Conditional Transfer- Condition Precedent and Condition

Subsequent

Transfer means an act by which a property is transferred from one or

more living person to another. Such a transfer can take place in present
or in future. A person can transfer his property to one or more living
persons or to himself and one or more living persons. Transfer of
property can take place in the form sale, exchange, gift, mortgage, lease,
actionable claim or charge under the Transfer of Property Act 1882.
Section 5 of the Act defines the term transfer.[i]

A transfer may be absolute transfer or conditional transfer.

 An absolute transfer of property is when the transferee

becomes the unconditional owner of the property transferred
to him immediately. For example, A transfers his property to B,
his son as a gift.
 A conditional transfer of property is when the transfer of
property is dependent on a condition, that is there are
conditions attached to the transfer of such property. For
example, A transfers his property to B on the condition that B
scores 90% in his examination.

Conditional Transfer

The relevant provisions of  conditional transfer have been explained

under sections 25 to 34 of the Act. Conditional Transfer means a transfer
that is dependent on a condition attached to it. That is when the vesting
of an interest created by a transfer depends on the fulfilment or non-
fulfilment of a condition, it is said to be a conditional transfer. A
condition is something that makes the existence of a right dependent on
the happening or not happening of a thing. A condition can be condition
precedent, condition subsequent or conditional limitations.[ii]

Illustration

A transfers property to B on the condition that B should marry his

daughter C. Such a transfer of property is a conditional transfer, due to
the condition imposed by A on B to marry his daughter C.

Condition Precedent

A condition precedent is that which precedes the transfer of property.

When an interest is created in the transfer of a property but the vesting
of such interest is dependent on the fulfilment of a condition prior to the
transfer, this condition imposed is called a condition precedent. In other
words, the condition must be fulfilled before the transfer is executed by
the transferor. Therefore the interest is made to accrue before the
completion of the contingency.[iii]

Illustration

X agrees to transfer his house to Y provided Y marries his daughter A.

Such a condition imposed should be fulfilled before the transfer takes
place, hence it is known as condition precedent.

Essentials of Condition Precedent

1. The condition imposed must be fulfilled before the actual transfer
takes place.

2. The interest created in the transfer will vest in the transferee after the
fulfilment of the condition.
3. When the condition precedent becomes impossible or immoral to be
performed the transfer will be declared as void.

4. When the condition imposed is substantially complied with, it is

deemed to have been fulfilled.[iv]

Condition precedent becomes impossible or unlawful

Under section 25 when the condition imposed becomes impossible or
unlawful or immoral to be complied with, the interest accruing in the
transfer of such property dependent on the condition fails. That is, where
the condition is void the transfer becomes void too. [v]

When the condition precedent becomes –

Impossible to be performed– a condition which no longer can be

fulfilled in any circumstance is said to be impossible. A condition
precedent may become impossible to be performed when the subject
matter is destroyed or there is no means to fulfil such a condition etc.

Illustration

X agrees to transfer his property to Y, provided Y sells his horse to Z. At

the time of such transfer, Y did own a horse. Therefore the condition
precedent was to sell the horse to Z, but Y did not own any horse on the
date of such transfer therefore the condition imposed is void and transfer
of property is also void.

Unlawful – when the condition imposed is unlawful or forbidden by the

law or defeat the provisions of law or fraudulent or opposed the public
policy and is immoral or injures any person or property the transfer
becomes void.
Illustration
A agrees to transfer his property to B, provided B murders C. The
condition of murdering B is forbidden by law, hence the transfer of the
property will be void.

Fulfilment of Condition Precedent

Under section 26 when the condition to be fulfilled for the transfer of
property is substantially complied with or fulfilled, such a condition is
deemed to have been fulfilled. In other words, the interest made to
accrue in the transfer will vest in the transferee if the transferee has
substantially complied with the condition precedent imposed by the
transfer. The doctrine of Cy-pres will apply to this section. [vi]

Illustration
X transfers rupees 1000 to Y on the condition that Y shall marry with
the permission of A,B,C,D. Subsequently A dies. Y obtains permission
from the other three (i.e. B,C and D). The condition is deemed to be
fulfilled.

In Gonendra Mohan Tagore v. Rajah Jotindra Mohan Tagore,

[vii] A agrees to transfer his property to B, if B marries C with the
permission of X,Y,Z. Subsequently, Z dies. B obtains permission from X
and Y and marries C. In such a case B has deemed to comply with the
condition and the transfer is to take place.

Conditional transfer to one person coupled with transfer to another

on failure of prior disposition

Under section 27 when a prior transfer is dependent on a condition and if

the prior transfer fails of non-fulfilment of the condition, the property is
to vest in another person. In such a case ulterior transfer instead of
failing, is accelerated due to the failure of the prior transfer. In other
words where an interest is created on the transfer of property in favour
of one person and in the same transaction an ulterior disposition is
created of the same interest in favour of another person, when the prior
transfer fails the ulterior disposition takes place upon its failure. [viii]

Illustration
X transfers his house to Y on the condition that he shall transfer his field
to Z. If he does not transfer his field, the house will be transferred to B.
Hence if Y does not transfer his field to Z, the house of X will go to B.

