A Constructive Trust is equitable tool for preventing Unjust Enrichment. Generally, Constructive Trusts fall into one of two types.
- The first common situation is where one party has an equitable interest in the property, but is not on legal title. A good example of this situation is where one party invests monies in a real property, the deed is in another party’s name, and legal owner of the real property thereafter denies the other party access, use, and/or rights to the real property.
- The second common type of Constructive Trust is where title of an asset is transferred from one party to another based on the promise that it will be returned, or turned over to a rightful beneficiary, at a later time. Thereafter, when the party who no longer has, or can claim, legal title to the asset demands its return, the legal title holder refuses, and retains the asset in their sole ownership.
In order to establish these two common types of Constructive Trusts, a Plaintiff must plead, and subsequently prove, or the Defendant must disprove, that:
- A confidential and/or fiduciary relationship existed between the parties at issue;
- Defendant made either an express or implied promise;
- A transfer was effected by the Defendant’s Promise; and
- The Defendant was unjustly enriched by said transfer.