Vested Interest and Contingent Interest
- The Transfer of Property Act, 1882 deals with the following two categories of interests - [a] Vested Interest, and [b] Contingent Interest
- Section 19 of the Transfer of Property Act, 1882 deals with a Vested Interest.
- Vested Interest is not depend upon the fulfilment of a condition.
- It creates present and immediate right through enjoyment.
- It may be postponed to a future date.
- A vested interest is not come to an end by the death of the transferee before obtaining possession. It will pass on to his/her heirs.
- In short, vested interest is transferable and heritable.
- For Example - ‘M’ gift to ‘P’ on the death of D creates a vested interest in M even during D's lifetime for the condition is bound to happen. But a gift to M on the marriage of D creates only a contingent interest because D may never marry, but that contingent interest becomes vested if and when D gets married.
- Section 21 of the Transfer of Property Act, 1882 deals with a Contingent Interest.
- Contingent Interest refers to a future interest which is an uncertain and it largely depends upon the happening of an event.
- In this type of interest, an interest can only arise on the occurrence of a specified event.
- In a contingent interest, the person who will enjoy the property or the occurrence of the event may be unknown and uncertain
- When the interest is contingent, the transfer depends upon a condition precedent.
- When the condition is fulfilled the transfer takes effect and that the interest becomes vested.