Constructive trust | Practical Law

Constructive trust | Practical Law

Constructive trust

Constructive trust

Practical Law UK Glossary 5-107-6322 (Approx. 5 pages)

Glossary

Constructive trust

A trust that arises by operation of law where it would be unconscionable for a person (A) who holds an asset to deny the beneficial interest of another person in the asset.
For example, a constructive trust may arise where:
  • A holds funds that he knows have been paid to him by mistake.
  • A holds an asset that he has obtained by means of fraud.
  • A and another person (B) share a common intention that B should have a beneficial interest in an asset, and B has acted to his detriment on the basis of that intention. This is known as a common intention constructive trust and is often argued in disputes about the ownership of property occupied by cohabitees, as in the leading cases of Stack v Dowden [2007] UKHL 17 and Jones v Kernott [2011] UKSC 53.
For more information, see Practice notes: