Exchange of property (movable and immovable)

 

5586_237458051

Exchange of property is one of the various modes to transfer ownership rights in a property (both movable and immovable). Other popular and widely used modes for transfer of immovable property are Sale, Gift, Will etc.

“Sale of immovable property” is defined under section 54 of “Transfer of Property Act, 1882” as “transfer of ownership in exchange for a price paid or promised or part paid and part promised”. The essential features for a transfer to be termed as “Sale” are:-

  1. Subject matter of such transaction must be immovable property.
  2. The property must be transferred absolutely.
  3. There must be at least two parties – the seller and the buyer.
  4. There must be a consideration in terms of money only.
  5. Stamp duty must be paid on such transaction.
  6. The transaction must be registered if the consideration amount is Rs.100/- or more

However under the provisions of “Transfer of Property Act, 1882” transactions in an immovable property can be carried on by exchange of one property for another. After due completion of the process of exchange, as required under law, the transactions acquires the sanctity of “transaction under sale”.

Section 118 of the said act defines “Exchange” as “When two persons mutually transfer the ownership of one thing for the ownership of another, neither thing or both things being money only, the transaction is called an exchange.”

All the formalities associated with “transfer by sale” have to be complied with, for transfer of ownership rights in exchange of another property. If the value of the property is Rs.100/- or more then a conveyance deed is required to be executed and that must be registered with the office of Registrar / Sub-registrar. Further section 119 of the said act provides relief to a party who suffers in “transfer by exchange” due to defect in the title of the transferor. A person with defective title is liable to return the original property of the other person and is also liable for the losses incurred due to such exchange.

Each party, to such transfer by exchange, enjoys the rights and is subject to liabilities of a seller, pertaining to the thing which he gives and enjoys the rights and is subject to liabilities of a buyer, pertaining to the thing which he takes. This provision is there in section 120 of the said act (Transfer of Property Act, 1882) for protection of both the parties involved in the process of transfer of ownership rights in immovable property by exchange.

Difference between “exchange of movable property” and “exchange of immovable property “ is that the former is known as “barter” and is subject to the Indian Contract Act, 1872, whereas the latter is known as “exchange” and is subject to the “Transfer of Property Act, 1882.”

indianpropertylawyers

This article is contributed by IndianPropertyLawyers.com, simplifying property legal services. Kindly do post your comments and queries below.

Comments

  1. What is the difference between a Sale and a Transfer?

Speak Your Mind

*