Vested and Contingent Interest under Transfer of Property Act by Samidha Hegde@Lexcliq

Vested Interest

Definition of Vested Interest Section 19 of Transfer of Property Act defines vested interest as follows… “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.”

A vested interest is not defeated by the death of the transferee before he obtains possession.


What are the characteristics of vested interest?

 There are three main characteristics of a vested interest as follows: –

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


Section 20 of the Transfer of Property Act, 1882 talks about vested interest to an unborn child. The interest in the property will be vested in him once he is born. The unborn child might not get the right of enjoyment of the property immediately after having vested interest.


Case Law Sundar Bibi vs Rajendra Narayan AIR1925 All.389. In this case the Allahabad High Court held that in a vested interest the title passes absolutely from the transferor to the transferee at the date of the transfer, though the enjoyment may be postponed.


Contingent Interest

Section. 21 defines Contingent interest as follows – Where, on a transfer of property, an interest therein is created in favour of a person to take effect only on the happening of a specified uncertain event, or if a specified uncertain event shall not happen, such person thereby acquires a contingent interest in the property. Such interest becomes a vested interest, in the former case, on the happening of the event, in the latter, when the happening of the event becomes impossible.

Exception to section 21 of transfer of property act

 However, when a person has a chance to own a specific Property and before that uncertain event occurs, if such person receives any income arising from such property then interest in the property is not a contingent interest.


What are the characteristics of contingent interest?

There are three main characteristics of contingent interest: –

  • The condition should be uncertain on the meeting of such condition; the contingent interest will become Vested interest.
  • If the transferee dies before receiving interest in the property, the contingent interest will be missed and the transferor will remain the owner of the property.
  • Contingent interest is a transferable right, i.e. it can be transferred.


Section 22 talks about the transfer to a group or class of members with a contingent interest. Example:- there is a transfer to a group of 4 people, and the condition is that the property will be vested in persons who attain the age of 40 years on a particular date. The persons who have attained that age will get an interest in the property and people who have not attained, will not get an interest in that property.


Section 24 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. This is also a contingent interest as an uncertain event. The transfer will only take place for those people who satisfy the condition of surviving at a particular date. The legal heirs of the deceased cannot claim an interest in that property as a transfer involving a contingent interest solely depends upon the fulfillment of the condition


Case Law-

In the case of Leake v. Robinson, the court upheld that when a condition involves an event that is to be given ‘at’ a particular age or ‘upon attaining’ a particular age or ‘after’ attaining this particular age, then it can be derived that the transfer involves a contingent interest.



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