What is a Solicitor’s Certificate or bank guarantee?

Many times when borrowing funds from a bank or guaranteeing a loan, particularly when there is a guarantor involved, the lender will require a Solicitor’s Certificate or Bank Guarantee to be signed.

We regularly receive phone calls from clients who advise that they “just need something signed in front of a lawyer”. This is mainly due to the information, or lack of information, received from the bank. The process, work involved and legal obligations have usually not been explained to the clients upon contacting our office. What the banks do not tell clients is that the solicitor is not just providing a signature, but rather a Solicitor’s Certificate of Independent Legal Advice. This advice is to protect you – our client.

In signing this certificate, the solicitor has to state that (amongst other things) that they believe that the guarantor or borrower understood the general nature and effect of the documents that were signed.

What we do:

• Carefully read the loan contract, mortgage and guarantee documents;
• Providing the client with a letter of advice in relation to the clauses of the loan contract, information regarding the interest rate, penalties, charges and defaults, an explanation of what the security property will be used for the loan and all other aspects of the loan including obligations, rights and enforcement;
• Explaining each person’s obligations if there is more than one borrower or guarantor as it is not always straight forward;
• Explore other avenues with you; and
• Explore avenues to reduce or limit your liability.Consequences of not getting proper legal advice:
• The borrower/ guarantor may not be fully aware that their own property can be used as security and sold if the borrower’s property is not enough to satisfy the debt on default;
• That the lender does not need to seek payment from the borrower before seeking payment from the guarantor/s.
• Unforeseen fees and charges payable to the bank or mortgage broker can be paid out of the loan funds leaving a shortfall;
• Being unaware of the interest rate that can be charged on the loan amount; and
• Being aware that the borrower may be able to borrow more money under the facility without your knowledge.As many of our clients have said, the advice on guarantee documents – or to obtain a solicitor’s certificate is the best money they have ever spent!

  Please give us a call on (03) 9707 1155 if you need “the signature of a solicitor”.