TRUSTEE ACT 1925 - SECT 39A Application of income by trustee-mortgagee in possession

TRUSTEE ACT 1925 - SECT 39A

39A Application of income by trustee-mortgagee in possession

(1) In any case in which a trustee is entitled whether severally or as a co-mortgagee to a debt secured by a mortgage of land in trust as to the whole or part of such debt for persons by way of succession, and such trustee is at the commencement of the Conveyancing, Trustee and Probate (Amendment) Act 1938 or at any time after such commencement becomes mortgagee in possession of the mortgaged land, the trustee shall apply the net income of the mortgaged land received by the trustee after such commencement or after the trustee becomes mortgagee in possession, as the case may be, as follows, namely--

(a) in discharge of all rents, taxes, rates and outgoings affecting the mortgaged land,

(b) in payment of the premiums on any insurances properly payable under the mortgage instrument or under the Conveyancing Act 1919 and the cost of executing necessary repairs,

(c) in keeping down all annual sums or other payments and the interest on all principal sums having priority to the mortgagee in right whereof the trustee is in possession.

Subject to the rights of the mortgagor such trustee shall hold the residue of the income so received by the trustee upon the trusts to which such mortgage debt is subject.

(2) The rents, taxes, charges, outgoings, premiums, costs, annual sums, payments and interest so to be discharged, kept down and paid shall be those accruing due--

(a) after the commencement of the Conveyancing, Trustee and Probate (Amendment) Act 1938 , where the trustee is in possession of the mortgaged land at such commencement,

(b) after the date of possession by the trustee, where the entry into possession is after the commencement of the Conveyancing, Trustee and Probate (Amendment) Act 1938 --

Provided that if at the commencement of the Conveyancing, Trustee and Probate (Amendment) Act 1938 or on the date of possession by the trustee, as the case may be, any rents, taxes, rates, outgoings, annual sums, payments, interest or premiums mentioned in paragraphs (a), (b), or (c) of subsection (1) were or are due and unpaid, and such of those rents, taxes, rates, outgoings, annual sums, payments and premiums as are periodical payments, were payable wholly or in part in respect of any period subsequent to such commencement or to such date of possession, as the case may be, then such lastmentioned rents, taxes, rates, outgoings, annual sums, payments and premiums shall, for the purpose of this section, be considered as accruing from day to day and shall be apportionable in respect of time accordingly.

(3) On the recovery of the moneys secured by the mortgage whether in whole or in part, and whether by repayment or on realisation of the security or otherwise, such part of the income applied by the trustee in the payments specified in paragraphs (a), (b), and (c) of subsection (1) as would otherwise have been payable as interest to the person entitled to the interest of the mortgage debts shall as between the persons respectively entitled to the income and corpus of the mortgage debt be deemed to be arrears of interest and the amount received by the trustee shall be apportioned accordingly.

(4) Notwithstanding anything in this section contained, the trustee may, if in the administration of the trust the trustee deems it necessary so to do, apply income of the mortgaged property received by the trustee after the commencement of the Conveyancing, Trustee and Probate (Amendment) Act 1938 in payment of any rents, taxes, rates, outgoings, premiums, costs, annual sums, payments and interest affecting the mortgaged land other than those specified in subsection (2) but the person entitled to the interest on the mortgage debt shall be entitled to recoupment out of the capital of the mortgage debt of all payments made by the trustee under the authority conferred by this subsection.