Glossary
Corporate trustee
A corporate trustee is a company that acts as trustee of a trust, such as a family trust or SMSF. The company holds legal title and enters into contracts, including loans, on behalf of the trust.
An example
A unit trust set up for a development has a company as its trustee. The construction loan is made to the company in its capacity as trustee, and its directors give personal guarantees.
Why it matters
Lenders review both the company records and the trust deed. They will want to know who the directors and shareholders are and will often require guarantees from them.
Points to check
Check the trust deed and the company's constitution to confirm the trustee has power to borrow and give security. Lenders usually ask for both documents and for guarantees from the directors. Make sure the company's details on ASIC's register are current, including directors and registered address. If the trustee changes, the lender and the land titles office may need to be notified, and duty can sometimes apply, so get advice before changing trustees.