As per provisions contains in Section 118 of Transfer of Property Act, when two persons mutually transfer the ownership of one thing
for the ownership of another, neither thing or both the things being money
only, such a transaction is called an exchange. This definition is not
restricted to immovable property only.
Thus, exchange implies, when two separate property
owners mutually agree to transfer the ownership rights by exchanging the property. Further, exchange also mean exchange of lands and barter of goods
too.
If one of the items that has been transferred in money,
then it is not an exchange but sale, because sale should always be for a price.
But money in one form can be exchanged for money in another.
In case of exchange, the transfer of ownership of one thing is not the price paid or promised to pay, but something else in lieu. For
example: if a person transfers a land valued Rs.20,00,000/- to another and in
return, the other person transfers a shop valued Rs.18,00,000/- and pay
Rs.2,00,000/- in cash, it is an exchange.
This type of exchange transactions can be reduced into
writing in the form of Property Exchange Deed. This Exchange Deed document for transfer of property rights need to be
registered with the jurisdictional sub Registrar’s Office by paying prescribed
stamp duty. While drafting the exchange
deed and its registration including the document execution, its presentation
and admission utmost care need to be taken, since this is a complex process.
Before drafting such complex type deed of transfer, it
is very important to ensure that all the necessary requirements for the
effective enforcement of such deeds are incorporated which only give legal
sanctity to the document. The essential requirements for such deeds are
discussed below:
The deed has to specify
the description, such as “This Deed of Property Exchange”, which may not
necessarily be in bold letters, but is preferable, in order to highlight the
nature of the deed.
It is very important to
mention the date of execution of the deed since the same is required to
determine the limitation and also for recording of such exchange in the revenue
records. Further, the date of execution of the document may vary from the date
of registration. However, the documents can be presented for registration,
anytime within four months from the date of execution.
All the proper and
necessary persons pertaining to the property intended to be exchanged have to be
mandatorily made as parties to the deed in order to avoid possible future legal
disputes, which may likely to be raised by the parties having interest over the
exchanged property. It is also important to properly depict the status of each
party to the deed.
The deed shall contain the
previous history pertaining to the property in a precise way, explaining the
nature of the interest and motive behind the exchange of property, which only
authenticate the title, and is called as Recitals in the legal terminology.
A covenant is an agreement
wherein either or both the parties to the deed bind themselves to certain terms
and conditions, which create an interest over the property, which may either be
express or implied. In recent times, with the advent of Apartment culture, it
is very necessary to incorporate covenants of various types besides those for
maintenance of common areas and facilities in the deed.
This is the part of the
deed which states that the parties have signed the deed. This is very important
in order to prove the authentication of the execution of the deed and the
necessary involvement of the proper parties having interest in the property in legally conveying to the parties of the other part.
This is the witnessing
clause wherein the witnesses signing the deed are introduced, along with their
names, address and signature. This clause is also very important for the reason
that the witnesses also play an important role to prove the execution of the
document. However, it is advisable that both the witnesses are from purchaser / transferee’s side.
This part of the deed
depends upon the nature of conveyance. However, operative words clearly depict
the intention of the parties conveying the property in favour of the other
parties, which is necessary for transfer of rights over the property.
This means description of
the property following the operative words. Anything intended to be
conveyed/assigned has to be specifically mentioned. Every minute detail about
the identification of the property has to be clearly incorporated. Any
ambiguity about the description of the schedule property may lead to serious
problems.
Property intended to be
transferred by way of exchange must not fall within the ambit of those
prohibited under any statute or the Government notification. This part of the
deed speaks about the conditions restraining the alienation and assurance that
such alienation does not involve any restrictions.
Exception refers to some
property or definite right which is existing on the date of conveyance and the
same would transfer if not expressly excluded.
Whereas, Reservation
refers to the right which is not existing but created at the time of transfer.
The deed can be
enforceable only if the same is properly stamped under Indian Stamp Act. Apart
from this, it is also necessary that the same has to be registered under the
Indian Registration Act. Only after the registration of such documents, the
right, interest and title over the property is validly transferred from thetransferor to the transferee.
Execution of the document
will be complete only after the parties put their signatures on the deed.
However, special care should be taken when any of the deed is signed by the
party who is an illiterate or blind or Pardanash in lady. In case any document
is signed by some person by putting thumb impression, the documents has to be
signed by the person who has taken the same and if any map or plan sketch is
annexed to the document, then the same has to be signed by the parties.
It is very important that
the transferor transfers possession of the property in favour of the
transferee. It is not necessary that actual possession has to be handed over to
the transferee, but even constructive possession will transfer and create right and interest over the property.
Thus, the transfer or assignment of right, title and
interest over the property, irrespective of the nature of transfer, entirely
depends upon the deed of conveyance. Any ambiguity, inadvertent addition or
deletion in the deed may give rise to lot of legal problems, therebyobstructing peaceful possession and enjoyment of the property.
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