Independent Legal Advice means impartial advice provided by an independent solicitor. The whole idea behind independent legal advice is to protect you from signing any document before you understand the risks of the transaction. Your independent advisor will have to sign a certificate confirming that they provided you with the relevant advice and that you signed the document in front of them without any signs that you were being forced into it.
Independent Legal Advice is commonly required in the following circumstances:
- Director’s Personal Guarantees (on Corporate loans and mortgages)
- Personal Guarantees (where an individual guarantees repayment of a loan made to someone else)
- 3rd Party Legal Mortgages (where the Borrower is not the same person as the person offering the lender security)
- Occupier’s Consent to a Mortgage
- Transfers of Equity
Furthermore, whilst this type of independent legal advice is normally a bank requirement, please do not underestimate the real need for this advice – it’s not a formality, nor just witnessing a signature. The House of Lords in Etridge has made clarification to the law on undue influence. To avoid the risk of being sued by a Guarantor/Surety because of undue influence can only be deflected by providing ILA to that person. Therefore, the Mortgage Lenders requires the Guarantor/Surety in a mortgage/loan to obtain ILA before the Guarantee/Surety is given.
The underlying principle is to ensure that the guarantor/surety clearly understands the transaction. Misbha Ali, a qualified Solicitor will meet with you in person, in the absence of the borrower, and discuss the following:
- The nature of the documents, and the financial risk you face if the borrower’s business fails, including the possibility of bankruptcy;
- The seriousness of the risks involved – with reference to the purpose, amount and terms of the new facility and whether you understand that other assets may be at risk to cover repayment if the business fails;
- The fact that the lender may alter the terms of the loan including increasing the amount borrowed without reference to you;
- Discussing whether you wish us to negotiate with the bank on the terms of the transaction (e.g. limitation on the amount borrowed);
- Explaining that you do have a choice on whether to sign the documentation.
- The proposed transaction will be explained in simple and non-technical language.
Our simple and transparent fixed fee charges are proportionate to the amount of time involved in advising you, and to the size of the loan. Our charges are as follows:
- Basic Fee – £450 plus VAT each
- Larger Loans/Agreements – £750.00 plus VAT
Contact our Independent Legal Advice solicitors in Ruislip, Middlesex.