A constructive trust is a remedy or solution a court may use to right a wrongful act or situation for which there may not otherwise be a legal remedy, such as money damages, or when the legal remedy would be inadequate. Because a constructive trust is based on a sense of fairness, equity, or what is right, it is known as an equitable remedy and a court that provides such a remedy is sometimes said to be sitting in equity. A constructive trust may also be known as an implied trust or involuntary trust.

The equitable remedy of a constructive trust is often used by courts when a person has possession or title to property that the person holding the property acquired by fraud—or when property obtained by fraud or theft is exchanged for other property or is given as a gift to another. Even though the person in possession of the property (motor vehicle, painting, home, etc.) may have title to it, courts recognize that the rightful owner from whom the property was stolen, embezzled, or fraudulently appropriated (taken) has a superior right and claim to it.

In these situations the court may apply or declare a constructive trust in favor of the rightful owner—giving title (ownership) of the wrongfully held property to the person or entity from whom it was stolen, embezzled, or fraudulently appropriated. The person or entity wrongfully holding the property is known as a constructive trustee and is required to turn the property over to the constructive beneficiary (the rightful owner).

Because a constructive trust is not an actual, written trust it is known as a legal fiction—created by courts to do equity.

In South Dakota, as in other jurisdictions, a constructive trust is an equitable remedy that courts may impose to address situations where legal remedies, such as monetary damages, are inadequate or unavailable. This remedy is typically used when someone has wrongfully obtained or retained property through fraud, theft, or other improper means. The court, sitting in equity, can declare a constructive trust to prevent unjust enrichment by transferring title and ownership of the property in question back to the rightful owner. The individual who is in possession of the property under such circumstances is deemed a 'constructive trustee' and is obligated to return the property to the 'constructive beneficiary,' who is the party that was wronged. South Dakota courts will use this remedy to uphold principles of fairness and justice, ensuring that the rightful owner's claim to the property is honored, despite the absence of a formal trust document. This legal fiction is created by the court to correct a situation where the title of the property does not reflect its equitable ownership.