Advocate for
Property registration,property registration,registration stamp duty,Bangalore property registration
We have in previous
issues dealt with the transactions like, sale, and gift, mortgage that are
different modes of transfer of property.
We shall in this issue discuss about exchange. This is also a species of
transfer of property akin to the age old barter system.
In
barter system movable and immovable properties were exchanged based on the
requirements of the transacting individuals. For example a cow was exchanged
for food grains and so on.
Section
118 of transfer of property deals with exchange. It defines the exchange as
transaction when two persons mutually transfer the ownership of one thing, for
the ownership of another, neither the thing nor both being money only. The
definition encompasses the exchange of both movables and immovable including
money. The only condition is that one of
the two properties to be exchanged should not be money.
Thus
an immovable property may be exchanged for another immovable or movable property
but not for money. However transfer of money for money is also exchange.
To
simply define, it is a mutual grant of equal interest; the one in consideration
of another.
Exchange
is different from sale. Section 54 of the transfer of property deals with sale,
which is defined as transfer of ownership in exchange for a price paid, part
paid or part promised. The word “price” is defined in sale of goods act as
money consideration. As far as exchange; the money cannot be transferred, for
any other property. Thus the distinguishing factor is the mode of payment of
consideration; money in case of sale where as in case of exchange, it is paid
in form of kind. Our concern at present is exchange of one immovable property
with another immovable property.
If
the values of both properties are not equal, then the difference in the value
has to be paid by money.
Section
119 of the Transfer of Property provides for remedy for defective titles of the
properties in exchange. For example A and B exchange properties. Later on ‘A’
finds, that the title of the property received from B is defective. The ‘B’ is
bound to make good; the loss suffered by ‘A’ and even if ‘A’ so desires to
return the property received from ‘A’ canceling the exchange transaction. This
liability extends to the legal heirs of B and also to the transferees who have
received the exchange property without monetary consideration like Gift.
Liability does not bind the bonafide purchaser. The procedure is similar to
that of sale where first an agreement of exchange is drawn. Section 120 of the
Transfer of Property provides that each party to the deal has rights and
liabilities as that of seller as to what he gives and that of purchaser as to
what he takes. Thus the rights and liabilities of the seller and purchaser as
dealt in section 54 and 55 of transfer of property act will apply subject to
the terms of agreement of exchange.
The
transaction is complete only, when mutual delivery of possession of respective
properties is completed as evidenced by deed of exchange. When a party to an
exchange has failed to obtain the possession of the property which he is
entitled; then also he is entitled for return of the property transferred by
him provided the property is still in possession of the other party or his legal
representatives or transferee without consideration.
Registration of exchange deed is compulsory. The stamp duty and
registration charges are as per the respective State laws. In Karnataka
exchange of property attracts stamp duty as that of conveyance based on the
market value of the property of the greatest value which is the subject another
of exchange.
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