sec.78Particular loans by trustee not in breach of trust

sec.78 Particular loans by trustee not in breach of trust

This section applies if a trustee lends trust funds on the security of property. The trustee is not in breach of trust only because of the comparison of the amount of the loan with the value of the property when the loan was made if— it appears to the court that— in making the loan, the trustee was acting on an independent valuation of the property; and the amount of the loan was not more than two-thirds of the value of the property stated in the independent valuation; and the loan was made in reliance on the independent valuation; or the trustee is insured by a prescribed insurer against all loss that may arise because of the borrower’s default. For this section, a valuation of a property made by a person is an independent valuation of the property if the trustee— instructed and employed the person, independently of any owner of the property, to make the valuation; and reasonably believed the person was competent to make the valuation. In this section— prescribed insurer means an entity, prescribed by regulation, that carries on the business of insurance. (sec.78-ssec.1) This section applies if a trustee lends trust funds on the security of property. (sec.78-ssec.2) The trustee is not in breach of trust only because of the comparison of the amount of the loan with the value of the property when the loan was made if— it appears to the court that— in making the loan, the trustee was acting on an independent valuation of the property; and the amount of the loan was not more than two-thirds of the value of the property stated in the independent valuation; and the loan was made in reliance on the independent valuation; or the trustee is insured by a prescribed insurer against all loss that may arise because of the borrower’s default. (sec.78-ssec.3) For this section, a valuation of a property made by a person is an independent valuation of the property if the trustee— instructed and employed the person, independently of any owner of the property, to make the valuation; and reasonably believed the person was competent to make the valuation. (sec.78-ssec.4) In this section— prescribed insurer means an entity, prescribed by regulation, that carries on the business of insurance.

• (a) it appears to the court that— (i) in making the loan, the trustee was acting on an independent valuation of the property; and (ii) the amount of the loan was not more than two-thirds of the value of the property stated in the independent valuation; and (iii) the loan was made in reliance on the independent valuation; or
• (i) in making the loan, the trustee was acting on an independent valuation of the property; and
• (ii) the amount of the loan was not more than two-thirds of the value of the property stated in the independent valuation; and
• (iii) the loan was made in reliance on the independent valuation; or