Jersey clarifies secured creditors’ statutory priority over trustee liens

Jersey has strengthened its trust law framework by confirming that secured creditors take priority over trustee liens. 

The amendment to the Trusts (Jersey) Law 1984 resolves a long-standing uncertainty highlighted by the Privy Council in Equity Trust (Jersey) Ltd v Halabi [2022] UKPC 36 (Halabi) and provides clearer protection for lenders to Jersey trusts, including Jersey Property Unit Trusts (JPUTs).

Jersey’s trust framework and why the issue arose

Jersey, with its modern and comprehensive statutory framework, is a well-established jurisdiction for trust structures and is widely used in real estate transactions through JPUTs. Lenders take security over units in a JPUT, in the same way as shares in a company.  

A central feature of Jersey trust law is that trustees hold a lien over trust assets, allowing them to recover costs and liabilities incurred while acting as a trustee. In Halabi, the Judicial Committee of the Privy Council: 

• clarified the nature and scope of that lien 
• confirmed that current and former trustees rank equally among themselves when a trust is insolvent 

However, the Privy Council did not determine how a trustee’s lien should rank against claims from secured creditors. It noted that “the question of priority” was “potentially important” and should be considered only after being discussed within Jersey’s lower courts first.  

This left lenders uncertain of whether a trustee could outrank a secured creditor over the same assets.  

Read more about the Privy Council’s Halabi decision in our article: Privy Council provides important clarification of the rights of current and former trustees

For further information on JPUTs, read our article: JPUT financing - security, structure and enforcement. Or, download our guide: A guide to Jersey Property Unit Trusts 

Why clarity was needed   

In practice, to manage this risk, lenders to Jersey trusts would often require the trustee to agree contractually that their lien would rank behind the secured creditors. This approach, however, could not bind former trustees whose liens continued to exist, but who were not party to the financing. 

The lack of statutory certainty created additional negotiation and documentation burdens – which typically was not practical – and, more importantly, left lenders exposed to potential priority disputes in an insolvency.

Legislative amendment: a statutory clarification

The introduction of the new Trusts (Jersey) Amendment Law 2026 (the Jersey Trusts Amendment Law), which came into force on 20 March 2026, has now answered this question beyond doubt.  

Article 43A (4) and (5) confirms that: 

• a secured creditor’s interests take priority over the lien of any current or former trustee, unless the secured creditor expressly agrees otherwise agrees 
• this priority applies regardless of whether the security is granted under Jersey or foreign law 

This change closes the gap left by Halabi and places the priority of secured creditors on a firm statutory footing. 

For more information on the Jersey Trusts Amendment Law, read our article: The Trusts (Jersey) Amendment Law 2026 - a welcome update 

What this means for lenders and trustees

For lenders 

• Clear statutory priority reduces the risk of trustee liens taking precedence 
• Negotiations can be streamlined, with less need for contractual subordination arrangements 
• Security over JPUT units becomes more predictable and lender-friendly 

For trustees 

• Greater clarity on how liens operate alongside secured interests 
• Reduced scope for disputes between trustees and secured creditors in an insolvency 
• Consistency when transitioning between past and present trustees  

Jersey: a creditor-friendly jurisdiction 

This amendment provides welcome certainty for secured creditors of Jersey trusts and avoids the need for ongoing judicial interpretation.  

It further highlights Jersey's commitment to taking decisive, forward-thinking action to ensure that it provides a robust, certain and pragmatic framework for creditors looking to lend to Jersey trusts. 

How Ogier can help

For more information on these changes to the Jersey Trusts Law or on financing to JPUTs, reach out to a member of our expert team.

As a market‑leading firm in Jersey real estate finance, Ogier has extensive experience advising on the establishment, financing and enforcement of JPUT structures. Our team regularly acts for major UK and international lenders, ensuring security packages are robust, SIJL‑compliant and aligned with commercial expectations. 

Ogier’s Trust Advisory Group offers specialised expertise and a dedication to excellence. Our highly skilled experts are adept at navigating the complexities of trust law across multiple jurisdictions, ensuring our clients receive the highest standard of service and advice. With a comprehensive understanding of the offshore trusts' framework and the practical implications of recent developments, we provide tailored solutions to meet your unique needs.

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Disclaimer

This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.

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