Independent legal advice for Mortgages
At SettleHub, we provide you independent legal advice keeping you fully aware of your rights and obligations as a guarantor to a loan. In issuing Solicitor's certificates, our experts will carefully analyze your loan agreement guiding you through, to understand the nature and consequences of your guarantee.
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When do you need Independent Legal Advice?
When do you need Independent Legal Advice?
In obtaining a loan, a lender may insist that either you as the borrower or a third party on your behalf guarantees the repayment of the loan. Should such a request be made, the lender will insist that the guarantor obtains independent legal advice, to ensure that the guarantor is fully aware of the legal consequences of the guarantee they are providing. This step can be very important in ensuring that the loan is admissible, as a loan may be struck down where a party was “unduly influenced” to become a guarantor and did not receive independent legal advice.
If such a request is made, you must provide the lender with a Solicitor’s Certificate, attesting that you have received independent legal advice.
When could you be a guarantor to a loan?
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Guaranteeing a loan taken by a family member or business associate
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A child, a sibling or a business associate may be looking to obtain a loan, and the lender may seek additional security in the form of a guarantee.
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Guaranteeing a commercial loan obtained for business purposes
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In obtaining finance for commercial purposes, the lender may seek that the Director provides a personal guarantee over the finances. This is common practice when the borrower is a corporate entity.
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In some instances, the spouse of the director may also need to provide a guarantee, particularly where the family home or another asset owned by the couple is pledged as security for the loan.
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Obtaining private lending for property developments
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If you are a small-scale developer and are seeking to obtain short term funding from a private lender, you as an individual, will often be asked to guarantee the repayment of the loan personally.
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This is because these types of loans can only be provided to companies and not individuals. Therefore, in order to protect their interests, lenders will often seek that you as the director of the company provide a personal guarantee.
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Where your property is cross collateralized in the provision of a loan
What is a Solicitor’s Certificate?
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Solicitors must first review the loan contract and the guarantee terms prior to providing legal advice. It is important that you provide these documents at your earliest convenience, as often delays in obtaining the Solicitor’s Certificate will cause the lender to delay in settling the loan.
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Once you have been provided with independent advice, our solicitors will issue you with a certificate attesting to this and that you accept the risks associated with the guarantee.
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Guaranteeing a loan can be an extremely risky endeavour. If you are considering guaranteeing a loan, contact us at SettleHub to receive expert advice that places you in the best position to make an informed decision.
FAQs on Independent Legal Advice
Find answers to commonly asked questions
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