encumbrance
An encumbrance is any right or interest in property held by someone other than the owner that reduces its value or limits its transfer: a mortgage, charge, lien, lease, easement or pending claim. A buyer takes the property subject to existing encumbrances unless they are discharged. Under s.55(1)(g) of the Transfer of Property Act, 1882 the seller must, unless otherwise agreed, discharge all encumbrances existing at the date of sale.
An encumbrance certificate (EC), issued by the Sub-Registrar from the registers under the Registration Act, 1908, lists registered transactions on a property for a period. It shows only registered encumbrances; an unregistered lease or an equitable mortgage by deposit of title deeds may not appear, so a buyer must inquire further.
Example
The bank's mortgage was a subsisting encumbrance, which the seller had to discharge under s.55(1)(g) before completing the sale.
In Indian law
- Section 55(1)(g), Transfer of Property Act, 1882
- Registration Act, 1908
See also
easement · English mortgage · equity of redemption
Read more in the study notes
- Lending by banks: principles, priority sector, securities, interest and penalty (Banking Law)
- Public speaking, body language in presentation, influencing and conveyancing (Business Communications)
- Modes of execution: arrest and detention, attachment, and sale (Civil Procedure Code and Limitation Act)
- Misrepresentation and fraud (Contract I)
- Contract of sale, conditions and warranties (Contract II)
- General principles of drafting (Drafting, Pleading and Conveyance)