Legal Definitions - contingent interest

A contingent interest refers to a right or claim to something, often property or money, that an individual or entitywill only receive or enjoy if a specific event or condition occurs first. This event or condition is known as a "condition precedent." If the condition precedent does not happen, the interest never becomes a firm, guaranteed right.

• Example 1: Inheritance in a Will

  Imagine a will states that a specific antique car collection is to be given to a niece, provided she obtains a valid driver's license by her 21st birthday. Until the niece turns 21 and successfully acquires her driver's license, her claim to the car collection is a contingent interest. If she fails to get her license by that age, she will not receive the collection, and her interest in it will cease to exist.

• Example 2: Business Acquisition Agreement

  A large corporation agrees to purchase a smaller startup company, but the acquisition agreement includes a clause stating that the deal will only finalize if the startup successfully secures a critical patent for its core technology within six months. The corporation's right to acquire the startup is a contingent interest. If the patent is not granted within the specified timeframe, the corporation is not obligated to proceed with the purchase, and its interest in acquiring the company dissolves.

• Example 3: Real Estate Development Contract

  A landowner agrees to sell a parcel of land to a developer, but the contract specifies that the sale is conditional upon the developer obtaining all necessary environmental permits for their proposed housing project within one year. The developer holds a contingent interest in purchasing the land. Their right to buy the property is dependent on them first securing the environmental permits. If they fail to do so within the year, the landowner is free to sell the land to someone else, and the developer's interest in that specific parcel is lost.