Resulting trusts: viable tools for litigating real property claims?

Key v. Trattmann, --- So.2d ----, 2007 WL 1517827 (Fla. 1st DCA May 25, 2007)

A common theme running through much trusts and estates litigation is the betrayal of confidences.  Be it among family members or erstwhile friends, notions of fairness -- not commercial imperatives -- often drive the litigation.  The linked-to case speaks to this point by providing an effective tool for successfully contesting title to real property on equitable grounds under a "resulting trust" theory.

Resulting Trusts

In the linked-to case "Mr. Key" purchased and maintained real property in Tallahassee with his own funds. In order to help "Mr. Trattmann" obtain U.S. citizenship, Mr. Key allowed the property to be titled in Mr. Trattmann's name, subject to Mr. Trattmann's promise to convey the property to him on demand.  Mr. Trattmann later denied the existence of this promise, and Mr. Key sued to obtain title.  The trial court granted summary judgment in Mr. Trattmann's favor based partly on two affirmative defenses: the claim was barred by (1) the statue of frauds and (2) the applicable statue of limitations.  In the linked-to opinion the 1st DCA reversed the trial court, and in the process provided an excellent litigation road map for counsel/parties finding themselves on either side of a resulting trust claim.

  • Florida law
As a starting point, the 1st DCA summarized the circumstances under which Florida courts may recognize the existence of a resulting trust:

A resulting trust arises where an express trust fails, in whole or in part; where the purposes of an express trust are fully accomplished, without exhausting the trust estate; or, of particular pertinence here, “‘where a person furnishes money to purchase property in the name of another, with both parties intending at the time that the legal title be held by the named grantee for the benefit of the unnamed purchaser of the property.’“ Steigman v. Danese, 502 So.2d 463, 467 (Fla. 1st DCA 1987) (quoting Steinhardt v. Steinhardt, 445 So.2d 352, 357-58 (Fla. 3d DCA 1984)), disapproved of on other grounds by Spohr v. Berryman, 589 So.2d 225, 228-29 (Fla.1991), and order vacated by In re Estate of Danese, 601 So.2d 570, 571 (Fla. 1st DCA 1992). See also F.J. Holmes Equip., Inc. v. Babcock Bldg. Supply, Inc., 553 So.2d 748, 749 (Fla. 5th DCA 1989) (“A resulting trust may arise in favor of one who furnishes money used to purchase property the legal title to which is taken in the name of another.”). A resulting trust can, indeed, be “founded on the presumed intention of the parties that the one furnishing the money should have the beneficial interest, while the other held the title for convenience or for a collateral purpose.” Frank v. Eeles, 13 So.2d 216, 218 (Fla.1943) (internal quotation marks and citation omitted). See also Restatement (Third) of Trusts § 7 cmt. c (2003).

  • Statute of Frauds: NOT applicable
The trial court found that even if a resulting trust had arisen, the plaintiff's claims were barred by Florida's statute of frauds because the promise to convey the real property alleged by the plaintiff was not in writing.  The 1st DCA rejected the trial court's ruling as follows:

The statute of frauds does not apply to resulting trusts . . . [b]ecause a resulting trust arises not ex contractu but by operation of law, the statute of frauds does not pertain. See, e.g., Williams v. Grogan, 100 So.2d 407, 410 (Fla.1958) (“A trust which is created by operation of law is not within the statute of frauds and may be proved by parol evidence.”); Stonley v. Moore, 851 So.2d 905, 906 (Fla. 3d DCA 2003) (reversing summary judgment entered on a claim seeking to establish a resulting or constructive trust where the trial court relied on the statute of frauds, because “‘resulting trusts involving real estate can be based on parol evidence’”) (quoting Zanakis v. Zanakis, 629 So.2d 181, 183 (Fla. 4th DCA 1993)).

  • Statute of Limitations: the clock starts ticking when the dispute is made known, NOT when the contested property is first purchased
In trust disputes, determining when the clock starts ticking for statute of limitations grounds can be tricky.  In fact, the Florida Bankers Association is currently proposing revisions to the current statute of limitations applicable to trust disputes (see here).


Although unclear from the opinion, the trial court apparently assumed that the cause of action arose at or about the time the property was first purchased.  The 1st DCA rejected that conclusion, making clear that under Florida law trust disputes do not accrue until the trustee actually repudiates the trust.

Applying a statute of limitations to a resulting trust,[FN5] the Fifth District held that the “beneficiary of a resulting trust is not bound to act until the trustee repudiates the trust or begins to hold the property adversely with knowledge on the part of the beneficiary.” Bradbury v. Fuller, 385 So.2d 7, 8 (Fla. 5th DCA 1980). See also Grable v. Nunez, 64 So.2d 154, 160 (Fla.1953) (“The statutes of limitations do not operate against a resulting trust until the trustee has disclaimed the trust and begins to hold adversely to the beneficial interest.”). Thus, assuming [as the trial court did that F.S. 95.11(3)(k) and (6)] applies, it would not have begun running until Mr. Trattmann refused to convey the property to Mr. Key.


FN5
. The rights of beneficiaries of resulting trusts to enforce their rights against the trustee or third persons are subject to the same rules regarding the doctrine of laches and statutes of limitations as apply in the case of express trusts. See § 98, and also compare §§ 96 and 97. The so-called doctrine of merger, which applies to express trusts (see § 69), also applies to resulting trusts.

Restatement (Third) of Trusts § 7 cmt. h (2003). See also supra note 1.

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