When one individual provides funds for the acquisition of property, but the legal title is held by another, a unique equitable relationship can arise. This situation often occurs in family contexts or close relationships where one party might not qualify for a mortgage or prefers to keep their name off the title for various reasons. For instance, a parent might finance a home purchase for a child, with the title registered solely in the child’s name. In such cases, equity presumes an intention to create a trust, where the legal owner holds the property for the benefit of the individual who provided the purchase money. This arrangement effectively creates a beneficial ownership for the contributor, even though legal ownership rests elsewhere.
This equitable remedy serves as a vital protection against unjust enrichment, ensuring that the person who furnished the purchase funds retains an interest in the property, proportional to their contribution. Historically, this doctrine played a crucial role in safeguarding the financial interests of individuals who, for various social or legal reasons, couldn’t hold property in their own names. It continues to be a relevant legal tool today, offering a framework for resolving property disputes and upholding fairness in ownership arrangements. Its existence underscores the distinction between legal and beneficial ownership, highlighting how equity can intervene to prevent inequitable outcomes.
