Legal Definitions - aliquot-part rule

The aliquot-part rule is a legal principle that courts use when determining whether a "resulting trust" should be established. A resulting trust is a legal arrangement where one person holds the legal title to property, but a court decides that another person is the true beneficial owner, often because they contributed funds to its purchase without their name appearing on the title.

Under the aliquot-part rule, for a court to declare that someone who contributed money to buy property is a beneficial owner, that person must have intended, at the time of the purchase, to acquire a specific, measurable fractional share of the property's ownership. Simply contributing funds without a clear intent to own a defined portion is generally not enough to establish a resulting trust under this rule.

Here are some examples to illustrate this concept:

• Real Estate Investment: Sarah and Emily, two friends, decide to purchase a rental property together. Sarah contributes 70% of the down payment and Emily contributes 30%. For convenience, only Sarah's name is placed on the property deed. They have a clear understanding and agreement that Sarah owns 70% of the property and Emily owns 30%. If Sarah later tries to claim sole ownership, Emily could invoke the aliquot-part rule. Because Emily contributed a specific, measurable fraction (30%) of the purchase price with the clear intent to own that same fraction of the property, a court could declare a resulting trust, recognizing her beneficial ownership of 30% of the property.
• Business Partnership: David wants to start a small consulting business, but he needs initial capital. His sister, Lisa, provides $50,000, which represents exactly one-quarter of the total startup funds required, with the explicit understanding that she would own one-quarter of the business. David registers the business solely in his name. If the business becomes highly successful and David later denies Lisa's ownership stake, Lisa could argue for a resulting trust based on the aliquot-part rule. Her contribution of a specific, measurable fraction (one-fourth) of the initial investment, coupled with the intent to own that same fraction of the business, would support her claim for beneficial ownership.
• Joint Purchase of a Collectible: Mark and his cousin, Alex, are avid collectors and decide to jointly purchase a rare comic book. Mark pays for two-thirds of the comic book's price, and Alex pays for one-third. They agree that Mark will keep the comic book in his secure display case, but both understand they own it jointly in proportion to their contributions. The purchase receipt is only in Alex's name. If Alex later attempts to sell the comic book and claims it is entirely his, Mark could use the aliquot-part rule to assert his ownership. His contribution of a specific two-thirds of the purchase price, combined with the clear intent to own two-thirds of the comic book, would allow a court to recognize his beneficial ownership of that specific fraction.