Exchange Deed

What is an Exchange Deed?

An exchange deed is a type of deed registered between owners of properties in order to exchange the properties between the transacting parties. The transaction is different from a conventional property sale because there is no transfer of money between the parties.

Features of Exchange

Property need not be immovable property

In Exchange properties may be immovable or movable. An immovable property can be transferred against a movable property and vice versa.

Transfer of Ownership

Exchange involves transfer of ownership in some existing property. In transfer of ownership, absolute interest of the owner is transferred. A partition of immovable property is not considered as exchange.

Exchange includes “Barter”

Exchange of one immovable property with another immovable property is known as “Barter” and same in case of transfer of one movable property against another moveable property.

Mode of Transfer

i. Section 118 provides that a transfer of property in completion of an exchange can be made only in a manner prescribed for transfer of such property by “Sale”. The formalities of Section 54  (dealing with sale of properties) will be complied with;

ii. Where both properties are of movable, then exchange may be affected by delivery of properties and registration is not essential;

iii. Where properties are immovable, but value is less than Rs. 100, then registration is optional;

iv. Where the properties exchange are immovable properties and their value are more than Rs. 100/- then registration of exchange of ownership through instrument is necessary.

Difference between Exchange and Partition

100%

Mutual transfer of ownership

Exchange is mutual transfer of ownership by two persons of different two properties. A partition is mere an arrangement by which the several co-owners hold property seperately, which they held in common pool previously.

Contract

Exchange is brought about a contract between the parties. The right of partition is a natural right and there is not need to enter into a contract.

Interest

In an Exchange the parties exchanging their properties has not interest prior to exchange in each other properties. In a partition each party has as much interest in the entire property as the other. There is no exclusive ownership under partition.

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