OF EXCHANGESCentral

Section 120 of The Transfer of Property Act, 1882

Rights and liabilities of parties.

Save as otherwise provided in this Chapter, each party has the rights and is subject to the liabilities of a seller as to that which he gives, and the rights and is subject to the liabiliti es of a buyer as to that which he takes.

Summary

Parties to an exchange are treated simultaneously as both buyers and sellers under the law.
For the property that a party gives away, they have all the legal rights and duties of a property seller.
For the property that a party receives, they have all the legal rights and duties of a property buyer.
These rights and liabilities are governed by the general rules of sales unless the exchange chapter contains a specific exception.

Practical examples

1Ramesh swaps his farm with Suresh's city apartment. Under the law, Ramesh acts as a seller for his farm and must disclose any hidden material defects in the soil to Suresh. At the same time, Ramesh acts as a buyer for the apartment and has the right to inspect Suresh's apartment ownership papers before completing the swap.

2Sita and Gita exchange their lands. After the exchange is completed, Sita discovers that there are unpaid municipal property taxes outstanding on the land she gave to Gita. Since Sita is treated as the seller of that land, she is legally liable to clear all taxes that accrued up to the date of the exchange.

FAQ

1. What are the rights and duties of parties in a property exchange under Section 120 of the Transfer of Property Act 1882?

Under Section 120 of the Transfer of Property Act, 1882, each party has the rights and liabilities of a seller for the property they give, and the rights and liabilities of a buyer for the property they receive.

2. How are tax liabilities divided in an exchange under Section 120 of the Transfer of Property Act 1882?

Under Section 120 of the Transfer of Property Act, 1882, each party must pay all public charges and taxes on the property they are giving away up to the date of the exchange, because they bear the liabilities of a seller for that property.

Test yourself

Q1.Under Section 120 of the Transfer of Property Act, 1882, how are the legal rights and liabilities of a party who gives property in an exchange determined?

Q2.Under Section 120 of the Transfer of Property Act, 1882, what is the legal position of a party regarding the property they take in an exchange?

Q3.Under Section 120 and Section 118 of the Transfer of Property Act, 1882, if Amit exchanges his house with Bobby's land, who is responsible for paying public charges like property tax on Amit's house up to the date of the exchange?

Q4.Under Section 120 of the Transfer of Property Act, 1882, which provisions of the Act provide the baseline rules for the buyer's and seller's rights and liabilities in an exchange?

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