Two ways to find out if a property has a loan or not

1. Encumbrance Certificate
2. Title documents

1. Encumbrance Certificate:

Encumbrance certificate is shortly called EC. It is the most important document to validate the title of a property.

Encumbrance Certificate records the history of transactions that the property has gone through, including the transaction of property loan

For your better understanding, let me share my experience,

On 12–11–2021, I took Rs. 40,00,000 loan from State Bank of India to buy 1200 square feet of land in Bangalore.

The lender and borrower (bank and me) have registered loan in sub-registrar office, the registration recorded in my encumbrance certificate.

In my below encumbrance certificate, bank detail is shown in column 6

On 17–02–2023, I paid my loan and registered the discharge deed in sub-registrar office.

The below encumbrance certificate is extracted after the registration of discharge deed, bank details shown in column 5 in EC

As of today, there is no mortgage lien in my property as my loan is paid and registered the discharge deed. (it means, I closed my loan after repayment)

Note:

• If the loan is still on, the bank name shown in column 6 of encumbrance certificate
• If the loan is paid and registered the discharge deed, the bank name shown in column 5 of an encumbrance certificate

2. Title document:

Title document is a property document through which property owners transfer property ownership rights to buyer

The title document includes

• Parent deed
• Sale deed
• Property tax receipt
• Khata

Few private lenders and banks may not register the loan in sub-registrar office. instead, they just collect title documents from borrower and return them once the loan is paid.

So, If the loan details are not recorded in EC, you should demand the seller to show the original title documents.

Few sellers may show photocopy of title documents, but you should specifically verify the original documents, if seller don’t have original, must have deposited it with lender against loan on the property.

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Thank you for reading…