Independent Advice Certificate

Independent Advice Certificate

It is becoming increasingly common for banks and other lenders to require borrowers or guarantors to obtain independent legal advice about their rights and obligations. Generally, these lenders will require that the solicitor providing the advice gives the lender an Independent Advice Certificate which certifies certain things.

What type of things need to be certified?

Depending on the lender, Independent Advice Certificates generally require that the solicitor certify that they have:

  • explained the nature and effect of the relevant documents to the borrower or guarantor (as the case may be);
  • advised the borrower or guarantor that they should carefully consider the financial risks of entering into the transaction, or providing the guarantee (as the case may be);
  • advised the borrower or guarantor to make appropriate enquiries about things like the risks involved in the loan or guarantee (as the case may be) and the adequacy of any security being given by the borrower or others;
  • asked and received confirmation from the borrower or guarantor that they they had read the relevant documents and understood their general nature and effect, the solicitor’s advice and that they were entering into the transaction freely, voluntarily and without pressure.

What can’t the solicitor certify?

The solicitor will generally not express any opinion or advise on:

  • the viability of the relevant transaction;
  • the borrower’s ability to make required payments; or
  • the guarantor’s ability to make payments.

Why does the lender require this?

Many people consider that they understand their obligations as a borrower or a guarantor, and become frustrated by this increasingly common requirement.  There are a number of cases in Australia that have resulted in loans and guarantees being set aside due to borrowers and/or guarantors failing to understand the consequences of the transaction.

Following the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry it is likely that lenders’ requirements in  this area will only increase.

What is involved in providing an Independent Advice Certificate

The provision of a certification as required by a lender is a serious obligation on a solicitor, and requires not only that the solicitor read voluminous and complex transaction documents, but that they explain those documents in a way allowing the borrower/guarantor to understand them.  The Queensland Law Society indicates that for a standard matter the time taken is generally between 1 -2 hours, while for more complex matters additional time should be taken.

Because of the risks and complexity involved, many solicitors refuse to provide these certificates, and they are generally not the type of things that can be done on very short notice.

Can Ballantyne Law Group provide an Independent Advice Certificate?

Ballantyne Law Group is experienced in providing independent advice certificates in a range of matters involving the major and other lenders.  We are usually able to provide a fixed fee for this work, and our costs generally start at $770.00 (including GST) for a standard independent advice certificate.

If you have been asked to procure an independent advice certificate, please contact us (please book a free telephone consultation with one of our lawyers) to arrange a time to discuss and we can provide you with a fixed quote and timeframe.

Call us on (07) 5606 7332 if you have any questions.

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