Guarantor Advice and Independent Solicitor’s Certificate

Guarantor Advice and Independent Solicitor’s Certificate

Often, Banks and other financial institutions will require home loan borrowers and guarantors to obtain independent legal advice.  At WN Legal we can provide you Guarantor Advice and an independent Solicitor’s Certificate to certify that our lawyers have provided you with independent legal advice regarding the loan agreement and the liabilities for the Guarantor.  

What is a Guarantee?

Depending on the type of loan, the Guarantee and the obligations for the Guarantor, may vary.  In general, what it entails is that the Guarantor will guarantee the loan.  What this means is that if a borrower fails to adhere to the obligations within the loan, and does not make the repayments on the loan, then the guarantor will be liable to pay back the outstanding amount, as well as any interests, fees/charges.

If the guarantor does not have the funds to pay this amount, the bank can sell their assets, which may include their cars, home and more (and the costs associated with this, will be added to the amount owing).  If selling all the assets does not cover the outstanding sum, then the guarantor will be responsible for any shortfall which may occur.

As such, before entering into a home loan as a guarantor we recommend that you contact WN Legal to understand your rights as a Guarantor and receive legal advice regarding the liabilities that you may face.

What is an Indemnity?

Usually Guarantees contain an indemnity clause.  This means that if the borrower’s obligation is unenforceable or if it becomes invalid, then the Guarantor will still be liable to pay the outstanding amount on the loan.  

Why am I required to obtain independent legal advice and an independent solicitor’s certificate?

Guarantor’s usually consist of parents, family members or spouses.  Many of whom are signing on, with no real benefit for the amount of risk that they undertake.   As such, banks and financial institutions want to ensure that Guarantors are fully aware of the implications and risks which are associated with becoming a Guarantor.

Accordingly, these institutions require a Guarantor to get independent legal advice and also independent financial advice.

What is the difference between independent legal advice and independent financial advice?

Independent financial advice is where you have received financial advice, independently from the other party.  Here you will be advised on the financial wisdom of the loan.  (ie they will look into your financial position and the documents to advise you on whether this is a good investment and whether you should act as a Guarantor or not)

At WN Legal we do not provide financial advice on the matter, and can only provide you with independent legal advice.   That is, we will explain to you:

  1. The mortgage document
  2. The Guarantee and indemnity documents

We make sure that you understand the documents and your liabilities before providing you with an independent solicitor’s certificate.

What types of Guarantees can we advise on?

At WN Legal we can advise on all types of guarantees including:

  1. Trustees providing personal Guarantees for a company
  2. Company directors providing personal Guarantees for a company
  3. Parents who are Guarantors on loans for their children
  4. Spouses who are Guarantors on loans to their partners

What is the process?

Firstly, WN Legal will obtain the relevant documents from you.  Upon reviewing the same, we will provide you with a reasonable fee for our services (obtaining the estimate is free).  We will then book in an appointment for you with one of our solicitors who will then go over the documents with you to ensure that you understand the documents and the implications and the risks involved.  Once this is done, we will provide you with an independent solicitor’s certificate.

What should I bring with me for my appointment?

Usually we will tell you what you need to bring with you for your appointment.  In general, we will need:

  • All of the loan documents that the lender has provided you with
  • Photo identification

I don’t understand English well, can I get an interpreter/translator?

Yes, we can, please call and arrange this with us.  We can arrange for a NAATI accredited Interpreters/translators to assist in interpretation.

What are the costs involved?

At WN Legal, we do not “bill by the hour” and render an expensive invoice upon completion of our legal services. We will provide a reasonable estimate once we look over your documents (to obtain this estimate is free) and endeavour to bill within the confines of our estimate, even if we are required to do extra work. At WN Legal, it is the quality of service and results that we pride ourselves on. Our Lawyers are passionate and client focused in helping you achieve excellent results without expending unnecessary legal costs.

Please do not hesitate to contact WN Legal if you require legal assistance in this area of law. Our Lawyer, Jun Khew Wong, has a broad range of experience in assisting his clients in in providing advice regarding guarantees.