There are several ways in which the owner of a property transfers his rights into his immovable assets to another person. One of the legal instruments to do so is the exchange deed. Along with sale and gifting, the Transfer of Property Act, 1882, also recognizes exchange as one of the mediums of property transfer among people.
Legal definition of property exchange
Section 118 of the Transfer of Property Act reads: “When two persons mutually transfer the ownership of one thing for the ownership of another ─ neither thing or both things being money only ─ the transaction is called an ‘exchange’. A transfer of property in completion of an exchange can be made only in the manner provided for the transfer of such property by sale.”
Note that Section 118 is not confined to immovable property only.
Basic difference in property sale, gift, and exchange
- When a property is sold in exchange for money, it qualifies as a sale and a sale deed is executed.
- When a property is given without receiving any consideration, it qualifies as a gift and a gift deed is executed.
- When a property is given in exchange for another property, it qualifies as an exchange and an exchange deed is executed.
What is stamp duty on exchange deed?
As an exchange deed must be registered to have legal validity, participants must pay stamp duty and fee at the time of the registration of the deed. Rates of stamp duty vary from state-to-state. In Uttar Pradesh, the stamp duty in the exchange deed is 3% of the transaction value.
In case of exchange deeds, both the parties typically pay stamp duty in equal shares.
See also: Stamp duty and taxation on exchange deed
Exchange deed format
EXCHANGE DEED
This exchange deed is made and executed at Delhi on this……………………day of …………………….,201……
BETWEEN
……………………………………, S/O …………………………….., R/O ……………………………………..
(hereinafter called the FIRST PARTY).
AND
……………………………………, S/O …………………………….., R/O ……………………………………..
(hereinafter called the second PARTY).
WHEREAS the terms FIRST PARTY and SECOND PARTY unless repugnant to the context shall mean and include their representatives’ heirs, successors, executors, administrators, trustees, legal representatives, and assigns.
WHEREAS the First Party herein, is the sole and absolute owner of immovable property bearing No………………………………. situated at ………………………………………………….. as described in the first Schedule
hereunder written (hereinafter referred to as FIRST SCHEDULE PROPERTY), having purchased/acquired/inherited the said property vide registered sale deed/gift deed Will/Letter of administrator as document No ………………….. Addl Book …………………… Vol. No. ………………pages………………
to …………., dated………………….duly regd. In the office of Sub-Registrar …………………………………………………….
WHEREAS the second herein, is the sole and absolute owner of immovable property bearing No…………………………….. situated at ……………………………………………………………. As described in the Second
Schedule hereunder written (hereinafter referred to as SECOND SCHEDULE PROPERTY), having purchased/acquired/inherited the said property vide registered sale deed gift deed/Will/Letter of Administrator as document No ……………………. Addl Hook …………………….Vol No …………………….pages………
to………….dated…………………….. registered in the office of Sub-Registrar.
WHEREAS the parties hereto have agreed to mutually exchange and transfer the ownership of the said properties as between them:
- That in pursuance of the ………………………………….agreement (if any) dated………………………………………… bearing
registration number ………………………………………….. and in consideration of the Second Party conveying, transferring, and assigning to the First Party, the Second Schedule property hereunder written. The First Party hereby in exchange conveys, transfers, and assigns unto the Second Party absolutely and forever with all rights, title and interest of the property described in the First Scheduled Property together with all the rights, easements and appurtenant thereto. The First Party has handed over all the deeds documents, writings and other evidence of title relating to the First Scheduled Property to the Second Party.
- That in pursuance of the agreement (if any mentioned above) and in consideration of the First Party conveying to the Second Party the First Scheduled Property hereunder written. The Second Party hereby in exchange conveys, transfers, and assigns unto the First Party absolutely and forever with all rights, title and interest of the Property described in the Second Schedule Property together with all the rights, easements and appurtenant The Second Party has handed over all the deeds, documents, writings, and other evidence of title relating to the Second Scheduled Property to the First Party.
NOW THIS EXCHANGE DEED WITNESSETH AS UNDER:
- That the First Party has now become the absolute and exclusive owner of the property as mentioned in Second
- That the Second Party has now become the absolute and exclusive owner of the Property as mentioned in the first
- That each Party has taken the actual, Physical, vacant, and peaceful possession of their above mentioned/exchanged above and are fully entitled and empowered to sell, let-out/mortgage, dispose of, or construct or use the said Properties in any manner as they may like
- That all the expenses of the Exchange Deed such as Stamp duty, Registration Charges/Fees and writing charges shall be borne equally by both the Parties hereto.
