Transfer of Property Act Section 12 — Condition making interest determinable on insolvency or attempted alienation

CHAPTER I PRELIMINARY

General

Summary

If a property transfer includes a condition that someone’s interest in the property will end if they become bankrupt or try to sell or give away that interest, that condition is legally invalid and has no effect. However, this rule does not apply to a condition written into a lease that is meant to protect the landlord or the people who take over the landlord’s rights.

Official Text

Where property is transferred subject to a condition or limitation making any interest therein, reserved or given to or for the benefit of any person, to cease on his becoming insolvent or endeavouring to transfer or dispose of the same, such condition or limitation is void. Nothing in this section applies to a condition in a lease for the benefit of the lessor or those claiming under him.