What is importance of encumbrance certificate?

First of all understand, what is encumbrance certificate?

An encumbrance certificate is a document which shows legal duties imposed on property associated with the person.

Second, what is importance of encumbrance certificate? 

The encumbrance certificate is important for those applying for a home loan or obtaining a loan against property or when one wants to sell or buy a property. “Encumbrance” means that the liabilities created on a particular property, whereby it is held as a security for any debt of its owner, which has not been discharged as on date. An encumbrance certificate contains all the transactions registered relating to a particular property for a certain period. These details also consist any claims or encumbrance on the property.

Government authorities and financial institutions like banks usually demand 10-15 years of encumbrance. However, you can also ask for up to 30 years encumbrance certificate to be checked. If you still have doubts, you can take a Possession Certificate of the ownership of the particular land, which is available from the village office.