Written by: Jocelyne A. Macelloni, Esq. and Elizabeth M. Arritola, Esq.
Imagine this. You spend years accumulating capital and finally take the leap into real estate investing with a partner you believe you can trust. The plan is straightforward—purchase a distressed property in an emerging neighborhood, renovate, sell, and reap the upside. Based on your partner’s assurances, you wire $500,000 for the purchase.
Days pass. Then weeks. Eventually, you learn the truth: the property was purchased and titled solely in your partner’s name. Worse, your partner and their family have moved in. Meanwhile, the neighborhood improves, infrastructure expands, and property values climb sharply. At that point, clients often ask us two questions: Can I get my money back? And just as importantly, is getting my money back enough?
Why a Lawsuit for Damages Is Often Inadequate
The instinctive response is to hire a lawyer, sue for breach of contract or fraud, and demand the return of the $500,000. But in real estate cases, money damages alone often fail to account for appreciation, leverage, and the unique nature of real property. Florida law recognizes this reality and, in appropriate cases, provides equitable remedies designed to restore fairness rather than merely cut a check. An equitable remedy is a form of relief that is granted by the court to make a situation fair. Equitable remedies can be imposed when money damages (such as the return of the $500,000) will not fully resolve the injury or ensure fairness. One of the most powerful—and frequently misunderstood—of those remedies is the constructive trust.
What Is a Constructive Trust?
A constructive trust is not a trust created by agreement or estate planning. It is a judicial remedy imposed by a court sitting in equity when someone holds property they should not, in good conscience, be allowed to keep. In practical terms, a court can order that the person holding title to property is deemed a “trustee,” required to preserve and ultimately transfer the property (or its value) for the benefit of the rightful owner.iv The objective is straightforward: prevent unjust enrichment and restore equity.
Florida courts generally identify four elements when determining whether to impose a constructive trust:
- A promise, express or implied, relating to the transfer or use of property;
- A transfer of money or property in reliance on that promise;
- A confidential or fiduciary relationship, such as business partners, spouses, or close family members; and
- Unjust enrichment, meaning the defendant benefited unfairly at the claimant’s expense.vii
While these elements provide a useful framework, experienced litigators know they are not applied mechanically. Equity is, by design, flexible.
A Classic Example: Saporta v. Saporta
In Saporta v. Saporta, a Florida appellate court imposed a constructive trust over real property purchased with the wife’s funds but titled solely in the husband’s name. After separation, the trial court initially denied relief.ix The appellate court reversed, finding that all four elements were satisfied and that equity required awarding the property to the wife.x
The takeaway is critical: legal title does not end the inquiry. Courts look behind the deed to determine whether ownership was obtained through inequitable means.
When Equity Overrides Technical Requirements
Florida courts have repeatedly emphasized that rigid adherence to the four elements is not always required when fairness demands intervention. This principle is particularly important in complex financial and real estate fraud cases.xi
In Lee v. Wiand, a bankruptcy court imposed a constructive trust on homes purchased by innocent third-party homeowners using funds traceable to a Ponzi scheme. There was no express promise and no confidential relationship between the victims and the homeowners. Nevertheless, the court found unjust enrichment and imposed a constructive trust for the benefit of the defrauded investors. As the court explained, constructive trusts may be imposed even in the absence of fraud or a confidential relationship where one party benefits from another’s mistake or misappropriated funds at the expense of a third party. For real estate litigators, Lee v. Wiand underscores the importance of tracing funds and focusing on equity rather than formalities.
Limits: Bona Fide Purchasers and Sale Proceeds
Equity, however, has limits. Florida courts will not impose a constructive trust on property held by a bona fide purchaser—someone who paid value without notice of a competing claim. This rule protects market stability and innocent buyers.xv Returning to our earlier example, if your partner sold the property before you discovered the misconduct and the buyer paid fair market value without notice of your $500,000 investment, the home itself is likely beyond reach. But the analysis does not end there. In such cases, courts can impose a constructive trust on the proceeds of the sale and on any assets acquired with those proceeds. Misappropriated funds can be traced into bank accounts, investment portfolios, or additional real estate. Any profits or appreciation derived from the wrongful use of the $500,000 may also be subject to the trust.
Can Constructive Trusts Apply to Money?
Although commonly associated with real property, constructive trusts may also apply to money—provided certain conditions are met. Courts are understandably cautious where traditional legal remedies, such as a money judgment followed by garnishment, are adequate.
A constructive trust becomes appropriate when funds have been wrongfully converted, commingled, or transformed into other assets and can be traced. In those circumstances, equity steps in to prevent a wrongdoer from insulating themselves through strategic transfers.xix
For example, in Carollo v. Carollo, a Florida court addressed a dispute over retirement account payments following a divorce.xx The husband received monthly distributions from an account deemed a marital asset.xxi To ensure the wife received her lawful share, the court imposed a constructive trust over the portion of the payments attributable to her interest.xxii The court reasoned that equitable relief was necessary to prevent the husband from retaining benefits that, in fairness, belonged to the wife.xxiii The decision illustrates how constructive trusts can be used to enforce property rights where money is involved and legal remedies are insufficient.xxiv
The Practical Lesson
When money or property has been wrongfully diverted—particularly in real estate transactions—time, tracing, and strategy matter. A constructive trust can be a decisive tool to recover not only the original investment, but also appreciation, profits, and substitute assets.
If any of these scenarios sound familiar, the first step is not resignation—it is informed legal advice. With the right factual development and equitable framing, a constructive trust can restore what was taken and prevent unjust enrichment where a simple damages award would fall short.
Jocelyne A. Macelloni is a partner and director of education at Barakat + Bossa PLLC. Board-certified by the Florida Bar in business litigation, Ms. Macelloni has spent more than a decade representing businesses and business owners in courts and arbitrations around the U.S., including in cross-border transactions and disputes that involve enforcing factoring companies’ and secured creditors’ rights. Her practice focuses on helping companies resolve complex disputes efficiently—by identifying winning strategies early, minimizing risk, and turning litigation into a controlled, strategic process rather than a reactive one. For assistance, Ms. Macelloni can be contacted at jmacelloni@b2b.legal.
Elizabeth M. Arritola, an attorney at Barakat + Bossa PLLC, handles real estate litigation and transactions. She advises businesses, investors, and property owners on contracts, title issues, property rights, and closings. Ms. Arritola can be reached at earritola@b2b.legal.
This post is intended to provide general information regarding constructive trusts and related equitable remedies. It does not constitute specific legal advice. For guidance tailored to your situation, please contact our team directly.
