Introduction

Transfer refers to any such act by which a property is transferred from one living person to another living person, whether in present or in future. Such transfers may take place in many forms which includes sale, exchange, gift, mortgage, lease, charge, etc. In India, the transfer of property is governed by a central legislation, which is Transfer of Property Act, 1882. Section 5 of the Transfer of Property Act defines transfer as "An act by which a living person conveys property, in present or in future, to one or more other living persons, or to himself, [or it himself] and one or more other living persons; and "to transfer property" is to perform such act."1

Transfer of properties can be broadly of two types – Absolute transfer and Conditional Transfer. Absolute transfer refers to such situations where the transferee acquires full, immediate and unconditional title in the transferred property, without any encumbrances and limitations.2 On the other hand, a Conditional transfer is such in which an interest is created in the favour of the transferee which are subject to the fulfilment or non-fulfilment of a condition attached with the transfer of property.3

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.4 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:

  • Prohibited by law,
  • Should not be an act that involves fraudulent acts,
  • Should not be any act that is impossible,
  • Should not be an act that is termed as violative of public policy,
  • Should not be immoral,
  • 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.This paper looks into detail about what is a conditional transfer.

Concept of Conditional Transfer

Conditional transfer refers to such transfer of properties where a condition is something that makes the existence of a right dependent on the happening or not happening of a thing, and the legal effect of the transfer may vary according to the nature of the condition attached to it. The conditions required for the transfer of property can be of three types – Condition Precedent, Condition Subsequent and Collateral Condition.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

Condition precedent refers to the condition which precedes the transfer of property. When the terms of a transfer impose a condition to be fulfilled before a person can take an interest in the property, the condition here is condition precedent. It is given in Section 26 of the Transfer of Property Act, 1882.5 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.6

In the landmark case of Wilkinson v. Wilkinson,7 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, 1882.8 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 2018,9 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.

Footnotes

1 The Transfer of Property Act, 1882 § 5.

2 Dr Poonam Pradhan Saxena, Property Law 01-08 (Lexis Nexis, 2017)

3 Dr. R.K. Sinha, The Transfer of Property Act 49-55 (Central Law Agency, 2021).

4 The Transfer of Property Act, 1882 §25.

5 The Transfer of Property Act, 1882 §26.

6 (1876) 2 Ch D 753.

7 (1871) Eq 604.

8 The Transfer of Property Act, 1882 §29.

9 Ashok Kini, Conditional Gifts Are Incomplete Until Conditions Are Compled With; Such Gift Deeds Are Canclelled By The Donor: SC [Read Judgment], Live Law (October 27, 2018, 12:29 PM), https://www.livelaw.in/conditional-gift-are-incomplete-until-conditions-are-complied-with-such-gift-deeds-can-be-cancelled-by-the-donor-sc/.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.