Parents wished to purchase a home that was to become the subject of the instant litigation. Defendant's
Question:
Parents wished to purchase a home that was to become the subject of the instant litigation. Defendant's parents were fully able to purchase the home through conventional financing. Defendant, a veteran, was eligible for GI loan financing. He urged his parents to let him use that method to purchase the property. Since only he, and not his parents, was eligible for the GI loan, title was taken in Defendant's name. But it was fully understood by Defendant and his parents that the latter would be the actual and beneficial owners of the property.
The Parents paid into escrow the entire amount necessary to close the transaction. Plaintiff (mother) and her husband moved onto the property in February 1977. Shortly thereafter, Defendant borrowed from his parents the $7,500 that they had planned to use as the down payment to purchase the property. He used the money, an interest-free loan, for real estate investments.
Payments on the GI loan amounted to $200 a month. The parents sent monthly checks in that amount to Defendant, who made the actual payments to the lending institution. This arrangement continued until shortly after the father's death, in March 1979.
After that, Plaintiff's sole income was from Social Security. She agreed with Defendant that she would credit him with $200 a month toward his personal loan, and that he would continue to make the monthly payments on the GI loan.
From the beginning, both parents and, later, Plaintiff alone, paid all of the costs associated with maintenance of the home. And almost fromthe beginning, they pressed Defendant to transfer title to them. He responded that he could not do so until six months after the purchase. He did not transfer title then, or at any time thereafter, despite his mother's repeated entreaties.
In May 1979, Plaintiff discussed with Defendant her plans to remodel the garage of the home into an apartment, which she could rent in order to increase her income. Defendant told her that the property was her home, and she could do with it as she wished. Plaintiff then spent $5,500 of her funds to convert the garage into an apartment.
In 1981, Defendant separated from his wife and moved into the property, paying no rent. In doing so, he gave no indication that he considered himself to be the owner of the property.
Some three years later, in 1984, Defendant told his mother that he was going to sell the house and that she would have to move. She declined to do so, and again asked Defendant to transfer title over to her. He refused, and Plaintiff brought this suit for declaration of a resulting trust and for ancillary relief.
Plaintiff argues that a resulting trust is presumed in this instance. Civil Code section 853 fn. 1 provides: "When a transfer of real property is made to one person, and the consideration therefor is paid by or for another, a trust is presumed to result in favor of the person by or for whom such payment is made." The trust that is "presumed to result" from this situation is termed a "resulting trust"; its purpose is to enforce the intentions of the parties. It is distinguished from a constructive trust, which is typically imposed to rectify fraudulent behavior. Clear and convincing proof is required to support a declaration that a resulting trust exists.
Defendant's theory in the trial court was that the parties intended that he own the property, but that his parents could live there during their lifetime, subject to making payments on the home. In effect, he argued that he was to own the property subject to a conditional life estate in favor of his parents.
- As a member of the jury, based on the evidence provided above, what party is best supported by governing law? Please provide the basis of law and the supporting facts to support your answer.
- What facts, if different, would change your mind as juror as to the outcome of this trial?