If you are a borrower, guarantor or lender, you may be required to seek independent legal advice before signing loan or mortgage documents. Loan and mortgage documents often require an Independent Solicitors’ Certificate to prove that you have received legal advice from a solicitor before signing the documents.
If you need to execute mortgage documents, it is important to be aware that this process involves more than a simple signature.
What is a mortgage?
A mortgage is a type of security for a loan used to purchase a property. There are a number of parties involved in this form of legal agreement.
- A lender loans funds to the person or business wishing to purchase the property with the expectation that the funds will be repaid.
- A borrower receives funds from the lender with the promise of repayment.
- If a borrower defaults on their loan, a guarantor agrees to repay the borrowers’ debt.
Why do I need independent legal advice to sign mortgage documents?
A lender may request an Independent Solicitors’ Certificate to confirm that the terms of the mortgage and loan have been explained to, and understood by, the borrower or guarantor. It is the solicitor’s responsibility to advise the signatory of the conditions of the mortgage and loan to ensure that all parties comply with their obligations.
An Independent Solicitors’ Certificate verifies that the borrower or guarantor has been informed of their liabilities, rights and obligations under the conditions of the loan agreement and mortgage.
What legal advice will my solicitor offer on mortgage documents?
Solicitors must comply with the Legal Profession Uniform Legal Practice (Solicitors) Rules 2015 when providing advice on loan and security documents.
Your solicitor should verify your identity and provide evidence of advice in the form of an approved Law Society of NSW declaration or acknowledgment.
Areas in which your solicitor may advise you include:-
- Interest and costs incurred by a borrower who fails to make regular payments on time;
- Potential legal action against a borrower or guarantor for non-compliance with the terms of the loan agreement. This may include possession and sale of the borrower or guarantor’s property to satisfy outstanding debts to the lender;
- A guarantor’s legal obligations in rectifying a borrower’s default.
N.B. Solicitors are not qualified to offer financial advice. You should ask a financial advisor or accountant about the financial aspects of the mortgage documents.
How can I prepare for an appointment with my solicitor?
To avoid any complications when executing your mortgage documents, we recommend that you:-
- Familiarise yourself with your loan or guarantee documents;
- Provide your solicitor with copies of the documents before your appointment.
- Explain the relevancy of the documents to all parties involved.
- Prepare a list of any questions you have for your solicitor before signing the documents.
Mid Mountains Legal – here to help
Becoming a borrower or guarantor can be a risky process if you are not aware of your rights and obligations. Contact us for independent legal advice on your mortgage documents.
