Industrial, Labour & General Law Important terms related to the Law relating to Transfer of Property Act
Vested and Contingent Interest
Vested Interest means an interest which is created in favor of a person – without specifying the time when it is to take effect, or specifying it is to take effect on an immediate basis, or on the happening 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.
In simple terms, as per the Transfer of Property Act; when an interest is vested, the transfer is complete but when the interest is contingent, the transfer depends on a precedent condition i.e. when the condition s fulfilled the transfer takes place and the interest becomes vested.
Vested interest is not defeated by the death of transferee before he obtains possession whereas the Contingent interest is defeated by the death of transferee before he obtains possession.
In vested interest, the party has present/immediate right even when the enjoyment is postponed whereas in the contingent interest there is merely a promise for giving such a right i.e. there is no present right of enjoyment.
The difference between these two seems simple but in practical life, it is not easy to differentiate between these two. The difficulty is that the vested interest is not, necessarily, in possession. An interest may be vested, but not in possession.
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For eg: Mr. A executed a gift in favor of Mr. B but Mr. B can’t take the possession of a portion of a 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 only been postponed and the event is certain to happen.
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Absolute Interest refers to someone having a complete right to, or ownership of, a property or an asset.
A person who has an absolute right has the sole right to legally possess and derive benefits from such an asset or property. No other person has the right to claim or to enjoy the benefits or rights of that asset or property. Also, that there are no circumstances attached to the asset or the property which can affect the right of the person, or the ownership of, the possession of the property.
If Mr. A sells the property to Mr. B, then, Mr. B becomes the owner of the property and he acquires an absolute right to that property. Now, Mr. B has the full protection of the law in enjoying the privileges, rights, and benefits arising or related to that property without the interference of others.
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