A non-encumbrance certificate (NEC) certifies that the property that is being offered to bank as security, is free of any debts. In layman’s words, the NEC certifies that the property in question entirely belongs to the person and not associated with any financial institution or bank. Encumbrance is a cost or charge created on a property, if it is bought with finances borrowed or is offered as a collateral or security for another loan.
Thus, an NEC informs that the property is not mortgaged and is without any burden of debt or security, or other obligation. For instance, if you had taken HDFC loan against property on your house, then you cannot apply for new loan on the mortgaged property, until the property loan is successfully closed. The authority will pass an NEC if the property loan is closed and the property is free of any debts. Otherwise, relevant charges … Read More