Solicitor's certificates for bank loans

If you’re borrowing money or guaranteeing a loan and need independent legal advice we can help

	What we offer You’ll need to arrange an appointment for us to review your documents. If everything’s in order we will issue a certificate to the lender. Please bring: all of the documents that the lender has sent to you including brochures; and photo identification It is very important that you do not sign any documents before the consultation.
	Fixed price $319 If more than 1 person needs advice about the same transaction, we charge $99 for each additional person. Additional charges may apply if you require an interpreter. You must pay by cash, eftpos, visa or mastercard at the time of the consultation.
	Things you should know How to find us Initial consultations are held at our offices during business hours.  Contact us for our street address, location map and details of parking arrangements.  If necessary, we offer consultations after hours, at your premises or by telephone - additional  charges apply. Before the consultation We will ask you to complete a capture sheet with your personal and business contact details and similar details for other parties involved in the matter. We need this information to maintain the integrity of our records protect you and the public generally against the possibility of fraud and to ensure that we do not have a conflict of interest that would preclude us from acting for you.
	Make an appointment Arrange an appointment now: Telephone 9220 4435 (1800 018 845 freecall from regional Western Australia) during business hours.  You could save time at the consultation by completing our SGC Consultation Form (PDF document) and bringing it with you to the consultation.

Why you might need a solicitor's certificate 

You wish to be a guarantor of a loan

• Some guarantors have been able to avoid their obligations under a guarantee as a result of, for example, claiming that they did not know what they were signing, or that they were forced to sign a guarantee. As a result, many lenders now require guarantors to obtain independent legal advice and a solicitor's certificate, or a solicitor to act for and be the witness of the guarantor.

You are borrowing funds that are repayable upon your death

• Some lenders now offer loans to senior citizens which are only repayable upon the death of the borrower, the sale of the property over which the loan is secured, or in other limited circumstances. Such lenders may require the borrower to obtain a solicitor's certificate of independent legal advice prior to advancing the funds.

The implications of being a Guarantor?

Before you sign any documents as a guarantor, you need to understand that:

• if you don't want to borrow the money yourself, don't go guarantor - because you will be the person paying if the borrower is unable or unwilling for any reason to do so; and

• giving a guarantee or an indemnity involves considerable risk. This risk includes losing property and other assets. Giving a guarantee requires very careful consideration.

Things you should know about being a Guarantor

To illustrate the rights and responsibilities of being a guarantor, we’ll use an example.

Your son Adam is borrowing $300,000 from Big Bank to buy a house. A condition of the loan is that you sign a Guarantee. Adam’s also getting a personal loan and credit card with Big Bank.

1. It may be a condition of Adam’s loan, but the decision to sign or not sign the Guarantee is yours alone. Read Adam’s loan documents with Big Bank. Ask Adam how he proposes to repay the loan. Read the implications of being a Guarantor (above) again.

2. By signing the Guarantee you accept responsibility for Adam’s debt to Big Bank. As the amount of Adam’s debt varies so does the amount for which you are responsible, but not beyond any maximum amount stated in the Guarantee.

3. Which of Adam’s debts to Big Bank are you guaranteeing? Don’t assume it’s just Adam’s home loan. The Guarantee may extend to the personal loan and credit card or any future loan from Big Bank to Adam. Read the Guarantee and find out.

Adam says “in a few years, when the value of my home has increased, I’ll refinance the loan and release you from the Guarantee.”

1. Don’t rely on any statement about the guarantee, unless it’s in writing from Big Bank.

2. Don’t rely on Adam’s promise. Leaving aside Adam’s optimism about his property value, you are liable under the Guarantee until Adam has repaid all amounts due to Big Bank under his loan – ie the $300K, interest and any costs or expenses due to Big Bank

3. You are liable under the Guarantee even though you do not have any control over the use Adam makes of the loan funds. In a few years time, Adam may decide to use the equity in his home to invest, rather than refinancing to release you from the Guarantee.

Many years ago you took out a mortgage with Big Bank to buy your house. You’ve almost paid off the mortgage. You’re thinking about taking out a second mortgage with Big Bank to buy some shares.

1. Beware! The existing mortgage you have, and the second mortgage you’re contemplating, may operate to secure the monies for which you are responsible under the Guarantee. If so, Big Bank has the right to sell your house if you are liable to pay under the Guarantee. Furthermore, your ability to borrow further funds secured against your home may be affected.

Then good times go bad. Adam’s business goes bankrupt and he fails to make payments under his home loan. To your surprise Big Bank immediately gives you a demand under the Guarantee. But doesn’t Big Bank have to sell Adam’s house first?

1. No. The Guarantee you signed was both a guarantee and an indemnity. In other words, you promised to make good any loss Big Bank suffered as a result of its loan to Adam, regardless of any rights Big Bank may have to recover the money from Adam or from any other guarantors. That loss includes the debt itself, interest, default interest and any costs Big Bank incurs recovering the debt.

2. If you pay Adam’s debt, the law gives you the right to sue Adam for the amount paid. If Adam is bankrupt, this right may not produce any money for you.

3. If you fail to pay Adam’s debt Big Bank may elect to sue you personally or sell any real estate over which it has a mortgage that is security for the guarantee. If the proceeds of sale of the property are insufficient to satisfy the debt, Big Bank may sue you for the shortfall.