What are constructive trusts and equitable liens?

A constructive trust and an equitable lien can be used to prevent unjust enrichment. Although there are technical differences, both can be very powerful remedies where a person has wrongfully taken your property, since you can prevent the wrongdoer, and the wrongdoer’s creditors, from keeping your property in the event of an insolvency.

In some cases, it is also possible to trace property and claim the fruits of the wrongdoer’s conduct. For example, if the wrongdoer misappropriates your 100 shares of IBM stock, then worth $5,000, and quickly sells the stock and uses the $5,000 to buy shares of a “high-flyer” that are now worth $25,000, using the remedies of constructive trust or equitable lien might enable you to recover the $25,000 in stock, instead of the ordinary compensatory damages of $5,000 (the value of the property at the time it was taken) plus interest.

For further information on constructive trusts, see Trusts.