CONDITIONAL TRANSFERS

Section 25 of the Transfer of Property Act, 1882 provides for

Conditional Transfer. It means that any transfer that happens on the
fulfilment of a condition that is imposed on the other party for the transfer
of property.

For example, A agrees to transfer his property to B if he gets selected for

a job. The requirement of A for B to get a job is called a condition.

For any kind of a conditional transfer to be valid, the condition that is

imposed should not be:

1. Prohibited by law,
2. Should not be an act that involves fraudulent acts,
3. Should not be any act that is impossible,
4. Should not be an act that is termed as violative of public policy,
5. Should not be immoral,
6. Any act that incurs any harm to any person or his property.

For example, X transfers a property ‘B’ to Y stating that he shall murder Z

as a condition for the transfer. Such transfer is void as the condition is
prohibited by law.

Types of Conditions on Transfer

There are three specific types of conditions that are imposed in a transfer
of property and there are some more types provided. All these conditions
should also satisfy all the requirements of a condition as mentioned in
Section 25 of the Transfer of Property Act, 1882.

Condition Precedent

It is given in Section 26 of the Transfer of Property Act, 1882. Any

condition that is required to be fulfilled before the transfer of any property
is called a condition precedent. This condition is not to be strictly followed
and the transfer can take place even when there has been substantial
compliance of the condition.

For example, A is ready to transfer his property to B on the condition

that he needs to take the consent of X, Y and Z before marrying. Z dies
and afterward, B takes the consent of X and Y so the transfer can take
place as there has been substantial compliance.

These facts were from a case of Dawson v. Oliver-Massey (1).

In the landmark case of Wilkinson v. Wilkinson (2), the condition

where one party was required to desert her husband for the transfer to go
through, this was held by the court as invalid as it was against public
policy.

Condition Subsequent
It is given in Section 29 of the Transfer of Property Act, 1882. Any
condition that is required to be fulfilled after the transfer of any property
is called condition subsequent. This condition is to be strictly complied
with and the transfer will happen only after the completion of such
condition.

For example, A transfers any property ‘X’ to B on the condition that he

has to score above 75 percent in his university exams. If B fails to
achieve 75 percent marks then the transfer will break down and the
property will revert back to A.

Although it is an essential requirement that the condition needs to lawful

and if it is not then the condition will be held as void and the transfer will
not break down and will be finalized. For example, A transfers the
property to B on the condition that he shall murder C. This condition is
void and hence transfer will go through and the property will be kept by
B.
Condition Collateral

Any condition that is required to be fulfilled simultaneously after the

transfer of any property is called condition collateral. It needs to be
strictly followed otherwise the transfer will break down. For example, A
transfers property ‘X’ to B on the condition that he shall maintain A’s wife
C for a period of 10 years. If B complies with it and maintains C, the
transfer will be valid and the property will be in the possession of B.  

Also it has been recently clarified by the Hon’ble Supreme Court in a case
in 2018, in case of a conditional gift where there was no recital of
acceptance and no proof or any sign of acceptance. If the possession of
that gift is with the donor for his lifetime and it is not completed during
his lifetime. The deed of gift might be cancelled at the option of the donor
as it has not violated any principles required in a valid transfer of property
and the donor is within his rights to cancel any gift deed of such kind.

Other Types of Conditions

Section 27 of the Transfer of Property Act, 1882 provides for any

transfer to any other person if the first transfer fails. For example, A
transfers a car to B on condition that he shall transfer his bike to C, if he
does not the car shall go to D. So if B does not transfer his bike to C, the
car shall go to D on failure of ‘prior disposition’ as said in the section.  

It should be noticed that the condition on the first transfer was valid
otherwise, the subsequent interest or transfer also fails. Only when the
valid condition is not fulfilled or ‘shall fail’ then only the subsequent
transfer takes effect.

The Doctrine of Acceleration comes into the picture here, it is based

on the principle that one property should be passed on to some other
person if the first condition fails as if the property was never vested in
him. In the case of Ajudhia v. Rakhman Kaur (3), where the property
when not registered in the name of the mother because of a local act and
she could not have received the gift, the property was accelerated to the
children as a gift.

There is an exception to this section which is when it is a situation of a

transfer in form of a gift, doctrine of acceleration does not apply unless
the first transfer fails in a particular specified manner only.

Section 28 of the Transfer of Property Act, 1882 provides for any

subsequent transfer that takes place on not happening of a specified
event.

