Transfer of Property to an Unborn Child | Explained

The article gives an insight into the process involved in the transfer of property to an unborn child. The article explains the meaning of property, transfer, and unborn child and how all three are related to each other as per the provisions of the property law in India.

Introduction

The word ‘property’ has a very wide scope. A bundle of rights are associated with the property. A property can be either immovable or movable in nature. Also, the property comprises of both tangible such as money and intangible rights, such as elements or sources of wealth or income. Every person is allowed to dispose of or enjoy his/ her property until and unless he makes use of his property for something which is restricted by law.

When a transfer of property takes place, all the rights that are associated with the property get transferred. On the other hand, some arrangements are to be made in such a manner that not all the rights attached to the property get transferred but just some of them.

The transfer of property is regulated with the help of the legislation known as the Transfer of Property Act, 1882 in India. It was implemented on July 1, 1882. This legislation explains everything concerning the transfer and all other conditions that are attached to the transfer.

Meaning

An entity which is virtual or physical in nature and owned either jointly by a group of individuals or an individual is known as property. The rights vested with the property are in the hands of the owner. No human life is possible or can be imagined without any property.

There are legal, religious, socio-political and economic implications that arise from the property. However, the idea of ownership comes from the legal implications that are attached to the property. Such an idea indicates the exclusive control of a person over that particular property of which he/ she is the owner.

The word ‘transfer’ implies a contract along with the conveyance. It is an act or a process by which something is given to someone else. The Act does not provide for the definition of the property but states it as something that gets delivered to one or more living persons by a living person in future or in the present date or to himself only.[1]

The words ‘in future’ or ‘in the present’ is used with reference to delivering, indicating that there can be no transfer with respect to a future property that does not exist on the day of transfer. However, such a property may be conveyed by virtue of a contract to assign.

The person who is transferring the property is known as the transferor, and the one to whom the property is transferred is known as the transferee. The Act has laid down certain provisions regulating the transfer of property.

Further, the objective of the Act is to provide the definition and make amendments in the laws concerning the transfer of property by the acts done by parties and to ensure that no transfer can take place without the operation of law. Since a contract is required for transferring property, it is essential that all the ingredients for forming a contract as per the Contracts Act have to be fulfilled. But then, we get a question here to ponder if an unborn child does not fit under the essentials laid down by the Contracts Act, then how can the property get transferred to an unborn child? Let’s have a look at it.

Unborn Child

The person who does not exist in the current time but will have its existence someday in future is known as an unborn child. An embryo in the womb of a lady is not an existing person yet.

I. Status of an Unborn Child

A child who is not yet born becomes a person as soon as he takes birth. There are a lot of reasons behind the birth of a child. In terms of property law, the child in the womb, i.e. an unborn child, can be granted some definite rights and can also inherit the property as soon as he takes birth and comes into existence.

Even if the unborn child cannot be treated as a person, the rights related to the property can get vested in him by handing over those rights to the trustees of that unborn child for the time being.

The law does not prevent an unborn child from owning the property or get the legal title of the property in his name. The ownership of the property is based on a condition for the time till the child is not in existence and in the womb of his/ her mother.

For the time being, all those rights are vested with some other person or trust with a contingent condition that as soon as the child is born, all those rights will transfer to it. As per the legal maxim, nasciturus pro jam nato habetur and various other reasons, such an unborn child is referred to as born by law for various reasons.

Hence, the law of property creates a fiction whereby the child that is en ventre sa mere is that person who is already chosen so that he can take part in the period of rule against perpetuity.[2] In the recent matter of Nugent v. Brooklyn Heights R. Co.,[3] the Appellate Division in New York held that a child is able to recover from all the prenatal injuries.

Another question arises how to determine whether an unborn child who is yet not in existence is capable of all those rights concerning property. Here, it becomes important to check how such a person is treated by other laws in force.[4] All other laws require the child to be living.

However, this does not state that a child, who is not born yet, will be considered a separate entity, but a rule of construction will be used on the premise that all such children are not only the reason for the gift but also come within the motive.[5]

The principle enunciated with this section is that a person who is disposing of his/ her property to some other person must not be allowed to handcuff to dispose of that property freely to just one generation and not more than that.

