Difference between vested interest and contingent intrest

Vested interest and contingent interest are the two types of interests that are covered by the Transfer of Property Act, 1882. Given that there are numerous parts that discuss vested interest and contingent interest, it is crucial to comprehend these notions. The key distinction between the two ideas is that the transfer of property with a contingent interest occurs only after the condition has been met; if the condition is not met, the transfer will not occur.

Vested Interest

Vested Interest in the Property refers to an interest in a piece of property that is created in the person’s favour without mentioning the occasion or a particular link. Even though the transferee’s right to enjoy the property is not immediate, the interest in it is vested in their favour. The individual with a vested interest does not immediately take ownership of the property, but instead expects to do so when a certain event occurs.

Vested Interest is defined as follows in Section 19 of the Transfer of Property Act: “Unless a contrary intention appears from the terms of the transfer, such interest is vested 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 upon the happening of an event which must happen.”

As mentioned above, a vested interest has several significant components, all of which are covered in more depth below:There should be vested interest: The clause that states that an interest shall be developed in a person’s favour where time is not stated or a requirement of the occurrence of a defined definite event has this basic meaning. To generate this interest, a person must formally declare that they will transfer a specific piece of property.Right to enjoy property is postponed: When an individual’s interest in a property becomes vested, he or she does not immediately take possession of it and cannot, therefore, use that right.

The acquisition of a vested interest in a property passed to an unborn child is covered by Section 20. When a property is transferred to an unborn child, the child becomes the owner of that property at the moment of the child’s birth. Although the child might not be able to use the property right away, the interest in it is passed right away.

Contingent Intrest

The Contingent Interest provision is included in Section 21 of the Transfer of Property Act, 1882. It is an interest that is generated in a person’s favour subject to the occurrence of a predetermined uncertain event. The owner of a contingent interest is not given possession of the asset but is entitled to it upon the occurrence of the event; nevertheless, they are not entitled to the asset should the event not occur because the condition is not met. The condition attached to the transfer determines whether there is any contingent interest.

In the case of Leake v. Robinson , the court decided that it is possible to infer that a transfer involves a contingent interest whenever a condition calls for a bequest to be made “at,” “upon attaining,” or “after” reaching a specific age.

The following conditions result in contingent interest:

-When a person to whom such property is transferred gains an interest that is dependent on the occurrence of a certain uncertain event.

-As a result, the interest transfer is dependent upon an unpredictable occurrence that may or may not occur.

-When such occurrence occurs, the contingent interest in the property can turn into a vested interest.

-The happening of an uncertain event, which may or may not happen, is what determines whether the owner or possessor has the right to use the property.

Contingent interest has three basic characteristics:

-This interest is wholly reliant on the circumstance. Only when the prerequisite is met does it take place.

-If the transferee passes away before taking possession of the property, the transferor will retain ownership of the property because the continent interest has failed.

-Although contingent interest is a transferrable right, its inheritability depends on the circumstances surrounding the transfer and the condition.





Aishwarya Says:

I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.


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