Conditional Limitation is something that is applied here and it affects

any ulterior disposition and if a vested property involves any condition
that does not happen, it takes place and property is transferred to the
ulterior disposition which is the ultimate beneficiary.

This section is subject to rules which are present in the sections

10,12,21,22,23,24,25 and 27 of the Transfer of Property Act,1882.

For example in Contingent interest which is mentioned in Section 21 of

the Transfer of Property Act, 1882 when the condition is put that A’s land
which is transferred to B will be transferred to C if B dies. Hence the
interests created in C is ulterior transfer. The requirement here also is
that the conditions need to be lawful and satisfy all other requirements in
Section 25.

This event is a condition of defeasance i.e. the act of making something

null and void. The only exception is where a person is vested with an
absolute interest and thereafter to a person. The interest for the third
person is on termination of the person vested with absolute interest and
not on defeasance.

Section 30 of the Transfer of Property Act, 1882 provides that any

transfer will not be affected by the invalidity of the ulterior disposition,
which means that is the subsequent transaction as it is rendered void
because of some default, then the first transaction will not be held invalid
because of it.

For example if X transfers land to Y and then, after his marriage, life
interest to his male offspring. As the transfer to the male offspring is not
valid as per Section 13 of the Transfer of Property Act, 1882 which
prohibits any life interest created in favour of unborn. The substance of
Section 30 provides that the transfer to B will not be affected even when
the ulterior disposition (transfer to unborn son) is not valid.

Section 31 of the Transfer of Property Act, 1882 states that any

transfer where the condition of happening of an event or not happening of
an event takes place is applied, the transfer shall cease to have an effect.
The condition mentioned in this section is a condition subsequent and not
a conditional limitation which is in favour of any third party. This condition
is given in a negative sense, as the transferor prescribes when the
transfer shall cease to have effect.

For example, A can put a condition on B to plant a tree and then the
transfer will have an effect. If B plants, then he will get the property.  

In the case of Ambika Charan v. Sasitara (4), it was held that even

condition collateral is a valid condition under the application of Section 31
and in this case, one party was required to live at a particular residence
and as long as this condition is fulfilled, the transfer shall continue to have
an effect.

Even where the condition where there is a prescribed penalty, it can be

extracted by way of compensation, for example for forfeiting an estate,
compensation can be demanded.

Section 32 of the Transfer of Property Act, 1882 states that the

condition mentioned in Section 31 should not be invalid or prohibited
by law. Although Section 30 is also kept in mind that any condition in
ulterior disposition which is invalid will not invalidate any transfer that
happened prior to it. As for condition precedent or subsequent, for the
transfer to be valid the conditions need not be invalid and all the
requirements mentioned in Section 25 should be met.

Section 33 of the Transfer of Property Act, 1882 states about any

transfer where on a condition, time is not specified for the happening or
non-happening of an act. This transfer ceases to have effect only when
the act is made to be impossible permanently or for a great period of
time.

Section 34 of the Transfer of Property Act, 1882 states about any

transfer where on a condition, time is specified for the happening or non-
happening of an act and on the failure of such condition, the interest of
the property is to go to another person. If the condition is fulfilled within
the prescribed time, then the transfer will continue to have effect, and if
not then the transfer shall cease to have an effect.

For example, M agrees to transfer land ‘X’ to N on the condition that he

shall go to England in a span of 2 months. If N goes to England within the
prescribed time period then the transfer shall go through and N shall get
the property, but if he fails to do so inside the 2 months specified by M,
the transfer shall cease to have effect.

But, it has to been seen that, what caused the delay of the condition to be
fulfilled. If the performance of the specified condition that may be either
subsequent or precedent is prevented by a person who is interested in its
non-fulfilment, the delay is condoned and the condition is discharged.

X transfers property to Y with a condition that if he does not go to U.S.

within 2 years, the property will pass on to Z. Later on if Z, by playing a
fraud, prevents Y from performing the condition, the delay in
such performance is excused.

Conclusion
Conditional Transfers form a very crucial aspect in day to day transactions
of transfer of property. It is important to know about provisions relating
to this concept. All types of conditional transfers are given from Section
25 – 34 of the Transfer of Property Act, 1882. It is important to note that
the condition on any transfer should not be prohibited by law and can be
ideally performed. This article conveys the basic principles and
mechanisms behind these provisions, and how they fare out with practical
examples that will help the reader relate it with the real time events.

Reference

1. (1876) 2 Ch D 753.
2. (1871) Eq 604.
3. (1883) 10 Cal 482.
4. (1915) 22 Cal LJ 61.