Law relating to Transfer of Property: Rule against perpetuities

Rule against Perpetuities is a legal principle that restricts the ability to control property (usually real estate) through various legal instruments (like wills or trusts) indefinitely. Its primary purpose is to prevent the indefinite restriction on the transfer of property and ensure that property remains freely alienable (i.e., capable of being bought, sold, or transferred). While the rule originated in English common law, it has been adapted and incorporated into the legal systems of various jurisdictions, including India, in different forms.

Application in India:

In India, the rule against perpetuities is specifically codified under Section 14 of the Transfer of Property Act, 1882. The section is designed to prevent the creation of interests in property that would indefinitely or for an unreasonably long period restrict the alienation of the property. The rule ensures that any interest created must vest, if at all, within a specified period.

Section 14 – The Rule against Perpetuities:

Section 14 of the Transfer of Property Act, 1882, states that “No transfer of property can operate to create an interest which is to take effect after the lifetime of one or more persons living at the date of such transfer and the minority of some person who shall be in existence at the expiration of that period, and to whom, if he attains full age, the interest created is to belong.”

Key Points of the Rule:

  • Lifetime + Minority:

The rule mandates that any conditional interest in property must vest (i.e., become the absolute possession of the legatee) within the lifetime of individuals living at the time of the transfer, plus the period of minority (i.e., until becoming an adult, which is 18 years in India, or 21 years if a guardian is appointed) of a person who is in existence at the end of the lifetime period.

  • Future Interest:

The rule is primarily concerned with future interests or conditional interests in property that do not take effect immediately upon the transfer but are supposed to arise on the occurrence of a specified event or after a certain time.

  • Vesting of Interest:

The interest created by a property transfer must vest within the period stipulated by the rule. If it appears that the interest might vest outside of this period, the interest is void from the outset.

Purpose and Effect:

The rule against perpetuities ensures that property is not tied up indefinitely by the conditions imposed by previous owners, thereby promoting the free transferability and use of property. It strikes a balance between respecting the wishes of the property owner to allocate their property as they see fit and the societal need to keep property available for use and development by living persons.

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