A constructive trust is a legal remedy imposed by a court to benefit a party that has been wrongfully deprived of its rights due to either a person obtaining or holding a legal property right which they should not possess due to unjust enrichment or interference, or due to a breach of fiduciary duty, which is intercausative with unjust enrichment and/or property interference. It is a type of implied trust, created by conduct, not explicitly by a settlor. A constructive trust is not an actual trust by the traditional definition but a trust created through a courts power, over assets they determine a party cannot equitably keep. It is a legal fiction that is used as a remedy for unjust enrichment. Key features of a constructive trust include:
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Equitable remedy: A constructive trust is established to right a wrong relating to a persons property.
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Unjust enrichment: A constructive trust is created to remedy a situation where there is unjust enrichment. This means that someone may have wrongfully possessed property through fraud, misrepresentation, or a breach in their fiduciary duty.
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No trustee: There is no trustee in a constructive trust, but the constructive trust orders the person who would otherwise be unjustly enriched to transfer the property to the intended party.
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Triggered by unconscionability: Constructive trusts are largely said to be triggered by unconscionability, which is the idea that a defendant would be unjustly enriched if they were allowed to keep the property.
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Imposed by operation of law: Constructive trusts are imposed by operation of law and are also referred to as implied trusts.
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Temporary measure: A constructive trust can be either a temporary measure designed to protect the property until the defendant transfers it to the rightful beneficiary.
Constructive trusts are not subject to formality requirements and do not give effect to the imputed/presumed intention of the parties. Instead, they are largely said to be triggered by unconscionability. A constructive trust will not be created if another adequate remedy exists in law.