Understanding Property Transactions: Digital Encumbrance Certificates and Conveyance Deeds Are On The Rise

Encumbrance Certificates and Conveyance Deeds are critical legal property documents required when purchasing or selling real estate or applying for a loan.

Digital encumbrance certificates verify that the property is free from legal and economic burdens. The conveyance deed signifies the legal exchange of property title from one person to another through a gift, mortgage and lease.

The evolution of technology has ensured that, with time, one can retrieve both documents online and eventually evaluate them. With the rising demand for paperless documentation, such digital solutions are efficient and convenient.

Read on as we decode these important documents in this guide:

What Is The Encumbrance Certificate(EC)?

An encumbrance certificate, also known as an EC, is critical to the proof of ownership and freedom of property title. This document is required to purchase or sell a property or to obtain a loan against the property. It helps to confirm that the property does not have any economic or legal liabilities associated with it.

What Is The Conveyance Deed?

On the other hand, the conveyance deed is a legal document used to transfer property ownership from one person to another through the transfer of a gift, an exchange, a lease or a mortgage. It is also possible to refer to a conveyance deed as a gift deed, mortgage deed, lease deed, or sale deed.

Scope of Digital Encumbrance Certificates

Digital encumbrance certificates allow buyers, sellers, and other relevant authorities to access and verify the property’s encumbrance status easily online. Digital formats eliminate the need for paper documents and manual processing, saving time and money. These are generated from official government databases to ensure both accuracy and reliability. Online access offers more transparency in property transactions.

Importance of Encumbrance Certificates

The significance of digital encumbrance certificates is as follows:

The Encumbrance Certificate would represent the property’s legal and financial ties, such as whether the owner has taken out a loan against it. When a property is involved in a legal dispute, the EC Certificate must reflect that.

It assures a buyer that the property is free from financial or non-financial liabilities such as liens, existing debts, or leases.

You must also provide this document when apply for a home loan or a loan against property. It is important to secure the title to the property for a buyer for easy loan approval.

A copy of the certificate is handed to the Village / Panchayat Officer for updating the land tax records. It applies if the property or land tax has been unpaid for over three years.

Types of Encumbrance Certificates

Given below are the types of encumbrance certificates:

  1. Form 15

The sub-registrar’s office issues an encumbrance certificate on Form 15 if the property has any encumbrances during the period when the certificate is requested.

  1. Form 16

On Form 16, the sub-registrar’s office issues a nil-encumbrance certificate if there have been no encumbrances registered during the period for which the applicant seeks a certificate.

Digital Conveyance Deed: What Is the Scope?

Digital conveyance deeds use encryption and digital signatures to ensure authenticity and integrity. These are more convenient for property owners and facilitate future reference eliminating physical documentation and in-person visits.

Also Read: What Are The Documents Required For A Mortgage Loan In India?

Importance of Conveyance Deeds

The following points denote the significance of conveyance deeds:

  • During legal disputes, the conveyance deed can be evidence that can help resolve the issue as soon as possible.
  • It serves as proof of ownership.
  • You can quickly transfer property rights to another party with a conveyance deed.
  • Conveyance deeds are digitally integrated with government systems and land registries that help verify and update property records.

Types of Conveyance Deeds

Here are the types of conveyance deeds:

  1. Freehold Property

This deed grants the buyer full property ownership rights. After converting the property into a freehold, the owner will have complete control over the property. Buyers will receive the conveyance deed as their final document.

  1. Leasehold Property

The leasehold ownership of a property means the owner owns only the walls and not the land. It will be the landlord who owns the common areas and structures.

  1. Subject to Mortgage

If the property is subject to a mortgage, the buyer can enter the property from time to time and enjoy its facilities.

  1. Deed of Relinquishment

This need for this type of deed arises when one person transfers or releases rights, titles, or interests in favour of another.

  1. Deed of Gift

When the grantor gifts the property to the grantee, it is called a gift deed.

Also Read: An Easy-to-Use Calculator To Know Your Home Loan EMI

Conclusion

The rise of digital encumbrance certificates and conveyance deeds has brought about a positive change in property transactions. These digital solutions help streamline the entire process, which helps both parties in the long run. Ensure you understand these concepts to navigate property transactions effectively and make informed decisions.

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