A constructive trust is an equitable remedy granted by a court to prevent someone who wrongfully acquired a property title from being unjustly enriched. The defendant must transfer title and possession of assets to the beneficiary designated by the court. Requirements for forming a constructive trust vary, but typically involve proving a wrongful act resulting in unjust enrichment. Examples include factual mistakes, undue influence, duress, fraudulent misrepresentation, and intentional killing. Plaintiffs may need to reimburse defendants for expenses incurred in maintaining or protecting the property.
A constructive trust is not the same as a classic trust, which requires a trustee to perform certain tasks on behalf of the trust’s beneficiaries. Rather, it is a type of equitable remedy granted by a court to prevent someone who wrongfully acquired a property title from being unjustly enriched. When a constructive trust is imposed on someone, they are usually required to transfer title and possession of the assets to the person designated by the court as the beneficiary. Ordinarily, the plaintiff is the one applying for the trust, while the defendant is the one on whom the trust is imposed.
The precise requirements for forming a constructive trust vary from one jurisdiction to another. In general, however, courts will look at two key elements when considering whether to enforce the trust. First, it must be proved that the defendant has committed a wrongful act. Alternatively, even if the defendant has not committed a tort, a court may grant a trust if the plaintiff has committed a clerical error of fact. Secondly, it must be shown that this tort or factual error resulted in a transfer of property which unjustly enriched the defendant.
Constructive trusts can be formed under a number of different circumstances. A common example, as noted above, is when a factual mistake has been made, such as someone accidentally conveying title to a piece of property to the wrong person. Another situation in which a constructive trust may be granted is when someone is unduly influencing another person to transfer ownership. A trust can also be formed if the plaintiff was under duress at the time of the transfer, particularly if the defendant threatened to cause bodily harm or acted violently against the plaintiff.
If a defendant obtains property through fraudulent misrepresentation, a constructive trust can be formed, requiring the defendant to return the property to the plaintiff. A defendant who acquires property by wrongfully and intentionally killing the owner can become a constructive trustee. This could happen, for example, if someone killed a relative to collect an inheritance. If a trust is enforced, the beneficiaries are typically the people who would have inherited the property if the killer predeceased the owner.
In some cases, a plaintiff may need to perform a certain act in order to receive the benefit of a constructive trust. For example, the plaintiff may be required to reimburse the defendant for expenses incurred by the defendant in maintaining or protecting the property. This may mean compensating the defendant for paying property taxes, making mortgage payments, or improving and repairing the property.
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