DIFFERENCE BETWEEN VESTED & CONTINGENT INTEREST

Meaning of Vested Interest: – The interest in a property which is created in favor of the person without specifying, the time or a specific connection is known as Vested Interest in the property. In this, the interest in the property is vested in favor of the transferee, even though the right to enjoy the property is delayed. The person having the vested interest does not get the possession of that property but has the expectancy to receive it upon happening of a specified certain event.

Section 19 of Transfer of Property Act defines Vested Interest: – “Where, on a transfer of property, an interest therein is created in favour of a person without specifying the time when it is to take effect, or in terms specifying that it is to take effect forthwith or on the happening of an event which must happen, such interest is vested, unless a contrary intention appears from the terms of the transfer.”

Meaning of Contingent Interest

Meaning of Contingent Interest: – When interest is created in favour of a person to whom such property is transferred, and such interest depends upon the happening of a specified uncertain event, it is called Continent Interest in the property. According to section 21 of Transfer of Property Act, the person having the contingent interest does not get the possession of that property but has the expectancy to receive it upon happening of that event but will not receive the property if the event does not happen as the condition is not fulfilled. Contingent interest is entirely dependent on the condition imposed on the transfer.

For example, ‘A’ agrees to transfer the property to ‘B’ on the condition that he shall secure 90 % in his exams. This condition is uncertain and the happening of the event or not happening is in doubt and therefore ‘B’ here acquires a contingent interest in the property. He shall get the property only if he gets 90 % and when the condition is fulfilled.

Sign number	Ground of Difference	Vested Interest	Contingent interest
1.	Section	Vested interest is provided in Section 19 of the Transfer of Property Act, 1882.	Contingent interest is provided in Section 21 of the Transfer of Property Act, 1882.
2.	Definition	It is an interest which is created in favour of a person where time is not specified or a condition of the happening of a specified certain event. The person having the vested interest does not get the possession of that property but has the expectancy to receive it upon happening of a specified certain event.	It is an interest which is created in favour of a person on a condition of the happening of a specified uncertain event. The person having the contingent interest does not get the possession of that property but has the expectancy to receive it upon happening of that event but will not receive the property if the event does not happen as the condition is not fulfilled.
3.	Condition	The condition involves a specified certain event. A certain event means an event that will eventually happen.	The condition involves a specified uncertain event. There is a chance of the happening or non-happening of that particular event.
4.	Fulfilment of conditions	Vested Interest does not entirely depend on the condition as the condition involves a certain event. It creates a present right that is in effect immediately, although the enjoyment is postponed to the time prescribed in the transfer.	Contingent interest is entirely dependent on the condition imposed on the transfer. Interest is only transferred to the transferee on the fulfilment of the condition imposed.
5.	Right of Ownership	This right is created as soon as the interest is vested.	There is mere chance to be having the ownership rights.
6.	Death of transferee	Death of the person who is having this interest will not have any effect over that interest as after the deceased, the interest will vest in his legal heirs.	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.
7.	Transferable and heritable?	Vested interest is a Transferable and heritable right.	Contingent interest is a Transferable right, but whether it is heritable or not, it depends upon the nature of such any transfer and the condition.
8.	The present right of enjoyment.	There is present, immediate right even when its enjoyment is postponed.	There is no present right of enjoyment, there is a mere expectancy of having such a right.
9.	Examples	X professes to transfer the property ‘O’ to Y when he attains the age of 20. There is a vested interest with Y for the property ‘O’.	X professes to transfer the property ‘O’ to Y on the condition that he shall construct a well in his property. If he constructs, Y shall get contingent interest in the property until the condition is not fulfilled.