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Constructive Trust Properly Imposed—Sister, Who Was Not Included on the Original Deed Because of Credit Problems, Contributed One-Third of the Downpayment Based Upon a Promise She Would Be Added to the Deed at a Later Time

The Second Department determined a constructive trust was properly imposed on property for which the plaintiff provided one-third of the downpayment.  Plaintiff Reynida Diaz was not included on the original deed with her two sisters because of her credit history. There was an agreement among the sisters that Reynida would be added to the deed at a later time. Defendant sister refused to add Reynida to the deed. The court explained the requirements for a constructive trust:

In general, the imposition of a constructive trust is appropriate in situations when ” property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest'” … . The elements of a constructive trust are (1) a fiduciary or confidential relationship; (2) an express or implied promise; (3) a transfer in reliance on the promise; and (4) unjust enrichment … . A party must establish the elements of a constructive trust by clear and convincing evidence … .

There is no dispute that the first element, a confidential relationship, exists among the sisters …, a fact conceded by the defendant. As to the second element, the testimony of the two plaintiff sisters, the defendant, and a family friend, as well as the documentary evidence, established the existence of an express agreement among the parties at the time the subject property was purchased that Reynida Diaz would be added to the deed at some later date … . The plaintiffs also established the transfer in reliance element in that, at the time of the purchase of the subject property, Reynida Diaz had given the defendant $13,000, the same amount contributed by the defendant and the other plaintiff, in exchange for the promise of being added to the title as a co-owner at a later date … . The fourth element, that the defendant would be unjustly enriched if the constructive trust was not imposed, was also established in that the defendant had received the $13,000 from Reynida Diaz, as well as payments from her toward the monthly mortgage and maintenance of the property equal to the amounts contributed by the defendant and the other plaintiff who was on the deed to the subject property … . Diaz v Diaz, 2015 NY Slip Op 05635, 2nd Dept 7-1-15

 

 

 

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