Transfer Of Interest: Vested and Contingent Interest | Transfer Of Property | The National TV

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Transfer of property involves the transfer of interests it may be either vested or contingent 

 

Vested interest

It is defined under section 19 of the transfer of property act.

Where no time is specified as to when it is to take effect. 

It is specified that it shall take effect immediately.

It is to take effect upon happening on a certain event that must happen. 

When a property is transferred, Transferor may not mention the date as to when interest shall pass, the intention is that it shall pass immediately.

He may put a condition that is of must nature which is bound to occur. 

For example, any future date, age, year, upon the death of any person as death is certain as birth. 

 

 

Illustration

A makes a gift of 10k to B on c’s death B has vested interest in 10k even before C dies but money shall be paid to B on C’s death but if B dies before C’s death the money shall be paid to B’s legal heirs 

 

 

Contingent interest 

It is defined under section 21 of the Transfer of Property Act.

Contingency means future uncertain event vesting of interest depends upon contingency i.e happening of uncertain future events such interest is contingent. 

A makes a gift to B provided X survives the age of 20 years interest of B is contingent as it may happen or may not it is not of must nature. Until the condition precedent is fulfilled transfer does not take place and interest of transferee remains a contingent interest.

 

 

Contingency may be of two kinds:

1- where happening of contingency depends upon the will or desire like marriage payment of some money. 

2- when happening of contingency does not depend upon will or desire. 

 Like the death of a person or before a certain age.

 

 

 

 

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