Important terms relating to the Law on the Transfer of Property Act

Industrial, Labor & General Law Important terms related to the Law on the Transfer of Property Act.

Vested and Contingent Interests

Vested Interest is an interest that is created for the benefit of a person – without specifying the time at which it is to take effect, or specifying that it is to take effect immediately, or on the occurrence of an event.

 Contingent Interest means an interest created in favor of a person – to take effect only on the happening or not happening of a specified uncertain event, which may or may not happen.

 Contingent Interest means an interest created for the benefit of a person – to take effect only on the occurrence or non-event of a specified uncertain event that may or may not occur.

 In simple terms, as provided for in the Transfer of Property Act; where interest is granted, the transfer is complete but where the interest is contingent, the transfer depends on the preceding condition, i.e. where the transfer takes place and the interest is granted.

 Vested interest shall not be defeated by the death of the transferee before the transferee obtains possession of the interest, whereas the interest is defeated by the death of the transferee before the transferee obtains possession of the interest.

In the interest of the parties, there is a present/immediate right even if the enjoyment is postponed, whereas in the contingent interest there is only a promise to grant such a right, i.e. there is no present right of enjoyment.

 The difference between the two seems simple, but it is not easy to distinguish between the two in practical life. The difficulty is that the vested interest is not necessarily in the possession of it. Interest may be granted, but not in possession of it.

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For example, Mr. A executed a gift in favor of Mr. B, but Mr. B cannot take possession of a portion of the property until the death of Mr. A and Mr. A's wife. In this case, Mr. B has a vested interest and the enjoyment has been postponed and the event is certain to happen.

 

Absolute Interest

 Absolute Interest refers to someone who has a full right to, or ownership of, a property or an asset.

 A person who has an absolute right has the sole right to legally own and benefit from such an asset or property. No other person has the right to claim or enjoy the benefits or rights of that asset or property. Also, there are no circumstances attached to the asset or property that could affect the right of the person or the right to own the property.

 

For instance:

If Mr. A sells the property to Mr. B, Mr. B becomes the owner of the property and acquires an absolute right to that property. Mr. B now enjoys the full protection of the law in the enjoyment of the privileges, rights, and benefits that arise or relate to that property without the interference of others.

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