What is a Constructive Trust in California?

Updated on January 11, 2023

Constructive Trust California

If you ever had real property or money payments paid towards real property that was taken from you in a manner that you believe was unfair or illegal, you may be interested in asking the court to impose a constructive trust on the party that took your property or currently possesses the property.

What is Constructive Trust?

You may have already heard the term “constructive trust” outside of the realm of real estate, perhaps used in the context of disputes involving personal finance or estate and probate litigation. Despite what it sounds like, a constructive trust is not a substantive device like a traditional trust, in which a party voluntarily transfers property interests to be held in a trust for tax or estate planning purposes. Rather, a constructive trust is an involuntary trust imposed by a court, to allow a party to regain property that was wrongfully taken by another person who was not justly entitled to it.

Purpose of a Constructive Trust

Constructive trusts are imposed in a variety of contexts, where a party has unjustly acquired property, perhaps by fraud, accident, mistake, undue influence, in violation of a fiduciary or confidential relationship, theft, forgery, or other wrongful acts. This remedy is available in both commercial and residential real estate property context.

Constructive Trust Example

Examples of common scenarios where a plaintiff may request the court to consider imposing a constructive trust against the defendant, who is:

• A business partner who purchases real property with the plaintiff, then sells the property without plaintiff’s permission and pockets all the profits.
• A parent who promises to leave certain real property to the child in exchange for care and companionship but transfers that property to another person.
• An ex-spouse takes funds rightfully belonging to an ex-spouse or her children and purchases real property with a new spouse.
• A real estate broker who agrees to buy property or negotiate to buy property on behalf of the plaintiff, but takes title under the broker’s own name.

Asking the court to impose a constructive trust is complex and requires more than simply asking the court to impose a constructive trust. There are many requirements to plead and prove up a claim that may entitle a plaintiff to obtain this remedy.

Los Angeles Probate Attorney at Schorr Law has significant experience in prosecuting and defending cases involving a claim of constructive trust. To see if you qualify for a free 30-minute consultation, contact our real estate attorneys in California by phone at (310) 954-1877 or by email at info@schorr-law.com. You can also send us a text to (310) 706-2265 or send us a message by using our contact form.

By Valerie Li, esq.