In a 2010 case, a couple were cohabiting on a piece of real property, but were not married. They were romantically involved for 14 years and were engaged at one point, but postponed their wedding due to the plaintiff’s brother’s death. They lived with the plaintiff’s mother for about three years. During that time the defendant helped around the house and took care of the plaintiff’s brother. The plaintiff paid $600 in rent so that the defendant could save money for both of them and the defendant deposited the savings into a joint checking account that was in both of their names.
The pair decided to buy a house together in 1997. They found a house, and applied for a mortgage together. The plaintiff’s credit score kept them from qualifying for a loan jointly. The parties agreed to have the defendant to apply for a mortgage loan in his own name. He paid a down payment of $4500 from the joint checking account. The plaintiff paid him $3700 as a contribution towards the down payment.
The parties agreed the plaintiff couldn’t qualify for a mortgage so the parties would act as joint owners and she would pay him half of the mortgage and other expenses every month. They did not agree she was a tenant, but rather that she was a joint owner. The defendant promised that the plaintiff’s name would be put on the deed in the future and that they held the property in joint tenancy.
Both parties made improvements to the property with the help of their friends. The plaintiff’s mother’s friend installed the HVAC with the understanding the house was going to be jointly owned.
The plaintiff paid half of the mortgage, the construction loan and all other payments until the parties’ relationship deteriorated. In January 2007, they broke off their engagement, but stayed together as a couple and the plaintiff continued to make payments.
In May 2007, the defendant moved out of their shared bedroom and a few months later he ordered the plaintiff to vacate the property. He refused her request to divide the home’s equity and he refinanced, which took a portion of equity out of the house.
In October the plaintiff sued in circuit court, arguing his actions imposed a constructive trust, unjustly enriched him, constituted promissory estoppel and required the court to declare her one-half the owner. The defendant answered and denied liability.
The court held a two-day trial and found that the plaintiff had established the existence of a constructive trust as an equitable remedy for the unjust enrichment of the defendant. The court found that in cases where only one party has title to a property, a constructive trust should be imposed not only if there was fraud, but also where the circumstances made it inequitable for the party to retain title. The court also found that the defendant as the holder of legal title was the dominant party in a dominant relationship.
The judge explained that even if there were no confidential relationship between the parties, it would have found a constructive trust based on unjust enrichment to the defendant. It gave each part a half interest. It also appointed a trustee to transfer title into both of their names.
The defendant appealed, asking the appellate court whether the trial judge had erred in imposing a constructive trust and appointing a trustee. The appellate court explained that a constructive trust was a remedy that converted a legal title-holder into a trustee for somebody who should reap the benefits. If a confidential relationship was shown, a presumption arose that confidence was placed in the dominant party and the transaction arose as a result of undue influence and abuse of a confidential relationship. This shifts the burden to the defendant.
The boyfriend said that the constructive trust was a palimony action, which is not permitted in Maryland. Palimony applies as a form of support to a member of a couple, predicated on promises to marriage or sexual services. The court found that the plaintiff claim arose from financial contribution to a party, not from palimony. Moreover, the defendant had testified he told his girlfriend he would put her on the title, but privately never planned to do so. The girlfriend had clearly relied on that representation.
A major difference between marriage and cohabitation is related to how straightforwardly the court handles a split of property in the unfortunate event that the relationship ends. When dealing with sensitive and difficult family law issues, contact an experienced Maryland family law attorney for representation.
More Blogs:
Corporal Punishment in Maryland Family Law, Maryland Divorce Lawyer Blog, January 26, 2013
Untimely Objections in Maryland Family Law, Maryland Divorce Lawyer Blog, January 10, 2013