Australia: Trustees selling trust property in NSW – tips and traps

Being appointed as a trustee carries great responsibilities. A trustee is appointed in the trust instrument (such as a trust deed or a will) or by the Court. Under the Trustee Act 1925 (the Act), a trustee by definition includes a Court appointed executor or administrator.

In order to carry out the trustee's duties, the trustee has certain powers and discretion as to the exercise of those powers. It is usually here that the trustee may face a difficult situation where a dissatisfied beneficiary objects to what the trustee has done or is about to do. This can even lead to a beneficiary making a claim for breach of trust and requesting the trustee to be removed from its office.

The purpose of this article is to provide an overview on trustee powers and responsibilities in relation to the sale of real estate in NSW as well as provide some risk management strategies.


A trustee can be a natural person or a company, but it must have capacity to hold and deal with property. Companies should check that their constitutional documents allow them this capacity.

Minors cannot act as trustees in NSW.

If a trustee is unable, unfit or unwilling to act, a new trustee may be appointed according to the provisions of the trust instrument. If there is no such provision in the instrument, a new trustee may be appointed by the Court under section 6 of the Act.


Before a trustee can exercise a power of sale, it must satisfy itself that it has that power. Trustees do not have a general power to sell the trust's property because of their paramount obligation to preserve trust property.

The power to sell can arise from the trust instrument, statute (section 38 of the Act) or a Court order.

The trustee must exercise the power according to the standard of care, diligence and skill a prudent person of business would exercise in managing the affairs of another person (section 14A of the Act).

The sale process

Before the property can be sold, it may require some work to be done on it. Trustees have the power to effect repairs and improvement of the property under sections 82 and 82A of the Act. However, the sale should not be delayed and must take place within a reasonable time for a fair and reasonable price.

The trustee must have the original Certificate of Title in respect of the property and the title must be in the trustee's name before the sale to the purchaser can be completed. If the original Certificate of Title is lost, the trustee must apply for a replacement with Land & Property Information and this may delay completion of the sale.

The trustee will need to engage a real estate agent to market the property and a solicitor to prepare the contract for sale and act on the conveyance. To ensure the property sells for fair market value and to avoid any breach of trust claim for not obtaining the best price possible, it is prudent to sell by a properly marketed public auction. If the property is sold by private treaty, the trustee should satisfy itself as to the purchase price by obtaining a valuation from a registered valuer to ensure the property is not sold below market value, which may then invite claims from the beneficiaries.

Throughout the sale process, the trustee must remember that its duty towards the beneficiaries is paramount and it must put the interests of the beneficiaries first (Cowan v Scargill [1985] 1 Ch 270 at 288).

Trustees should ensure that any money received from the proceeds of the sale are deposited into the trust bank account. Beneficiaries have the right to inspect trust accounts and documents and trustees must keep these up to date and ensure they are accurate (Hancock v Rinehart [2015] NSWSC 646 at [339]).


A trustee will only be accountable for its own acts, receipts, neglects or defaults and not for those of any other trustee, nor for any banker, broker or other person with whom any trust moneys or securities may be deposited unless any loss occurs through the trustee's own willful neglect or default (section 59(2) of the Act).

However, in Dalrymple v Melville (1932) 32 SR (NSW) 596 it was found that where an honest trustee allowed his fellow trustee (who was also a solicitor) to sell property and that trustee misappropriated the proceeds of the sale, the first trustee was not relieved of liability because it was his duty to safeguard the interests of the trust and he failed in this respect.

The court also has power to relieve the trustee from liability under section 85 of the Act, provided the trustee acted honestly, reasonably and ought to be excused.

Reimbursement and exoneration (but no remuneration)

Being a trustee can be a costly exercise. When selling a property, the trustee will incur legal costs, valuation costs and agent costs (amongst others).

Trustees have the right to be indemnified for costs and expenses which they incur as part of the proper administration of the relevant trust. This right arises either from the trust instrument itself, statute (see section 59(4) of the Act) or in equity (see Franknelly Nominees Pty Ltd v Abrugiato [2013] WASCA 285 at [212]). Any expenses must have been properly incurred in the course of exercising the trustee's duty, otherwise the indemnity may be reduced or completely denied to the trustee.

If the trustee is subsequently sued in its capacity as trustee, it is entitled to be indemnified in respect of its legal costs incurred in defending itself in the lawsuit (Wales v Wales (No 3) [2015] VSC 151).

A trustee cannot make any profit or borrow money from the trust unless the trust instrument allows it, it has been agreed with the beneficiaries or it has been ordered by the Court.


Trustees are allowed to request advice and directions from the court (section 63 of the Act). The court must determine what should be done in the best interests of the trust (Application by Mary Joy Cottee; Estate of Gwenyth Shirley Smith [2014] NSWSC 464 at [35]). A case example involved a person who had been appointed a trustee for sale by Court order pursuant to section 66G of the Conveyancing Act 1919 (NSW). The trustee sought advice as to whether he should complete a sale in circumstances where the persons beneficially entitled to the property requested that he terminate the contract and refund the deposit. Judicial advice was given that the trustee would be justified in completing the sale (Application of Richard Albarran; Harb v Harb [2010] NSWSC 1251).

Bartier Perry has a trusts/estates team which can advise trustees on the trust instrument and a property team which can assist with the sale (and purchase) of property.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.