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What is a constructive trust?

A constructive trust is an equitable remedy that creates a type of trust imposed by a court as a remedy for an unfair or unjust situation. Based on the circumstances, courts, rather than parties through individual agreements, impose or imply a constructive trust to remedy a wrong or prevent unjust enrichment.

For example, suppose one party holds some property on behalf of another but refuses to transfer the property. In that case, a court may impose a constructive trust on that property and order the party to transfer it to the rightful owner. Similarly, if one party obtains property through fraud, duress, undue influence, or other unethical means, a court may impose a constructive trust to transfer the property to the rightful owner.

Constructive trusts are often present in property cases involving real estate and inheritance disputes. Ultimately, constructive trusts prevent the person who holds the property from unjustly profiting from it and ensure that the property transfers to its rightful owner.

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What are relevant laws related to a constructive trust in Florida?

In Florida, the laws related to constructive trusts are primarily established by case law, as no specific statute governs constructive trusts. Accordingly, Florida courts recognize constructive trusts as a legal remedy in various situations, including divorce disputes (See, e.g., Wallace v. Torres-Rodriguez, 341 So.3d 374 (Fla. 3d DCA 2022  and property disputes (See, e.g., Castetter v. Henderson, 113 So. 3d 153 (Fla. 5th DCA 2013).

When is a constructive trust generally imposed in Florida?

Courts may impose constructive trusts in several situations, including the following:

  • Breach of fiduciary duty: If a fiduciary breaches their duty to act in the best interests of the person they represent, a constructive trust may be imposed as a remedy. Such breaches might arise when a trustee misappropriates trust assets, or an attorney mishandles client funds.
  • Fraudulent transfers: A transfer of property made with the intent to defraud a creditor may also implicate a constructive trust. For example, suppose a debtor transfers property to a third party to avoid paying their debts. In that case, the court may impose a constructive trust on the transferred property to prevent the debtor from benefiting from the fraud.
  • Partnership disputes: When there is a dispute among partners regarding the ownership of partnership assets, the court may impose a constructive trust to clarify ownership and ensure appropriate asset distribution.
  • Divorce and property division: A constructive trust may be imposed in divorce cases when one spouse hid or transferred marital assets to avoid division during property distribution.

When a set of facts is appropriate to meet the requirements of a constructive trust, there are many paths a claimant may take. We are value-based attorneys at Jimerson Birr, which means we look at each action with our clients from the point of view of costs and benefits while reducing liability. Then, based on our client’s objectives, we chart a path to determine if this is an appropriate remedy.

To see what actions may be available for your unique situation, please contact our office to set up your initial consultation.

What are common defenses to the imposition of a constructive trust in Florida?

The primary defenses against the imposition of a constructive trust in Florida include the following:

  • Laches: Laches is a possible equitable defense when there has been an unreasonable delay in seeking relief. If the plaintiff delayed seeking relief for excessive time, the defendant might argue that a constructive trust is not an appropriate action.
  • Unclean hands: The doctrine of unclean hands is a raisable defense when the plaintiff has engaged in misconduct or wrongdoing. If the plaintiff engaged in unethical, fraudulent, or illegal conduct, the defendant might use this fact to argue against a constructive trust.
  • Lack of evidence: If the plaintiff fails to provide sufficient evidence to support their claim for a constructive trust, the defendant may argue that there is insufficient evidence to support the imposition of a constructive trust.
  • Innocent purchaser: If the defendant is an innocent purchaser for value, they may argue that they should not be subject to a constructive trust. An innocent purchaser buys the property without knowing of any wrongdoing by the seller.

To see what defenses may be available for your unique situation, please contact our office to set up your initial consultation.

Have more questions about a constructive trust-related situation?

Crucially, this overview of constructive trusts does not begin to cover all the laws implicated by this issue or the factors that may compel the application of such laws. Every case is unique, and the laws can produce different outcomes depending on the individual circumstances.

Jimerson Birr attorneys guide our clients to help make informed decisions while ensuring their rights are respected and protected. Our lawyers are highly trained and experienced in the nuances of the law, so they can accurately interpret statutes and case law and holistically prepare individuals or companies for their legal endeavors. Through this intense personal investment and advocacy, our lawyers will help resolve the issue’s complicated legal problems efficiently and effectively.

Having a Jimerson Birr attorney on your side means securing a team of seasoned, multi-dimensional, cross-functional legal professionals. Whether it is a transaction, an operational issue, a regulatory challenge, or a contested legal predicament that may require court intervention, we remain a tireless advocate every step of the way. Being a value-added law firm means putting the client at the forefront of everything we do. We use our experience to help our clients navigate even the most complex problems and come out the other side triumphant.

If you want to understand your case, the merits of your claim or defense, potential monetary awards, or the amount of exposure you face, you should speak with a qualified Jimerson Birr lawyer. Our experienced team of attorneys is here to help. Call Jimerson Birr at (904) 389-0050 or use the contact form to set up a consultation.

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