A condition precedent is aconditionor an event that must occur before aright,claim,duty, orinterestsarises. A condition precedent is contrasted with a condition subsequent.
In acontract, a condition precedent is an event that must occur before the parties areobligatedtoperform. For example, aninsurancecontract may require the insurer to pay to rebuild the customer’s home if it is destroyed by fire during the policy period. The fire is a condition precedent. The fire must occur before the insurer is obligated to pay.
Courtsprefer to interpret a clause in a contract as apromiserather than a condition precedent to avoidforfeiture. The SecondRestatementof Contracts has dropped the term “condition precedent” and simply refers to it as “condition.”
In property law, a condition precedent is an event at which thevestingof apropertyinterest occurs. If the condition does not occur before a specified time, the condition fails, and the property interest does not vest.
For example, if parents write a grant which states they grant the property Blackacre “to our son, if he graduates from college by his 21st birthday”, graduating from college before the son’s 21st birthday is the condition precedent. If the son graduates from college before his 21st birthday, title to Blackacre transfers to him. If the son’s 21st birthday comes and he has not yet graduated from college, the interest never vests, and the parents never lose ownership of Blackacre.
Condition precedents are most frequently seen in combination with contingent remainders. Accordingly, conditions precedent are usually subject to the rule against perpetuities which states that they are invalid unless they must vest, if at all, within 21 years after a relevant life in being.
[Last updated in July of 2022 by the Wex Definitions Team]
