Solicitors Certificates

---

A solicitor’s certificate, also known as a guarantor’s certificate, is a document issued by a lawyer confirming that a guarantor has received independent legal advice before signing a loan guarantee.

Lenders commonly require a solicitor’s certificate to ensure the guarantor understands the legal risks, obligations, and consequences of guaranteeing a loan. This requirement applies to both commercial loans and some residential or family-backed loans.

A solicitor’s or guarantor’s certificate is usually required where:

• A lender requires a personal guarantee as a condition of a loan.
• Directors guarantee loans for company or trust borrowers.
• Family members guarantee loans for relatives.
• Commercial or business loans involve increased financial risk.
   

In these situations, lenders require guarantors to obtain independent legal advice before loan funds are advanced.

Lenders require a solicitor’s certificate to confirm that:

• The guarantor has received independent legal advice.
• The risks of providing a loan guarantee have been clearly explained.
• The guarantor understands their legal obligations.
• The guarantee has been signed freely and voluntarily.
   

This process protects the lender by confirming the enforceability of the guarantee and the guarantor’s liability.

A loan guarantor agrees to repay the loan if the borrower defaults under the loan agreement. If there are multiple guarantors, they are often jointly and severally liable, meaning each guarantor can be held responsible for the full debt.

A guarantor may be liable for:

• The outstanding loan balance.
• Penalty interest.
• Enforcement costs.
• Legal fees incurred by the lender.
   

Because of this exposure, obtaining legal advice before signing a guarantee is essential.

A limited guarantee restricts a guarantor’s liability to a specific dollar amount. Depending on the lender and loan structure, limited guarantees may be available and should be negotiated during the loan application process.

If you are providing a guarantee, requesting a limited guarantee can significantly reduce your financial risk.

Where a loan is secured by a mortgage over property, the lender will generally enforce its security first through a mortgagee sale. However, if the sale proceeds do not fully repay the loan (including interest and legal costs), the guarantor will be responsible for any shortfall.

For this reason, guarantors should carefully consider the loan amount, property value, and overall risk before signing a guarantee.

To obtain a solicitor’s certificate, you must:

1. Provide your lawyer with copies of the loan and guarantee documents.
2. Attend a consultation to receive independent legal advice.
3. Provide 100 points of identification.
4. Sign the guarantee in the presence of the solicitor.
    

Once the solicitor is satisfied that you understand the nature and effect of the guarantee, they will issue a solicitor’s or guarantor’s certificate for your lender.

Please note that solicitors provide legal advice only, not financial advice.

Our firm regularly assists borrowers and guarantors with independent legal advice for loan guarantees, including commercial loans, director guarantees, and family guarantees. We also assist conveyancing clients who require a solicitor’s certificate as part of their transaction.