Plain language law

New Zealand law explained for everyone

Trusts Act 2019

Trustees’ powers and indemnities - Trustees’ indemnities

88: Trustee’s indemnity for rent, covenant, or agreement under lease

You could also call this:

"Protection for trustees who pay rent or follow lease rules"

Illustration for Trusts Act 2019

If you are a trustee and you have to pay rent or follow rules in a lease, you have some protection. You can assign the lease to someone else if you pay what you owe up to that point and set aside money for future expenses. If you do this, you do not have to use more trust property to pay for future problems with the lease. You can give the rest of the trust property to the people who are supposed to get it, except for the money you set aside.

If you assign the lease and give out the trust property, you are not personally responsible for any later problems with the lease. This means you will not have to pay for something that happens after you assigned the lease. However, the person who leased the property to you can still try to get money from the people who received the trust property.

You can look at s 34 of the 1956 Act to compare it with this section. This section is about what happens when a trustee has to deal with a lease. It explains how you can protect yourself if you are a trustee and you have to pay rent or follow rules in a lease.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

This page was last updated on

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM7382997.

Topics:
Money and consumer rights > Banking and loansHousing and property > Renting
Previous

87: Trustee’s lien on insurance money for premiums, or

"Trustees can claim back insurance premiums they paid, plus interest, from insurance money"

Next

89: Protection of trustee in handing over personal property to life tenant, or

"Safeguarding the person managing property when they give it to someone for their lifetime"

Part 4Trustees’ powers and indemnities
Trustees’ indemnities

88Trustee’s indemnity for rent, covenant, or agreement under lease

  1. This section applies if a trustee is, for any reason, liable in relation to—

  2. any rent, covenant, or agreement reserved by or contained in a lease; or
    1. any indemnity given for any rent, covenant, or agreement mentioned in paragraph (a).

      1. The trustee may assign the lease to a person entitled to call for an assignment of the lease if the trustee—

      2. satisfies all liabilities under the lease that may have accrued, and been claimed, up to the date of the assignment; and
        1. if necessary, sets apart a fund that is enough to pay any future claim that may be made in relation to a fixed and ascertained amount that the lessee agreed to expend on the leased property (even though the time for expending the amount may not yet have arrived).

          1. If the trustee acts under subsection (2), the trustee—

          2. is not required to appropriate any further amount from the trust property to meet any future liability under the lease; and
            1. may distribute the remaining trust property, other than any fund set apart under subsection (2)(b), to the persons entitled to the trust property.

              1. A trustee who acts under subsection (2) and distributes the remaining trust property under subsection (3)(b) is not personally liable for any later claim under the lease.

              2. This section does not affect the right of the lessor, or a person deriving title under the lessor, to follow the trust property into the hands of the persons to whom it was distributed.

              Compare