New South Wales Consolidated Acts

TRUSTEE ACT 1925 - SECT 18

18 Ratio of loan to value

(1) A trustee lending money on the security of any property on which the trustee can lawfully lend shall not be chargeable with breach of trust by reason only of the proportion borne by the amount of the loan to the value of the property at the time when the loan was made, provided that the loan was made in accordance with this section.

(2) In making the loan the trustee must have acted upon a report as to the value of the property made by a qualified valuer, instructed and employed by the trustee independently of any owner of the property.

(3) The amount of the loan must not exceed--

(a) two-thirds of the value of the property as stated in the report, or

(b) 95 per cent of the value of the property as stated in the report if--

(i) the repayment of the loan is insured under a contract of insurance issued by a prescribed insurer, and

(ii) the mortgagee is the assignee of the benefit of that contract of insurance.

(4) The loan must have been made under the advice of the valuer expressed in the report.

(5) This section extends to transfers of existing securities as well as to new securities.

(6) This section applies to investments made either before or after the commencement of this Act.

(7) In this section--

"prescribed insurer" means an insurer or an insurer of a class prescribed by the regulations.

"qualified valuer" means (subject to the regulations) a person who--

(a) has membership of the Australian Valuers Institute (other than associate or student membership), or

(b) has membership of the Australian Property Institute (other than student or provisional membership), acquired in connection with his or her occupation as a valuer, or

(c) has membership of the Royal Institution of Chartered Surveyors as a chartered valuer, or

(d) is of a class prescribed by the regulations.