Using the example of Sally and Bill, who are friends, a resulting trust can arise in two situations:
1 the gratuitous transfer of property from one person to the other. This is where Sally transfers her property to Bill. The title to Sally’s property is now in Bill’s name; yet, Bill did not give Sally any money for the property, so the transfer is referred to as gratuitous or without payment.
2 the joint contribution by two people to the acquisition of property, title to which is in the name of only one of them. In this case Sally and Bill both put $25,000 toward the purchase of a property; however, the property is only in Bill’s name.
In both examples above, Sally does not have any legal title to the property. In example one – she transferred the property into Bill’s name and in example two – the property was only registered in Bill’s name. As a result, if Sally and Bill part ways, Sally does not have legal title to the property.
If Bill does not want to provide Sally with her interest in the property, Sally could go to court and rely on equity. Equity allows the court to decide what is fair. Since Sally put money toward the property in both examples, the court could recognize her contribution and say that Bill is holding Sally’s interest in trust for her.
In the first example, the property would result or be transferred back to Sally even though the title is in Bill’s name. The court would recongize that Sally paid for the property and Bill paid nothing to acquire the property.
In the second example, Sally may be entitled to her 50% interest in the property as a result of her $25,000 contribution.
Because in both of the examples above, Sally does not have legal title, she must rely on a resulting trust to regain her interest in the property.
These are simple examples to illustrate the basics of resulting trusts, real life examples are normally much more complicated.