Understanding your rights in real property may be crucial when making legal decisions concerning that property, as illustrated in an August 15, 2018 Massachusetts real estate case. The dispute centered around property that had been the plaintiff’s home since 1987. The plaintiff had initially owned the property, but he lost it to foreclosure in 1994. The plaintiff continued residing in the house, however, after convincing a friend to purchase the house from the foreclosing bank and rent it to him. The plaintiff hoped to buy the house back after his credit had improved.
In 2003, the house was sold to the defendant, another friend of the plaintiff. The defendant promised to sell the property back to the plaintiff several times. Each time, however, the plaintiff failed to close on the property through no fault of the defendant. The last purchase and sale agreement was executed by the parties in 2015, and the defendant agreed to four extensions of the closing through the following year. When the plaintiff did not close, the defendant initiated eviction proceedings. In response, the plaintiff filed an action to impose a constructive or resulting trust over the property, claiming that he had been the property’s rightful owner all along.
A constructive trust is created by the court to prevent unjust enrichment resulting from fraud, a violation of a fiduciary duty, mistake, or other circumstances in which the title owner’s retention of legal title to property would result in unjust enrichment. A constructive trust is not a true trust. However, once a court determines that a constructive trust exists, the court can order the unjustly enriched party to transfer the property to the beneficiary of the constructive trust.