Contingent and Vested Interest
Meaning of Vested Interest
Section 19 of Transfer of Property Act 1882 lays down the meaning of vested interest. Vested
interest can take place in two stages. First when the transferee is in immediate and present
possession of the property and second when the transferee has acquired an interest in the
property but is not in the present possession of property that is the right to enjoyment is
postponed to a future date.
Vested interest is when an interest in a property is transferred in favour of a person without
specifying the time or a specific condition. Such interest must vest in the person on happening of
an event which is bound to happen. The interest in the property remains vested in the transferee
even though the right to enjoyment of the property is postponed. In other words, interest is said
to be vested when it depends on happening of a certain event precedent. [i]
Illustration
X, the father of Y agrees to transfer an ancestral property in favour of Y after his death. The
interest in the ancestral property in favour of Y is dependent on the condition of the death of his
father X, which is certain. Hence on the death of X, Y will have vested interest in the ancestral
property.
Characteristics of Vested Interest
The three main characteristics of vested interest is as follows-
1. Vested interest does not depend on an uncertain event. It depends on a certain event which
must happen. It creates a present or immediate right though the right to enjoyment is postponed.
2. Vested interest is not defeated by death. On the death of the transferee, the interest is passed to
the heir of such transferee.
