Question

The maximum period during which property can be tied up is

• A. Only 15 years
• B. One or more life or lives in being at the date of transfer and the minority of an unborn person
• C. During the lifetime of the transferor and the minority period of an unborn person
• D. None of the above.

Hint:

To simplify the Rule against Perpetuity (S.14 TPA), remember the formula for the maximum period you can postpone vesting: Max Period = Life in Being + Minority of the Ultimate Beneficiary. The ultimate beneficiary must come into existence before the death of the last person holding the prior life interest.

Answer 1

The Correct Option is B

Step 1: Understanding the Concept:
This question relates to the "Rule against perpetuity". This is a legal rule that prevents a property owner from controlling the disposition of their property for an indefinite period after their death. The law favours the free circulation of property and disfavours tying it up for generations. This rule is codified in the Transfer of Property Act, 1882.
Step 2: Detailed Explanation:
Section 14 of the Transfer of Property Act, 1882, lays down the Rule against perpetuity. It states:
"No transfer of property can operate to create an interest which is to take effect after the life-time 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."
Let's break this down:
- A transfer can create a prior life interest in favour of any number of living persons ('life or lives in being').
- The ultimate vesting of the property in the final beneficiary must happen, at the latest, when that beneficiary (who must have been born before the last life interest holder dies) attains the age of majority (18 years).
So, the maximum period for which the vesting of property can be postponed (i.e., tied up) is:
Perpetuity Period = Life of the last life interest holder(s) + Gestation period (if the ultimate beneficiary is in the womb) + Minority period of the ultimate beneficiary.
Option (B) "One or more life or lives in being at the date of transfer and the minority of an unborn person" accurately captures the essence of this rule.