Banks have an obligation to practice responsible lending. Sometimes, when giving a loan or accepting a personal guarantee, your bank will ask you to get legal advice about the loan and their effect.
The bank will ask your lawyer to provide them with evidence that you have obtained independent legal advice. This means that the bank can lend to you, or accept a personal guarantee from you, and be confident that you understand exactly what your obligations are.
What will my lawyer do?
We often get enquiries from people saying that they just need a lawyer to witness something. It can be very frustrating to turn up to your lawyer’s office with your documents to find that your lawyer will not sign them!
For loan and guarantee documents, your lawyer needs to do a lot more than just witness some forms. Your lawyer is certifying that they have given you legal advice about the documents and their effect. This means that your lawyer needs to:
- Read the documents carefully.
- Understand what the loan or guarantee is for, and who is benefitting from it.
- Make sure that the loan documents comply with any special rules (for example, superannuation fund borrowing rules).
- Review the security that you are providing, and make sure you understand the consequences to you and your family if there is a breach of the loan agreement.
- Meet with you in person to explain the documents and their effect to you.
- Comply with any professional rules and regulations that apply to lawyers when giving this kind of advice.
What can I do to speed up the process?
Chances are that you – or someone you care about – are in the middle of a large, exciting, or time sensitive transaction when you need one of these certificates signed.
Here is what you can do to avoid delays.
Give the documents to your lawyer as soon as you can.
These documents can be long and complex. It may take your lawyer a few hours to read everything. Depending on how busy your lawyer is, they might not be able to read the documents as soon as you send them in. Getting the documents to your lawyer early is the most important thing you can do to speed up the matter.
Provide Context
Your lawyer will need to understand the context of the loan and the guarantee. Often, the bundle of documents your bank provides will have all related documents in it, such as copies of trust deeds or related agreements. If they do not, then you should make sure your lawyer also has these.
Who is your lawyer advising?
If there is more than one borrower or guarantor, make sure your lawyer knows who they are advising. Depending on the circumstances, your lawyer might not be able to act for everyone.
Bring everything to your meeting!
When you come to your meeting, your lawyer will ask to see a copy of your ID. Your bank might also ask your lawyer to provide them with a certified copy of your ID.
You should bring your passport and a photo ID card (such as a driver licence) with you to your meeting. If you do not have a current passport, you should bring a birth certificate (or citizenship certificate) and a Medicare card instead.
What does it cost?
Legal costs will vary depending on the complexity of the documents, the number of people involved, and the bank’s requirements.
Once you have provided a copy of your loan and guarantee documents, we will be able to provide you with a fee estimate for your matter.
If you need someone to provide independent advice for a loan or a personal guarantee, contact us at either our Canberra or Queanbeyan office and ask to speak to one of our experienced commercial or property lawyers.
Further reading
elringtons lawyers regularly provide legal advice in relation to a range of commercial matters. Please contact our Business and Commercial Team for more information or to make an appointment call (02) 6206 1300
