Purchase Money Resulting Trusts Texas | Houston Lawyers Abogados

This comes from Haynes v. Molina, No. 01-19-00917-CV, 2021 WL 4155822, at *6 (Tex. App.—Houston [1st Dist.] Sept. 14, 2021, pet. denied):

It has long been the law in Texas that “[w]hen title to property is taken in the name of someone other than the person who advances the purchase price, a resulting trust is created in favor of the payor.” Tricentrol Oil Trading, Inc. v. Annesley, 809 S.W.2d 218, 220 (Tex. 1991); Nolana Dev. Ass’n v. Corsi, 682 S.W.2d 246, 250 (Tex. 1984); Cohrs v. Scott, 338 S.W.2d 127, 130 (Tex. 1960); Morrison v. Farmer, 213 S.W.2d 813, 815 (Tex. 1948); Tarpley v. Poage’s Adm’r, 2 Tex. 139, 150 (Tex. 1847) (“This [purchase money resulting trust] doctrine, according to Mr. Justice Story, has its ‘origin in the natural presumption, in the absence of all rebutting circumstances, that he who supplies the money means the purchase to be for his own benefit, rather than that of another, and that the conveyance in the name of another is a matter of arrangement and convenience between the parties for collateral purposes.’ ”) (citations omitted). A thousand years of Anglo-French jurisprudence has brought us to this point. See G. Bogert, The Law of Trusts & Trustees § 454 (June 2020 Update).

Section 454, “The purchase money resulting trust” states:

Hundreds of litigated cases attest that it is a common event for one person to pay the price of property and to direct that the conveyance run to another…. Taking into consideration the usual human desire to obtain something for value and the relative infrequency of gifts, the courts have held that the events outlined above normally show an intent on the part of the payor of the price to get the benefit of the property bought. Gifts are out of the ordinary course. The obtaining of property or services in return for money paid is the normal expectation.

These purchase money transactions first arose in England in the [M]iddle [A]ges, when the holding of land to uses was a very common practice, and when secret uses were numerous. It was easy to infer that the payor desired to follow the common usage of having the land held to uses, and that he (the payor of the price) was to be the beneficiary of the use. Modern courts have not felt that altered social or economic customs warranted a change from an inference of a trust to an inference of a gift. While trusts may not be as common nowadays as were uses of land in England in the [M]iddle [A]ges, nevertheless they are sufficiently numerous to make them natural devices for property holding.

The courts of equity have therefore established a doctrine that normally the payor of the purchase price of property is entitled to be decreed the beneficiary of a trust where the conveyance was absolute and was made to another with the consent of the payor. Id.

A purchase money resulting trust “arises by operation of law when title is conveyed to one person but the purchase price or a portion thereof is paid by another.” Cohrs, 338 S.W.2d at 130. “The parties are presumed to have intended that the grantee hold title to the use of him who paid the purchase price and whom equity deems to be the true owner.” Id. “The trust arises out of the transaction and must arise at the time when the title passes.” Id. (citing Morrison, 213 S.W.2d at 815); Tolle v. Sawtelle, 246 S.W.2d 916, 919 (Tex. Civ. App.—Eastland 1952, writ ref’d) (purchase money resulting trust arises out of transaction by which property is purchased; later agreements cannot create a purchase money resulting trust).

A party who provides all or a portion of the purchase price acquires equitable title when the deed is executed. See Hellmann v. Circle C Properties I, Ltd., No. 04-03-00217-CV, 2003 WL 22897220, at *2 (Tex. App.—San Antonio Dec. 10, 2003, pet. denied) (“The creation of the resulting trust in favor of All [who provided the purchase price] meant that Alejos [record title holder] held bare legal title as a result of the deed while equitable title remained in AII.”); cf. Smithsonian Inst. v. Meech, 169 U.S. 398, 406–07 (1898) (holding that using parol evidence to prove the existence of a purchase money resulting trust is expressly in accord with the statute of frauds); Bogert, supra, § 454 (explaining that statute of frauds does not apply to purchase money resulting trust because purchase–money beneficiary “acquires at once a vested interest”).

A party’s equitable ownership arising under a purchase money resulting trust “extends to the proportion that her contribution bears to the total price.” Williams v. Robinson, No. 12-08-00260-CV, 2009 WL 2356268, at *4 (Tex. App.—Tyler July 31, 2009, no pet.) (mem. op.) (citing first, San Antonio Loan & Trust Co. v. Hamilton, 283 S.W.2d 19, 28 (1955), then citing, Wright v. Wright, 132 S.W.2d 847, 850 (Comm’n App. 1939), and then citing, Restatement (Second) Trusts § 454 (1959)); see Baylor v. Hopf, 642, 17 S.W. 230, 231 (1891) (holding that plaintiff’s provision of partial consideration for purchase of property entitled her to 28% ownership interest in the land).

The doctrine of resulting trust prevents unjust enrichment of the person in whom legal title rests. Nolana Dev. Ass’n, 682 S.W.2d at 250. The holder of equitable title is considered the real owner, and the person vested with legal title is considered to hold the property for the benefit of the equitable-title holder.² Eagle Oil & Gas Co., 619 S.W.3d at 706. A party holding equitable title to a house has standing to sue for damage to the house. See Starr v. A.J. Struss & Co., No. 01-14-00702-CV, 2015 WL 4139028, at *4–5 (Tex. App.—Houston [1st Dist.] July 9, 2015, no pet.) (mem. op.) (holding that evidence that plaintiff received equitable title by virtue of parol gift of house defeated challenge to plaintiff’s standing to sue for damages due to allegedly faulty installation of air conditioning system).

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