Resulting Trusts in North Carolina

Many potential clients with whom I speak believe that the person who has legal title to a piece of real property has an interest that is unlikely to be successfully challenged. In many cases, however, this is far from the truth. There are several types of situations in which a person who has been wrongfully deprived of title to property can regain it or be entitled to money damages for their loss. One of the most common situations is when a person provides funds for the purchase of property and title to that property is taken in another person’s name.

A resulting trust arises “when a person becomes invested with the title to real property under circumstances which in equity obligate him to hold the title and to exercise his ownership for the benefit of another. A trust of this sort does not arise from or depend on any agreement between the parties. It results from the fact that one person’s money has been invested in land and the conveyance taken in the name of another.” Teachey v. Gurley, 214 N.C. 288, 292, 199 S.E. 83, 86-87 (1938).[3] 784*784 The trust is created in order to effectuate what the law presumes to have been the intention of the parties in these circumstances—that the person to whom the land was conveyed hold it as trustee for the person who supplied the purchase money. Waddell v. Carson, 245 N.C. 669, 97 S.E.2d 222 (1957).

The classic example of a resulting trust is the purchase-money resulting trust. In such a situation, when one person provides the funds to purchase property, title to which is taken in the another person’s name, a resulting trust commensurate with his interest arises in favor of the one furnishing the funds. There are two possible ways to form a resulting trust based on the time at which consideration is paid. Either the consideration is paid before or at the time legal title passes, or it is paid after such time pursuant to an earlier agreement between the parties.

Evan Lohr is a North Carolina estate dispute attorney and has successfully represented individuals pursuing resulting trust claims. He can be reached at (919) 348-9211 or evan@lohrnc.com.

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