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Tag: advancement

Resulting and Constructive Trusts: The Various Types

Resulting Trusts Arising from Mortgage FraudThe Alberta Court of Appeal observed in Luitenko v. McAleer that a resulting trust arose out of mortgage fraud. The respondent, Erika Luitenko, who was ineligible for a mortgage, purchased a house by committing fraud with help from her friend Lada McAleer and Lada’s husband. The purchase price of approximately $185,000 was given by Ms. Luitenko as a down payment as well as the lawyer’s fee to complete the transaction. It was placed in the joint names of the McAleers and their son. Ms. Luitenko lived in the house for over two years starting October 2005, paying the appellants $1,150 per month to cover the cost of the mortgage payments, municipal taxes, and home insurance. She also paid all utilities, renovation, and general upkeep costs for the home.The value of the home continued to increase in a very short amount of time and by 2008 stood at $323,000.

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Resulting and Constructive Trusts: What are They and What is Their Significance for Real Estate Lawyers?

Important developments have taken place in Canadian jurisprudence from the 1960s relating to interpretation and application of resulting and constructive trusts and more recently, the presumption of advancement. Such equitable doctrines have been reflected in some recent Canadian judgments.The Resulting TrustThe English Chancery Court maintained in 1788 that in all cases without any exception, the trust of a legal estate, whether freehold, copyhold, or leasehold; whether taken in the names of the purchasers or others jointly, or in the names of others without that of the purchaser; whether in one name or several; whether jointly or successive, is reposed on the person who advances the purchase money.A resulting trust is formed whenever legal or equitable title to property is in one party’s name.  If that party is a fiduciary or gave no value for the property, then he is under the obligation to return the property to the original title owner, or to the person who paid for it. The trust, which is formed by operation of law to return the beneficial ownership of that asset to the person who paid for the expenses, is known as a resulting trust.  That person could be the previous owner who transferred the asset to the resulting trustee, or the person could have paid all or part of the purchase price for the transfer.

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