Conditional Transfers under Transfer of Property Act, 1882

Introduction
Section 25 of the Transfer of Property Act, 1882 provides for Conditional
Transfer. It means that any transfer that happens on the fulfilment of a
condition that is imposed on the other party for the transfer of property. For
example, A agrees to transfer his property to B if he gets selected for a job.
The requirement of A for B to get a job is called a condition.
For any kind of a conditional transfer to be valid, the condition that is
imposed should not be:
Prohibited by law,
Should not be an act that involves fraudulent acts,
Should not be any act that is impossible,
Should not be an act that is termed as violative of public policy,
Should not be immoral,
Any act that incurs any harm to any person or his property.
For example, X transfers a property ‘B’ to Y stating that he shall murder as
a condition for the transfer. Such transfer is void as the condition is
prohibited by law.
Types of Conditions on Transfer
There are three specific types of conditions that are imposed in a transfer
of property and there are some more types provided. All these conditions
should also satisfy all the requirements of a condition as mentioned in
Section 25 of the Transfer of Property Act, 1882.

Condition Precedent
It is given in Section 26 of the Transfer of Property Act, 1882. Any condition
that is required to be fulfilled before the transfer of any property is called a
condition precedent. This condition is not to be strictly followed and the
transfer can take place even when there has been substantial compliance
of the condition. For example, A is ready to transfer his property to B on the
condition that he needs to take the consent of X, Y and Z before marrying.
Z dies and afterward, B takes the consent of X and Y so the transfer can
take place as there has been substantial compliance. These facts were
from a case of Dawson v. Oliver-Massey.
In the landmark case of Wilkinson v. Wilkinson , the condition where one
party was required to desert her husband for the transfer to go through, this
was held by the court as invalid as it was against public policy.
Condition Subsequent
It is given in Section 29 of the Transfer of Property Act, 1882. Any condition
that is required to be fulfilled after the transfer of any property is called
condition subsequent. This condition is to be strictly complied with and the
transfer will happen only after the completion of such condition. For
example, A transfers any property ‘X’ to B on the condition that he has to
score above 75 percent in his university exams. If B fails to achieve 75
percent marks then the transfer will break down and the property will revert
back to A.
Although it is an essential requirement that the condition needs to lawful
and if it is not then the condition will be held as void and the transfer will not
break down and will be finalized. For example, A transfers the property to B
on the condition that he shall murder C. This condition is void and hence
transfer will go through and the property will be kept by B.
Condition Collateral
Any condition that is required to be fulfilled simultaneously after the transfer
of any property is called condition collateral. It needs to be strictly followed
otherwise the transfer will break down. For example, A transfers property
‘X’
to B on the condition that he shall maintain A’s wife C for a period of 10
years. If B complies with it and maintains C, the transfer will be valid and
the property will be in the possession of B.
Also it has been recently clarified by the Hon’ble Supreme Court in a case
in 2018, in case of a conditional gift where there was no recital of
acceptance and no proof or any sign of acceptance. If the possession of
that gift is with the donor for his lifetime and it is not completed during his
lifetime. The deed of gift might be cancelled at the option of the donor as it
has not violated any principles required in a valid transfer of property and
the donor is within his rights to cancel any gift deed of such kind.
Other Types of Conditions
Section 27 of the Transfer of Property Act, 1882 provides for any transfer to
any other person if the first transfer fails. For example, A transfers a car to
B on condition that he shall transfer his bike to C, if he does not the car
shall go to D. So if B does not transfer his bike to C, the car shall go to D
on failure of ‘prior disposition’ as said in the section.
It should be noticed that the condition on the first transfer was valid
otherwise, the subsequent interest or transfer also fails. Only when the
valid condition is not fulfilled or ‘shall fail’ then only the subsequent transfer
takes effect.
The Doctrine of Acceleration comes into the picture here, it is based on the
principle that one property should be passed on to some other person if the
first condition fails as if the property was never vested in him. In the case of
Ajudhia v. Rakhman Kaur , where the property when not registered in the
name of the mother because of a local act and she could not have received
the gift, the property was accelerated to the children as a gift.
There is an exception to this section which is when it is a situation of a
transfer in form of a gift, doctrine of acceleration does not apply unless the
first transfer fails in a particular specified manner only.
Section 28 of the Transfer of Property Act, 1882 provides for any
subsequent transfer that takes place on not happening of a specified event.
