You can exchange your property with another property owner

If you want a bigger house to accommodate your growing family, while your aging neighbours do not need all that space, you can actually exchange your property with your neighbours. In fact, exchange of property need not be in the neighbourhood alone, but in any part of the country.

 

What is exchange of property?

 

As per section 118 of the Transfer of Property Act, 1882, when two people mutually transfer the ownership of one immovable property for the ownership of another, without the involvement of sale through money, it is called an exchange.

 

How is it done?

Before getting into an agreement for exchange, both parties involved in the exchange need to frame a deed of exchange. This deed is very similar to a sale deed. Besides the normal details of a sale deed, an exchange deed also mentions the provisions of penalty against any fraud and the date of exchange. The exchange can be implemented by either one deed/document for both properties or by execution of two separate documents for the properties. However, the former practice of making a single document is more common.

 

How is the difference in price sorted out?

In general, no two properties can have the saame market rate. Therefore, the value of each property is mentioned in the deed of exchange at the time of signing. At the time of exchange, the owner of the property that has lower value pays the difference to the owner of the property with the hgiher market value. This difference is also mentioned in the document. However, there is room for negotiation in such deals too.

 

The final transfer

The deed of exchange is registered under the Indian Registration Act, 1908, after payment of the stamp duty on the transfer, as per the applicable rates. Once the deed is executed, the rights over the property and its title also gets transferred to the respective parties. The rights & liabilities of the parties in an exchange are the same as those of sellers and buyers of immovable properties.

 

Steer clear of frauds

It has been seen in the past that fraudulent deals are common in the exchange deeds. And perhaps that is why there is a provision for cases of fraud in exchange deeds. To safegaurd your interests, section 119 of the Transfer of Property Act, 1882 holds the person involved in the exchange or the person claiming to be the owner responsible for the loss that you may have suffered in the exchange. If you get into a fraudulent exchange deal, you have two remedies – either seek damages for the loss caused, or claim the return of the property transferred.