Section 12. Condition making interest determinable on insolvency or attempted alienation
When property is transferred subject to a conditions or limitation making any interest therein, reserved or give 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 is lease for the benefit of the lessor or those claiming under him.” This section provides that a condition that the grantee shall cease to have any right on becoming insolvent or that the shall cease to have any interest on attempting to alienate property, is void.
The principle behind this provision is that it would be unjust  that the grantee should enjoy and possess all the incidents of ownership of property and yet be deprived  who have made  advances on the strengths of the property should be prevented of the right of alienation incident to such ownership; and it is equally unjust aiming, that the creditor who may have made advances on the strength of the property should be prevented from having recourse to the property transferred for satisfaction of their debts on account of clause in the  transfer, which none but the grantor and the grantee may know nothing about.
The exception to this section provides that nothing in this section applies to a condition in a lease for the benefit of the lessor or those claiming under him.