Solicitors Certificates

---

A solicitor’s certificate, often referred to as a guarantor certificate, is a document issued by a lawyer that verifies a guarantor has received independent legal advice before agreeing to sign a loan guarantee. 

Lenders frequently require a solicitor's certificate to ensure the guarantor fully understands the legal risks, obligations, and potential consequences of guaranteeing a loan. This requirement is applicable to both commercial loans and certain residential or family-backed loans. 

When Is a Solicitor’s / Guarantor Certificate Required?  

A solicitor’s or guarantor certificate is typically necessary when:  

- A lender stipulates a personal guarantee as a loan condition.  

- Directors guarantee loans on behalf of company or trust borrowers.  

- Family members act as guarantors for loans taken by relatives.  

- Commercial or business loans present heightened financial risks.  

In these circumstances, lenders mandate that guarantors obtain independent legal advice prior to the disbursement of loan funds. 

Why Do Lenders Require a Solicitor’s Certificate?  

Lenders insist on a solicitor's certificate to verify that:  

- The guarantor has obtained independent legal advice.  

- The potential risks associated with providing a loan guarantee have been clearly communicated.  

- The guarantor comprehends their legal obligations.  

- The guarantee was signed freely and voluntarily.  

This procedure safeguards the lender by affirming the enforceability of the guarantee and the guarantor's liability. 

What Does It Mean to Be a Guarantor on a Loan?  

A loan guarantor commits to repaying the loan if the borrower defaults on their agreement. In cases with multiple guarantors, they are often jointly and severally liable, meaning each guarantor can be liable for the entire debt.  

A guarantor may be responsible for:  

- The outstanding loan balance.  

- Penalty interest.  

- Enforcement costs.  

- Legal fees incurred by the lender.  

Due to this potential exposure, obtaining independent legal advice before signing a guarantee is crucial. 

What Is a Limited Guarantee?  

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

If you are considering providing a guarantee, asking for a limited guarantee can significantly mitigate your financial risk. 

What If the Loan Is Secured by a Mortgage?  

In instances where a loan is secured by a mortgage on property, the lender will typically enforce its security through a mortgagee sale first. However, if the sale proceeds fail to cover the loan amount (including interest and legal fees), the guarantor will be liable for any shortfall.  

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

How Do I Get a Solicitor’s / Guarantor’s Certificate?  

To obtain a solicitor’s certificate, you must:  

- Provide your lawyer with copies of the loan and guarantee documents.  

- Attend a consultation to receive independent legal advice.  

- Present 100 points of identification.  

- Sign the guarantee in the presence of the solicitor.  

Once the solicitor confirms that you comprehend the nature and implications of the guarantee, they will issue a solicitor’s or guarantor certificate for your lender. 

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

Independent Legal Advice for Loan Guarantees  

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