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Vested and Contingent Interest under TPA: Meaning, Characteristics and Difference

Vested Interest

Section 19 of the Transfer of Property Act, 1882 talks about Vested Interest. It is an interest which is created in favour of a person where there is a condition of the happening of a specified certain event and time is not specified. The person having the vested interest does not obtain the possession of that property but expects to receive it upon happening of a specified certain event.

Example- A promises to transfer his property to B on him attaining the age of 21. B will have vested interest in A’s property till the time he does not become 21 years old and gets the possession of it.

After death, the person (promise) who is having this interest will not have any right over that property and the interest will vest in his legal heirs.

In the above example, if B dies at the age of 20, then the interest vested in B will pass on to the legal successors of B and they will get the charge over the property in the mentioned time period.

All the aforementioned important aspects of a vested interest are written in detail below:

1. Interest should be vested: This basic postulate lays down that interest should be created in favour of a person where time is not specified or a condition of the happening of a specified certain event is provided. A person should proclaim to transfer a particular property in order for this interest to be created.

2. Right to enjoy property is postponed: When interest is vested in a person, he does not immediately get the possession of that property and hence cannot enjoy that property.

But any person who is not a major and has a guardian is only entitled to the vested interest after he attains majority.

Example- X agrees to transfer the property ‘O’ to Y and commands his guardian Z to give him the property when he attains the age of 20. Y gets vested interest once he attains the age of 18, the age of majority.

Other important point to remember:-

1. Contrary Intention: The transferor can specify a time slot as to vest the interest in the person who will receive the property.

2. Death of the transferee: If the transferee dies before getting the property in his possession, the interest vested in him will be vested in his legal heirs and they will get the possession of that property after the condition is fulfilled.

3. Time of vesting: The interest is vested right after the moment when the transfer is initiated.

In the case of Lachman v. Baldeo (1)[i], a person transferred a deed of gift in favour of another person but directed him that he will get the possession of that property only when the transferor himself dies. The transferee will have a vested interest even though his right of enjoyment is postponed till the death event.

Characteristics of Vested Interest

1) Vested interest creates a current right that comes in effect immediately, although the enjoyment is postponed to the time prescribed in the transfer. It does not entirely dependent on the condition as the condition involves a certain event.

2) Vested interest is a Transferable and heritable right.

3) Death of transferee will not make the transfer invalid as the interest will pass on to his legal heirs.

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.

Contingent Interest

Section 21 of the Transfer of Property Act, 1882 states about Contingent Interest. It is an interest which is created in favour of a person on fulfilling a condition of happening of a specified uncertain event. The person having the contingent interest does not get the possession of the property but receives it upon happening of that event but will not receive the property if the event does not happen. Contingent interest is entirely dependent on the condition imposed on the transfer.

Example- A agrees to transfer the car ‘X’ to B on the condition that he shall secure 80 % in his exams. This condition is uncertain on the happening of the event or not happening and therefore B here acquires a contingent interest in the car ‘X’. He shall get the property only if he gets 80 % and when the condition is fulfilled.

In the case of Leake v. Robinson (2)[ii], 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.

Characteristics of Contingent Interest

1. This interest only happens when the condition is fulfilled.

2. Contingent interest is a transferable right, but the condition of heritability depends upon the nature of such any transfer and the condition.

3. Death of the transferee before getting the possession of the property will result in the failure of continent interest and the property will remain with the transferor.

Some important aspects of contingent interest are explained in detail below:

1. Interest: In a transfer if a condition is such that the transfer will take effect only upon the fulfillment of that condition and till that time, the interest is contingent.

2. Exception: When a person who has an expectancy in the rights of ownership of a specific property, and he for the time being till the happening of the event, gets any sort of income that arises from that property. This interest in the property does not come under the aspect of contingent interest.

The following sections of Transfer of Property Act lay down the conditions for contingent interest.

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 23 talks about a transfer which happens after happening of an event that was mentioned in the transfer which involves contingent interest. This section writes about what happens after the happening of the specified uncertain event.

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.(3)[iii]


The Transfer of Property Act, 1882 deals with vested interest and contingent interest. The concepts of vested interest and contingent interest are very important to understand as there are many sections relating to these concepts. The transfer of property involving Contingent interest takes effect only after the condition is fulfilled, if the condition is not fulfilled then the transfer will not take effect. The conditions are required to be fulfilled and they have to mandatorily synchronize with the preamble rules that talk about justice, equity and good conscience, the three major principles of the natural law on which this whole act is based upon.

[i] (1919) 21 OC 312. [ii] (1817) 2 Mer 363 [iii] The Transfer of Property Act, 1882 by Mulla.

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Author Details: Prapti Bhattacharya (2nd year student at Asian Law College, Noida)

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