Underwood v. wing [ix] A transfers his property to his wife B, in case

she dies in his lifetime the property should be transferred to C. A and his
wife B die in an accident together and it cannot be proved as to who died
first. The disposition in favour of C cannot take place.

Condition Subsequent

Condition subsequent is a condition which is required to be fulfilled

after the transfer of a property. The interest vested in the transferee after
the transfer of property is affected by the completion or non-completion
of a condition after the vesting of the interest resulting from the transfer.
The condition imposed either destroys or divests the right upon
happening of an event.[x]

Illustration
A gifts a property to B on the condition that B should marry C within
three months from such a transfer. Hence the property vests in B at
present but if B does not marry C within three months the transfer will
fail.
Venkatarama v. Aiyasami[xi] X who was under a sentence of
transportation for life, transferred his field to Y, with a proviso that in
case he returns from Port Blair, Y’s interest shall cease. X returned from
Port Blair and hence the court held that X can claim back his field from
Y. 

Characteristics of Condition Subsequent

1. When a condition subsequent is imposed on the transfer, the
fulfilment or non-fulfilment of such a condition will defeat the transfer.

2. The transfer of property is effected immediately and the interest in

such a property vests in the transferee unless the condition subsequent is
fulfilled or not fulfilled.

3. In case where the condition subsequent is impossible or unlawful, the

condition will be ignored and the interest created by the transfer in the
transferee will still vest in him.

4. A condition subsequent should be strictly fulfilled.[xii]

Condition that transfer will cease to have effect in case a specified

uncertain event takes place or does not take place.

Under section 31 and 32 of the Act, when a property is transferred on the

condition that should take place after the transfer, such that the condition
is an uncertain event which does or does not happen the transfer will
cease to have effect when the condition subsequent is fulfilled or not
fulfilled. The condition imposed shall not be invalid.[xiii]
Illustration

X transfers a farm to Y for his life, with a condition that if Y cuts a tree
from the farm, the transfer will cease to have effect. Subsequently, Y
cuts a tree from the farm. Y loses life- interest in the farm.

Section 33 lays down that when a property is transferred and an interest

is created subject to a condition that the persons taking it must perform a
specified act, but no time limit is specified for the performance of such
an act, the condition is broken when he proves the performance of the
act is impossible temporarily or permanently.[xiv]

Effect of fraud preventing the fulfilment or non-fulfilment of the

condition imposed

Section 34 states that when a property is transferred with a condition

precedent or subsequent imposed on the transferee to be fulfilled. In
such a case when the time is specified for the completion or non-
completion of the condition and if the performance of the condition is
prevented by fraud of a person who would benefit directly, such a
further time is to be allowed by the transferor to the transferee for the
performance of the act as is required to be make up for the delay caused
by the fraud. In case no time is specified for the performance of an act
then the condition is deemed to have been fulfilled. [xv]

Ulterior transfer conditional on happening or non-happening of a

specified event (Section 28,29,30)

When a property is transferred an interest therein may be created to

accrue to any person with the condition superadded that in case a
specified uncertain event happens or does not happen such an interest is
to pass to another person. The condition imposed should be strictly
complied with. If the ulterior disposition is not valid, the prior
disposition will not be affected by it. [xvi]

Frequently asked question

What is the difference between condition precedent and condition

subsequent?

 Condition precedent must be fulfilled before the transfer of

propertyand condition subsequent must be fulfilled after the
transfer of property and on the failure of such condition the
transfer will cease to have effect.
 In case of condition precedent vesting of interest is postponed
till the fulfilment of the condition and in case of condition
subsequent, the vesting of an interest in the property
transferred takes place immediately.
 Condition precedent imposed should be valid in the eyes of law
and should not be impossible. If it impossible or unlawful the
transfer will be void. Whereas when the condition subsequent
invalid, it is ignored and the transfer will still be effective.
 When the condition precedent is substantially complied with it
is deemed to have been fulfilled whereas, the condition
subsequent needs to be strictly complied with.
 When the interest is vested in the transferee after the
completion of the condition precedent imposed, it can never be
divested due to non-fulfilment of condition. Where when the
interest is vested in the transferee it can be divested due to
non-fulfilment of condition subsequent.[xvii]
Detailed Study on Conditional Transfers under Transfer of
Property Act, 1882

This article on ‘Detailed Study on Conditional Transfers under

Transfer of Property Act, 1882’ has been written by  Nishant Vimal,
3rd  year student of Symbiosis Law School, Hyderabad.  

Introduction

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.

Click Here

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.