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Multiple Choice

Which trust remedy is used to prevent unjust enrichment when title is in one person's name but the purchase price was paid by another?

Purchase money resulting trust explains this situation: when the property is bought with someone else’s funds but the title is in another person’s name, the law treats the payer as having an equitable interest in the property. The payer is presumed to hold the beneficial ownership for their own benefit, up to the amount they paid, and the person in whose name the title sits holds the legal title as a trustee for the payer. This arrangement prevents the other party from unjustly benefitting from the purchase without contributing to the price. Equitable lien, by contrast, would create a security claim on the property for the amount paid rather than recognizing an ownership interest. A constructive trust arises to prevent unjust enrichment in scenarios involving wrongdoing or improper acquisition. A general resulting trust could apply in other transfers with no clear payment basis, but the purchase money variant is the precise remedy when the purchase price is paid by someone other than the title holder.

Purchase money resulting trust explains this situation: when the property is bought with someone else’s funds but the title is in another person’s name, the law treats the payer as having an equitable interest in the property. The payer is presumed to hold the beneficial ownership for their own benefit, up to the amount they paid, and the person in whose name the title sits holds the legal title as a trustee for the payer. This arrangement prevents the other party from unjustly benefitting from the purchase without contributing to the price.

Equitable lien, by contrast, would create a security claim on the property for the amount paid rather than recognizing an ownership interest. A constructive trust arises to prevent unjust enrichment in scenarios involving wrongdoing or improper acquisition. A general resulting trust could apply in other transfers with no clear payment basis, but the purchase money variant is the precise remedy when the purchase price is paid by someone other than the title holder.