Legal Guide

Everything To Know About Conditional Transfer In Property Law

by Bhavya Choudhary · 3 min read

conditional transfer in property law

Introduction

The conditional transfer is regulated by Section 25 of The Transfer of Property Act of 1882. Any transfer that has conditions attached to it from one party to the other party is conditional in property law. 

For example, X offers to transfer his property to Y, but the condition attached is that Y has to give up his car. So this transfer is completed when Y agrees and gives his vehicle for receiving the property. 

This is a conditional transfer in property law.

Conditional Transfer in Property Law

Some key points make the conditional transfer in property law a valid one.

  • The conditions should not be prohibited by law. 
  • The conditions imposed should not involve any fraud or coercion acts.
  • The conditional transfer in property law must not expect impossible or life-threatening tasks or acts.
  • There should be no public policy and interest violations when making a conditional transfer in property law.
  • The party should not transfer based on any immoral motives. 
  • The conditional transfer in property law should be free from any act that causes harm and damage to a person or any property. 

Different types of Conditional Transfer in Property Law

As per the Transfer of Property Act 1882, there are three types of specific conditional transfer in property law, and other types are imposed at times when transferring land documents

The types should also abide by the requirements of a valid conditional transfer in property law as per Section 25.

1. Condition Precedent: As per Section 26 of the Transfer of Property Act 1882, the conditions that must be fulfilled before the property transfer is called a condition precedent. 

  • It is not mandatory or strictly followed by the parties when the actual transfer occurs as per the conditional transfer in property law. It can also be done with substantial compliance with the Transfer. 
  • Any party can ask for a condition with substantial compliance before the land documents are transferred to the other party’s name.

Example case: 

Wilkinson vs. Wilkinson 

  • The party asked the other party to end the marriage and divorce the husband for the transfer to be completed. 
  • This is an immoral act that violates the other party’s interests. Hence, it was termed void, and the court held it invalid to go through with an act against public policy. 

2. Condition subsequent: As per Section 29 of the Transfer of Property Act 1882, the conditions that must be fulfilled after the property transfer is called a condition subsequent. 

  • It is a mandatory condition that is to be strictly followed and completed. The transfer can be completed only after the subsequent has been done. 
  • An essential factor and requirement are that the conditional transfer in property law should be lawful and must not have fraudulent actions involved. If found to be unlawful, it will be void and canceled by the court. 
  • For example, X offers to transfer the property to you on the condition that Y causes injury to Z. This is immoral and void. The transfer cannot go through with such types of conditions.

3. Condition collateral: Simultaneously fulfilling the conditions after the property transfer is condition collateral. 

  • This is to be followed accordingly and strictly to keep the transfer valid and avoid it from going invalid. 
  • The transfer will break down once the necessary has been done.
  • The Hon’ble Supreme Court clarified during a case (2018) that if there are no signs about the acceptance of the transfer of property if the donor has possession of the gift involved during his lifetime.
  • If the gift is not transferred, it will be canceled at the option of the donor because there was no violation of principle and interests involved.
  • The donor has such rights for cancellation of gift deeds and takes necessary legal consultation for understanding the process. 

The other types of conditional transfer in property law. 

As per Section 27 of the Transfer of Property Act 1882,

  • A transfer can be made again by a party if one of them fails the first time they do it.
  • Transferor A can choose C as transferee B has not completed the task as per the law.
  • The prior disposition of the conditional transfer in property law is to be taken seriously. 
  • Only valid conditions can be fulfilled again if the prior task fails.
  • The subsequent transfer comes into effect to break down the conditional transfer in property law. 

Doctrine of Acceleration 

  • This will assess that the property from one party is to be given to another party if any of the first conditions fails as it was never vested for them.
  • For example, A wants to transfer the property to B, and B cannot fulfill the conditions, or the transfer was not successful, or the property is unregistered. Then the property is accelerated to their legal heirs and children. 
  • The doctrine of Acceleration does not apply when it is a gift unless there is a specific manner of failure involved where it can be applied for another transfer. 
  • This counts as an exception to the conditional transfer in property law. However, the party may also take legal consultation to know where this is applicable. 

Conditional Limitation

  • This applies here as this affects any ulterior disposition motives.
  • The vested property may have conditions, and if it does not get fulfilled, the ulterior disposition takes place, and the property is transferred to the ultimate beneficiary of the other party. 

Conclusion 

Some many crucial factors and conditions are stated in the conditional transfer in property law as per the Transfer of Property Act 1882. An individual must be knowledgeable about the different provisions related to it to take better responsibility and resolutions.

Taking advice about the various laws and regulations regarding the transfer of property through a property expert lawyer is beneficial for the person's interest.

Bhavya Choudhary

Written by

Bhavya Choudhary

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