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contingent and vested interest, Assignments of Property Law

discuss the details of contigent and vested interest

Typology: Assignments

2019/2020

Uploaded on 07/19/2020

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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.
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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.
  1. Vested interest is a transferable right as well as a heritable right Section 20 pertains to the acquisition of a vested interest in a property transferred to an unborn child. When a transfer of property takes place in favour of an unborn child, the interest in such a property vests in the unborn child at the time of the child’s birth. Such a child maybe not be able to enjoy the property immediately but the interest in the property is transferred immediately. [iii] Under the following circumstances, the vested interest remains vested in the transferee even though
  2. When the enjoyment of the property is postponed.
  3. When a prior interest in the property is created.
  4. Income arising from the property is accumulated till the right of enjoyment of the property.
  5. When on the happening of a certain event interest passes on to another person. Case Law Sunder Bibi v. Rajendra [iv] The court held that A would hold the property till his death and subsequently after his death the property would pass to B. The interest acquired by B in the said property is a vested interest. B would acquire vested interest because the death of A is a condition which is a certain event and is bound to take place. Meaning of Contingent Interest Section 21 of the Transfer of Property Act 1882, contingent interest is when interest is created in a property in favour of a person to whom such property is transferred, such interest is dependent on the happening of a specified uncertain event which may or may not take place. Hence the transfer of an interest in a property is dependent on a contingent event. This interest in the property can become vested interest in favour of the person to whom it is transferred on the happening of the event or when the happening of the specified event fails or becomes impossible.