- That both the Parties to this exchange deed have paid all taxes, charges, dues, demands, Electricity charges etc., in respect of their respective properties (as mentioned in the respective schedules) to the concerned departments for the Period prior to the date of execution of this exchange deed.
- That in the future both the parties hereto shall pay all taxes, charges, demands, electricity charges, water charges, bills, house tax, development charges in respect of the above exchanged properties.
- That both the parties hereby agree and assure each other to help and assist in getting the properties, as exchanged above transferred/mutated in the relevant records of concerned authority/Revenue department and any other concerned
- That each party shall have full right to apply and get the water, electric and sewerage connection regarding property as exchanged above from the concerned authorities and to get existing name changed in his/her own name from the department
- That in case it is proved otherwise at any time and any of the parties suffer any loss, then the defaulting party shall be fully liable and responsible for the same and the aggrieved party shall be entitled to recover all his/her losses the defaulting
- That in future neither of the party to this exchange deed shall claim right title and interest in the said property which has been exchanged in favour of the party as mentioned
(11) That the present exchange deed is being executed in duplicate and each party shall retain one original each.
(Any other covenant with the consent of both the parties may be added)
IN WITNESS WHEREOF, the parties have signed/ affixed their thumb mark on this Exchange Deed after understanding the contents of the same on the day, month and year first above written in the presence of the following witnesses:
FIRST SCHEDULE PROPERTY
(Property belongs to First Party exchanged to the Second Party)
Total Area of Plot/Flat…………………………………………………….. Square Meter/Square Feet/applicable plinth area
Cost of Land………………………………………………………………………………………………………………………………………………
Built up Area…………………………………………………………………………………………………………. Sq. ft.
Number of floors constructed/semi constructed …………………………………………………………………………………….
Category (Area Wise, for the purpose of calculation of circle rate) ………………………………………………………..
Approved Use …………………………………………………………………………………………………………………………………………..
Actual Use …………………………………………………………………………………………………………………………………………………
Year of construction ………………………………………………………………………………………………………………………………….
Cost of construction ………………………………………………………………………………………………………………………………….
Stamp Duty paid Rs. ………………………………………………………………………………………………………………………………….
Bounded as under: EAST:
WEST:
NORTH:
SOUTH:
SECOND SCHEDULE PROPERTY
(Property belongs to Second Party exchanged to the First Party)
Total Area of Plot/Flat…………………………………………………….. Square Meter/Square Feet/applicable plinth area
Cost of Land………………………………………………………………………………………………………………………………………………
Built up Area…………………………………………………………………………………………………………. Sq Ft.
Number of floors constructed/semi constructed …………………………………………………………………………………….
Category (Area Wise, for the purpose of calculation of circle rate) ………………………………………………………..
Approved Use …………………………………………………………………………………………………………………………………………..
Actual Use …………………………………………………………………………………………………………………………………………………
Year of construction ………………………………………………………………………………………………………………………………….
Cost of construction ………………………………………………………………………………………………………………………………….
Stamp Duty paid Rs. ………………………………………………………………………………………………………………………………….
Bounded as under: EAST:
WEST:
NORTH:
SOUTH:
INWITNESS WHERE OF, the parties have signed and affixed their signature thumb mark on this Exchange Deed after understanding the contents of the same on the day, month and year first above written in the presence of the following witnesses:
In Compliance of Section 32A of the Registration Act, 1908
Name of the First party
Name of the Second party
WITNESSES
- (Name, father’s name, address) FIRST PARTY
- (Name, father’s name, address) SECOND PARTY
What is transfer under the Transfer of Property Act?
The term transfer includes transfer through sale, mortgage, lease, actionable claim, gift, or exchange.
What are the types of property transfer under the Transfer of Property Act?
The Transfer of Property Act talks about six types of property transfers:
- Sale
- Lease
- Mortgage
- Exchange
- Gift
- Actionable claim
FAQs
Is exchange possible only in the case of immovable property?
No, both immovable and movable properties can be transferred through exchange.
Is registration of exchange deed necessary?
As the exchange deed transfers rights in an immovable property, it must be registered with the office of the registrar of assurance under Section 54 of the Transfer of Property Act.
Is stamp duty payment for the exchange deed necessary?
As the exchange deed must be registered, one must also pay the applicable stamp duty.
Who pays the stamp duty on the exchange deed?
This is generally divided between the two parties as there is no express responsibility fixed for the stamp duty payment on the exchange deed.
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