completion certificate necessary?

  • Completion certificate is proof of the builder’s compliance (National Building Code of India, 2005).
  • To obtain necessities, such as water, electricity, etc.
  • After receiving a certificate, the non-domestic water rate is converted to a domestic one in residential buildings.
  • Once the building is completed, its property tax assessment will take effect.
  • A completion certificate will facilitate the payment of the final instalment of the housing loan so that repayment can begin.

What is the process for obtaining a completion certificate?

You can obtain a completion certificate from your city’s chief zonal officer of the municipal corporation or development authority. You must submit the following documents and your application to get a completion certificate.

  • A copy of the sale deed or lease deed
  • A copy of the approved building plan, as well as a permission letter
  • Any receipts for property taxes paid up to date.
  • Receipt of water tax payment
  • A receipt for the underground drainage connection fee
  • Receipt of electricity cable and road cutting charges paid
  • Please provide a receipt if any borewell permission fees have been paid.
  • Document on Rs 10/- Non-judicial stamp paper attested by Notary Public/Metropolitan magistrate certifies ownership of the building, architect/engineer details engaged for construction, and complete document of structure as per bylaws.
  • The authorities may also request/require additional documentation.

Who can apply for a completion certificate?

A builder applies for a Completion Certificate.

When buying a flat without an occupation certificate/completion certificate, is it safe?

If an employer asks for a home loan statement and occupancy certificate to obtain income tax benefits, the employer may request the occupancy certificate. You are legally required to possess an occupancy certificate to occupy a property. If you do not have one, the civil authorities will ask you to vacate it. With these certificates, getting a water connection, electricity connection, or sanitary connection may be more manageable. However, if you wish to sell your flat/apartment later, you may need help finding a buyer. Moreover, getting a Khata Certificate without an occupancy certificate may also be very challenging.

What is the difference between an Encumbrance Certificate (EC), an Occupancy Certificate (OC) and a Completion Certificate (CC)? 

In India, buying a home requires many important documents, so buyers must have a clear understanding of all of them. Then, per the building plan and various other regulations, the local authority issues a CC when the property construction is complete.

A regional municipal authority issues an occupancy certificate after the Completion Certificate confirms that the building is safe to occupy and a building permit is granted. Encumbrance Certificates are also different from completion certificates and occupancy certificates since they determine whether a property is associated or not with any legal or financial liability.

Conclusion:

In conclusion, an encumbrance certificate determines whether the property is free from any lien and if there is no charge against the property. Therefore, it is necessary to have an encumbrance certificate when selling a property/land or applying for a loan against the property.

An encumbrance certificate differs from an occupancy certificate and a completion certificate. A completion certificate assures the authorities that the property complies with all their requirements and follows the approved building plan. Additionally, it ensures the buyer that the property is safe and will be provided water and electricity regularly.

It is recommended that homebuyers collect all these certificates. If these certificates are unavailable, homebuyers may suffer even though they are not at fault. In addition, obtaining the occupancy certificate when registering a property should also be mandatory.

FAQs

 Yes, an individual can apply for an encumbrance certificate online, but only in some states in India, that is, Andhra Pradesh, Telangana, Kerala, Tamil Nadu and Uttar Pradesh.

 An encumbrance certificate (EC) can be obtained from the sub-registrar’s office in the applicant’s region. All property registration procedures are handled at the Sub-Registrar’s office.

 With the offline method, the applicant can get the encumbrance certificate within 15-30 days, while with the online process, the applicant can get the certificate within 3-5 days.

 A partial OC upholds the ownership right of the buyer, and it is legal for a homebuyer to take possession with a partial OC. It is valid until the builder receives an occupancy certificate.

 There are multiple reasons why a builder is denied an Occupancy Certificate. For example, when there are deviations in the approved building layout/plan, such as when a No Objection Certificate (NOC) has not been received from the pollution board or airport authority or when the property builder fails to produce a commencement certificate or has not received it at all.

 Encumbrance certificates provided by the sub-registrar’s office provide information regarding property and ownership, mortgages, transfers of ownership, etc.

 In this case, the homebuyer can file a legal complaint against the builder in the consumer court. A notice can also be issued against the property builder, asking him to hand over the document within a month.

 An encumbrance certificate verifies whether a property or land is free of financial or legal obligations, such as liens or pending loans.

 An occupancy Certificate (OC) is an important document that ensures the supply of basic amenities such as electricity, water and drainage system. The builder cannot give possession to the buyer unless the occupancy certificate is obtained.

 Form 22, known as an encumbrance certificate proforma, is commonly used to request a certificate of encumbrance.

 The completion certificate is issued to the builder/developer when the project has been completed per the approved sanctioned plan.

The occupancy certificate (OC) is granted upon issuance of the completion certificate.

A builder can only give possession of a flat to a buyer once the OC has been granted.

 Encumbrance certificates are required when buying or selling property, applying for a home loan, or withdrawing money from PF.

 A builder/developer is responsible for applying for Occupancy Certificate with the Municipal Corporation or development authority of the city/region in which the property is situated. The certificate is awarded after the inspection authority is satisfied that the project has been constructed under the approved building plan and mandatory norms.

However, in some cases, builders can avail of partial OC and offer possession. For instance, in mixed-use development projects, a builder can obtain a partial OC for a partly completed residential project and hand possession to the flat owners. In contrast, OC for shops or retail units in the under-construction stage can be availed later.

 A completion certificate or CC is issued through the local authority after the inspection of the premises. The authority provides the CC if the developer complies with all regulations, norms and safety guidelines.

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