Encumbrance certificate: what it proves, and what it does not

What it is actually telling you

It is a search of the register for one property over a date range, run by the sub registrar office. What comes back is a list of what was registered against it: sales, mortgages, gifts, court attachments.

The word doing the work is registered. That is where people get a false sense of safety.

How far back to search

The standard search in Maharashtra runs 30 years, and most lenders will insist on either a 13 year or a 30 year search before they sanction.

Take the 30 year search. The extra cost is small and the shorter one can miss exactly the transaction that matters, because a problem in a title chain is usually old rather than recent.

What it will not show you, which is the part worth reading twice

A clean certificate is not proof of a clean title. It reflects what is in the registration records for the period you asked about, and no more.

These do not appear on it:

• ·An unregistered agreement, will or family arrangement
• ·An equitable mortgage, where title deeds were deposited with a lender without a registered charge
• ·An oral tenancy, which in Mumbai is not a small risk
• ·A claim by adverse possession
• ·Society dues, property tax arrears or maintenance arrears, which sit elsewhere entirely
• ·Anything about the physical condition of the flat or who is actually living in it

So the certificate answers one question well and stays silent on several others. Pair it with the title chain, the society records and the last paid tax receipt, and you have covered most of the ground.

Where it fits in a purchase

1. 1Shortlist a flat
2. 2Encumbrance certificate and the title chain
3. 3Society NOC, dues position and the last property tax receipt
4. 4Agree a price
5. 5Agreement, stamp duty, registration

Most people do step two after step four. Doing it first is what keeps a good deal on schedule.

What we pull alongside it

An encumbrance search only shows charges that were registered. It will not show society dues, an unregistered agreement, a family claim that has not reached a court, or a dispute that has. So it goes in a stack, never alone.

The stack is: a search report on the title going back thirty years, which is what a bank asks for on an older building anyway; the Index 2 for every document in that chain, so each link is seen rather than taken on trust; the society share certificate and the society's no objection letter, which say whether the society recognises this seller and whether dues are outstanding; the latest property tax bill, in whose name it stands and whether it is paid; the occupancy certificate for the building; and, where the seller had a loan, the lender's closure letter and the return of the original documents.

If the encumbrance search is clean and any one of those is not, the flat is not clean.

Before you pay a token

Get the certificate before money moves. It is one of the cheapest steps in the purchase and one of the most reassuring, because it tells you the flat is yours to buy with nothing hanging over it. If you would like us to run the search on a flat in Borivali, Kandivali or Malad, send us the details and we will do it with you.