ANALYSIS OF VESTED AND CONTINGENT

INTEREST UNDER TRANSFER OF

PROPERTY ACT, 1882

DONE BY:
SAMANTHA M LOYALA
BCOM..,LLB(6TH SEM)
REG.NO:19LW3K1027
 INTRODUCTION

 According to The Transfer of Property Act, 1882, the parties for

the contract of transfer of property are Transferor and
Transferee.

 The transferor is someone who transfers his property to

another while the transferee is a person who is transferred.
Provisions of the Indian Contract Act, 1872 are applicable in the
transfer of property.

 For the transfer of a property two major interests are taken into
consideration, namely, Vested Interest and Contingent Interest.
They are explained under The Transfer of Property Act, 1882
along with the necessary conditions related to transfer of
property.
 VESTED
INTEREST CONTINGENT
INTEREST

TYPES OF
INTEREST
 VESTED INTEREST
Section 19 of Transfer of Property Act defines Vested Interest: –

“Where, on a transfer of property, an interest therein is created in

favour of a person without specifying the time when it is to take
effect, or in terms specifying that it is to take effect forthwith or on
the happening of an event which must happen, such interest is
vested, unless a contrary intention appears from the terms of the
transfer.”

For Example: –

‘X’ promises to transfer his property to ‘Y’ on him attaining the age of
22. ‘Y’ will have vested interest in X’s property till the time he does
not get the possession of it. If ‘Y’ dies at the age of 21, then the
interest vested in ‘Y’ will pass on to the legal heirs of ‘Y’ and they will
be entitled to the property in the prescribed time period.
WHAT ARE THE CHARACTERISTICS OF VESTED INTEREST?

There are three main characteristics of a Vested Interest as follows: –

1.The vested interest does not depend upon an uncertain event, which
may or may not happen. It creates an immediate or present right,
though the right to the enjoyment of property can be delayed.

2.Vested interest does not defeat by death, the property is transferred

to the transferee. And on the death of the transferee the interest is
passed to the heir of the transferee.

3.Vested interest is both transferable right and heritable right.

Section 20 of the Transfer of Property Act, 1882 states

about vested interest to an unborn child.
 WHAT IS CONTINGENT INTEREST?

• Meaning of Contingent Interest: –

According to section 21 of Transfer of Property Act, the person having the
contingent interest does not get the possession of that property but has the
expectancy to receive it upon happening of that event but will not receive the
property if the event does not happen as the condition is not fulfilled.
Contingent interest is entirely dependent on the condition imposed on the
transfer.

• For example, ‘A’ agrees to transfer the property to ‘B’ on the condition
that he shall secure 90 % in his exams. This condition is uncertain and
the happening of the event or not happening is in doubt and therefore ‘B’
here acquires a contingent interest in the property. He shall get the
property only if he gets 90 % and when the condition is fulfilled.
 WHAT ARE THE CHARACTERISTICS OF
CONTINGENT INTEREST?

o This interest is entirely dependent upon the condition. It only

happens when the condition is fulfilled.

o Death of the transferee before getting the possession of the

property will result in the failure of continent interest and the
property will remain with the transferor.

o Contingent interest is a Transferable right, but whether it is

heritable or not, it depends upon the nature of such any
transfer and the condition.
EXCEPTION TO  CONTINGENT INTEREST  OF TRANSFER
OF PROPERTY ACT
Where, under section 21 of transfer of property, a person becomes entitled to an
interest therein upon attaining a particular age, and the transferor also gives to
him absolutely the income to arise from such interest before he reaches that age,
or directs the income or so much thereof as may be necessary to be applied for
his benefit, such interest is not contingent.

Section 22 of Transfer of Property Act states about the transfer to a group or
class of members with a contingent interest. Such interest in the property will only
be transferred to those who fulfil that necessary condition.

Section 23 of Transfer of Property Act states about a transfer that happens after
happening of an event that was mentioned in the transfer involving contingent
interest.

Section 24 of Transfer of Property Act states about a transfer to a group or class
of members who will get the property on a condition that they shall be living at the
specified date. The transfer of an interest in a property will only be to such
persons who are alive at the specified time.
Ground of
Vested Interest Contingent interest
Difference
The condition involves a specified The condition involves a specified
Condition
certain event. uncertain event.
Vested Interest does not entirely
Fulfilment of Contingent interest is entirely dependent
depend on the condition as the
conditions on the condition imposed on the transfer.
condition involves a certain event.

Right of This right is created as soon as There is mere chance to be having the
Ownership the interest is vested. ownership rights.

Death of the person who is having

Death of the transferee before getting the
this interest will not have any
Death of possession of the property will result in
effect over that interest as after the
transferee the failure of continent interest and the
deceased, the interest will vest in
property will remain with the transferor.
his legal heirs.

Contingent interest is a Transferable

Transferable a Vested interest is a Transferable right, but whether it is heritable or not,
nd heritable? and heritable right. it depends upon the nature of such any
transfer and the condition.

The present There is present, immediate There is no present right of enjoyment,
right of right even when its enjoyment is there is a mere expectancy of having
enjoyment postponed. such a right.
 CONCLUSION
The Transfer of Property Act, 1882 deals with two kinds of interest that are
vested interest and contingent interest. The concepts of vested interest
and contingent interest are something that is very important to understand
as there are many sections relating to these concepts.

The main point to understand about both the concept is that the transfer of
property involving Contingent interest takes effect only after the condition
is fulfilled, if the condition is not fulfilled then the transfer will not take
effect.

The conditions are required to be fulfilled and they have to necessarily

comply with the rules of the preamble that talk about justice, equity and
good conscience, the three major principles of the natural law on which
this whole act is based upon. In a transfer of property involving vested
interest, the transfer is not invalidated if the condition mentioned is not
fulfilled.
THANK
YOU!