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What is a Constructive Trust?

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  • Written By: Charity Delich
  • Edited By: Bronwyn Harris
  • Last Modified Date: 18 November 2016
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    Conjecture Corporation
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A constructive trust is not the same thing as a classic trust, which requires a trustee to perform certain duties on behalf of the trust’s beneficiaries. Rather, it is a type of equitable remedy granted by a court in order to prevent someone who has unfairly acquired title to property from being unjustly enriched. When a constructive trust is imposed on someone, he or she is usually obligated to transfer title and possession of property to the person designated by the court as the beneficiary. Ordinarily, the plaintiff is the person requesting the trust while the defendant is the person on whom the trust is imposed.

The precise requirements for forming a constructive trust vary from one jurisdiction to another. Generally, however, courts will look at two key elements in considering whether to impose the trust. First, it must be established that the defendant has committed a wrongful act. Alternatively, even if the defendant has not performed a wrongful act, a court may grant a trust if the plaintiff made a material mistake of fact. Secondly, it must be proven that this wrongful act or mistake of fact resulted in a property transfer that unjustly enriched the defendant.

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Constructive trusts can be formed in a number of different circumstances. One common example, as noted above, is when a mistake of fact has been made, such as someone accidentally conveying the title to a piece of property to the wrong person. Another situation in which a constructive trust can be granted occurs when someone unduly influences another person to transfer property. A trust can also be formed if the plaintiff was under duress at the time of transfer, particularly if the defendant has threatened to cause physical harm or acted violently toward the plaintiff.

If a defendant obtains property through fraudulent misrepresentation, a constructive trust may be formed, requiring the defendant to return the property to the plaintiff. A defendant who acquires property by wrongfully and intentionally killing the owner may become a constructive trustee. This could occur, for instance, if someone murdered a relative in order to collect an inheritance. If a trust is imposed, the beneficiaries are typically the people who would have inherited the property if the murderer had died before the property owner.

In some cases, a plaintiff may need to perform a certain act in order to receive the benefit of a constructive trust. For instance, the plaintiff may be required to reimburse the defendant for any expenses paid by the defendant on 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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