A recent media story of a former All Black great being a trustee of a rental property where a P lab was discovered highlights the risk to trustees responsible for trusts that hold properties.
Thursday, May 31st 2007, 11:16AM
by The Landlord
Mark Maxwell, author of a book on trusts entitled, Trusts – A Kiwi Sham? says while finding a P lab in a trust property you are trustee of might be rare, “there are many other risks that can see unsuspecting trustees paying thousands of dollars compensation back to the trusts they are responsible for”.
Risks could include lack of maintenance, leaky homes and properties being underinsured – or worse, not insured at all.
Maxwell suggests that if trustees do not have a robust property maintenance program in place, they could be at risk of personal financial loss.
Trustees have a fiduciary responsibility to the trust beneficiaries and the beneficiaries can sue any trustee found negligent in their duties. One of these duties is to protect trust assets, which includes insuring and maintaining them in the case of properties, and if it could be proved it was reasonable that they should have known about a particular risk, they could be in trouble.
Any trustees found negligent in a P lab case could be at risk of meeting any cost of clean up – potentially thousands of dollars – as well as compensating the trust for any loss in value of the property. Given a P lab discovery may be noted on a council LIM report, that loss could be considerable.
