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.
Date of execution
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.
Recitals
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.
Covenants
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.
Testatum
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 party/ies, which is necessary for transfer of rights over the property.
Parcels
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.
Completion of transaction
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 the
transferor to the transferee.
Execution
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 Pardanashin 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, thereby obstructing peaceful possession and enjoyment of the
property.
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