MBE Rules · Remedies
Constructive Trust & Equitable Lien
Cal. Civ. Code § 2223-2224
The rule
A constructive trust arises where a person holding legal title to property would be unjustly enriched by retaining it; the court declares the wrongdoer a constructive trustee for the plaintiff. An equitable lien secures a claim against specific property where the plaintiff traces value into the property.
In plain English
A constructive trust is imposed by a court to prevent unjust enrichment when someone wrongfully holds property that rightfully belongs to another. An equitable lien, on the other hand, allows a plaintiff to claim a specific property to satisfy a debt or obligation when they can show that their value has been invested in that property.
Worked example
Alice gives Bob $50,000 to buy a house, but Bob instead uses the money to buy a car for himself. When Alice learns of this, she can seek a constructive trust on the car, as Bob would be unjustly enriched by retaining the funds. The court will declare Bob a constructive trustee for Alice, allowing her to reclaim her investment.
Memory hook
Don't let wrongdoers keep what isn't theirs; a constructive trust can reclaim your value!
The trap
Exams may present scenarios where students confuse the requirements for a constructive trust with those for an equitable lien, leading to incorrect conclusions about the appropriate remedy.
How examiners test it
Questions often involve fact patterns where one party has wrongfully obtained property, prompting candidates to identify whether a constructive trust or equitable lien is the appropriate remedy based on the details provided.
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