Conditional Limitation is something that is applied here and it affects any
ulterior disposition and if a vested property involves any condition that does
not happen, it takes place and property is transferred to the ulterior
disposition which is the ultimate beneficiary.
This section is subject to rules which are present in the sections
10,12,21,22,23,24,25 and 27 of the Transfer of Property Act,1882.
For example in Contingent interest which is mentioned in Section 21 of the
Transfer of Property Act, 1882 when the condition is put that A’s land which
is transferred to B will be transferred to C if B dies. Hence the interests
created in C is ulterior transfer. The requirement here also is that the
conditions need to be lawful and satisfy all other requirements in Section
25.
This event is a condition of defeasance i.e. the act of making something
null and void. The only exception is where a person is vested with an
absolute interest and thereafter to a person. The interest for the third
person is on termination of the person vested with absolute interest and not
on defeasance.
Section 30 of the Transfer of Property Act, 1882 provides that any transfer
will not be affected by the invalidity of the ulterior disposition, which means
that is the subsequent transaction as it is rendered void because of some
default, then the first transaction will not be held invalid because of it.
For example if X transfers land to Y and then, after his marriage, life
interest to his male offspring. As the transfer to the male offspring is not
valid as per Section 13 of the Transfer of Property Act, 1882 which prohibits
any life interest created in favour of unborn. The substance of Section 30
provides that the transfer to B will not be affected even when the ulterior
disposition (transfer to unborn son) is not valid.
Section 31 of the Transfer of Property Act, 1882 states that any transfer
where the condition of happening of an event or not happening of an event
takes place is applied, the transfer shall cease to have an effect. The
condition mentioned in this section is a condition subsequent and not a
conditional limitation which is in favour of any third party. This condition is
given in a negative sense, as the transferor prescribes when the transfer
shall cease to have effect.
For example, A can put a condition on B to plant a tree and then the
transfer will have an effect. If B plants, then he will get the property.
In the case of Ambika Charan v. Sasitara , it was held that even condition
collateral is a valid condition under the application of Section 31 and in this
case, one party was required to live at a particular residence and as long
as this condition is fulfilled, the transfer shall continue to have an effect.
Even where the condition where there is a prescribed penalty, it can be
extracted by way of compensation, for example for forfeiting an estate,
compensation can be demanded.
Section 32 of the Transfer of Property Act, 1882 states that the condition
mentioned in Section 31 should not be invalid or prohibited by law.
Although Section 30 is also kept in mind that any condition in ulterior
disposition which is invalid will not invalidate any transfer that happened
prior to it. As for condition precedent or subsequent, for the transfer to be
valid the conditions need not be invalid and all the requirements mentioned
in Section 25 should be met.
Section 33 of the Transfer of Property Act, 1882 states about any transfer
where on a condition, time is not specified for the happening or non-
happening of an act. This transfer ceases to have effect only when the act
is made to be impossible permanently or for a great period of time.
Section 34 of the Transfer of Property Act, 1882 states about any transfer
where on a condition, time is specified for the happening or non-happening
of an act and on the failure of such condition, the interest of the property is
to go to another person. If the condition is fulfilled within the prescribed
time, then the transfer will continue to have effect, and if not then the
transfer shall cease to have an effect. For example, M agrees to transfer
land ‘X’ to N on the condition that he shall go to England in a span of 2
months. If N goes to England within the prescribed time period then the
transfer shall go through and N shall get the property, but if he fails to do so
inside the 2 months specified by M, the transfer shall cease to have effect.
But, it has to been seen that, what caused the delay of the condition to be
fulfilled. If the performance of the specified condition that may be either
subsequent or precedent is prevented by a person who is interested in its
non-fulfilment, the delay is condoned and the condition is discharged.
X transfers property to Y with a condition that if he does not go to U.S.
within 2 years, the property will pass on to Z. Later on if Z, by playing a
fraud, prevents Y from performing the condition, the delay in such
performance is excused.
Conclusion
Conditional Transfers form a very crucial aspect in day to day transactions
of transfer of property. It is important to know about provisions relating to
this concept. All types of conditional transfers are given from Section 25 –
34 of the Transfer of Property Act, 1882. It is important to note that the
condition on any transfer should not be prohibited by law and can be ideally
performed. This article conveys the basic principles and mechanisms
behind these provisions, and how they fare out with practical examples that
will help the reader relate it with the real time events.