II. Transfer of Property to an Unborn Child

The Transfer of Property Act provides that an interest can be created in favour of a person who is not yet in existence but is in the womb the day the transfer occurs. This can be done only when a prior interest gets created by such a transfer.

Further, the interest created for such persons' benefit shall not get effect until and unless all the rights associated with a particular property get transferred in the name of that unborn child.[6]

The general rule of the property law that a property can be transferred amongst living persons is given effect by Section 13 of the Act.[7] Since there cannot be any transfer to a person who is not in existence as per the mandate of the Contracts Act, the expression ‘for the benefit of’ is used by Section 13 of the Act instead of ‘transfer to unborn person’ and this is how a child who is yet in the womb of his/ her mother is recognised as competent transferee.

Here, it becomes important to understand that the transfer can take place only in the name of the person who is not born yet and in the womb of the mother but someone who is not even in the womb cannot be considered competent for transferring the property.

There is a transfer of interest whenever a property is transferred.[8] The transferor gets divested of all the rights or interests attached to the property, and those get vested with the transferee as soon as the property gets transferred.[9]

Henceforth, it becomes important for a transferee to be present and exist under the sun to get the interest vest with him otherwise, it will create a situation where the interest is in abeyance until the transferee gets his existence in the world.[10] This violates the general principle of property law, as mentioned above.[11]

Conclusively, it is provided by Section 13 of the Act that the property cannot be transferred directly to the one who is not born but can be done for his/ her benefit by laying down two conditions, such as :

1. There must be the creation of a prior life interest in favour of a person who exists on the date of transfer[12]
2. There must be a transfer of an absolute and not partial interest in favour of that unborn child.

III. Essentials of a valid Transfer of Property to an Unborn Person

(i). No Transfer: An unborn person cannot be made a party to the transfer of any property. If someone wants to transfer the property in the name of an unborn child, this has to be done by forming a trust. This is because of the general principle of property law that there has to be someone who takes charge of the ownership of the property.

Assuming the property gets transferred in the name of an unborn child, this gives rise to a situation where there is no owner of the property for the time between the transfer of the property and the birth of such a child, which will violate the general principle of the property law mentioned above.

Henceforth, an unborn child can never be granted property in his name but with the help of a trust. However, a situation may arise where trust cannot be formed for such a transfer. When such a situation is encountered, the property rights get created in the name of a living individual and then transferred in the name of the minor.

(ii). Prior Interest: If a failure occurs to create the trust for such a transfer, then it is important to vest the interests of the property in an individual between the date on which the transfer takes place and the date on which the child gets born.

Such a transfer in the name of a living individual helps him to enjoy the interests vested with the property till the unborn child comes into existence. However, the property gets passed in the child's name as soon as he takes birth on the earth.[13] Simply, it can be said that a prior interest must be created in the name of a living individual before transferring it to the name of an unborn child.

(iii). Absolute Interest: It states that the absolute interest in the property must be transferred at a go in the name of the unborn child and not the partial interest. There can be no transfer regarding limited interest in the property. This means that the whole interest in the property must be transferred in a single go.

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[1] Section 5 of Transfer of Property Act, 1882

[2] Harvard Law Review, Vol. 26, No. 7 (May, 1913), pp. 638-640

[3] i39 N. Y. Supp. 367

[4] AM Hess – Tenn. L. Rev., 1994

[5] A Lotierzo – Temp. L. Rev., 2006

[6] Section 13 of Transfer of Property Act, 1882.

[7] I PG Haskell, NFL Rev., 1987

[8] M Bloom, Washington Law Review, 1987

[9] PH Winfield, Australian Law Journal, 1935

[10] EF Albertsworth, California Law Review, 1922

[11] AM Hess – Tenn. L. Rev., 1994

[12]Mohamed Shah v Official Trustee of Bengal, (1909) 36 Cal 431

[13] Issac Nissin v Official Trustee, Bengal, AIR 1957 Cal 118 (119)

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1. Property Law
2. Exchange Explained As Under Transfer Of Property Act, 1882