Module 5 of 6 — Sale Deeds and Property Conveyance

Encumbrance Certificates, Charges, and Prior Rights

Reading module · approx 12 min

The encumbrance certificate is the single most important document in property due diligence. It records all instruments registered against a specific property over a specified period.

What an EC shows

Issued by the sub-registrar's office, an EC lists all registered instruments affecting the property during the requested period: sale deeds; mortgage deeds; lease deeds; gift deeds; partition deeds; lis pendens registrations; attachment orders; and other registered instruments.

The EC does NOT show: unregistered agreements to sell; unregistered mortgages; litigation not yet registered as lis pendens; family disputes not yet formalised; physical encumbrances (encroachment, adverse possession).

Standard EC period

Industry standard: 30 years. Corresponds to the general limitation period for adverse possession claims. Provides a comprehensive record of registered activity but does not guarantee that all encumbrances have been discovered.

Types of encumbrances

Mortgages: a registered mortgage creates a security interest in favour of the mortgagee that must be released before the property can be sold free of the mortgage.
Charges: a charge created under statute (income tax charge under Section 281, bank charge under statutory recovery) may need to be lifted.
Lis pendens: registration of pending litigation. Any buyer takes subject to the outcome.
Court attachment: attachment by a court in execution of a decree. Cannot be sold free of attachment without leave.
Injunctions: restraining orders that may prevent sale.

Removing encumbrances before sale

For mortgages, pay off the loan and obtain a discharge certificate, which is then registered to remove the mortgage from the record. For statutory charges, obtain a formal release from the authority. For lis pendens, the underlying litigation must typically be resolved.

Recent EC vs sale execution date An EC obtained months before sale execution may not capture the most recent instruments. Common practice: obtain a fresh EC on the day of, or just before, sale registration to catch any last-minute encumbrances. In hot property markets, this is particularly important — sellers under pressure sometimes borrow against property just before a sale.

The role of the buyer's lawyer

The buyer's lawyer: obtains the 30-year EC; analyses each entry; requires discharge documents for encumbrances shown as released; verifies that no encumbrance has been created between the date of the EC and the sale; confirms in writing that title is clear of encumbrances (subject to disclosed exceptions). A significant professional responsibility — confirming clean title where an encumbrance exists may face professional liability.

Module 6 covers post-sale remedies.