Legal Information Sheet - Independent Solicitor's Certificate (for Guarantors and Borrowers)

If a lender thinks a borrower may not be able to repay a loan they will ask for a guarantee.  A guarantor is someone who signs a contract, called a guarantee, with a lender. Under the contract, the guarantor promises to repay the loan (or part of the loan) if the borrower is unable to pay. 

Generally the guarantee covers the whole loan but it can be limited to only part of the loan. The guarantee could be for a fixed amount, or "all monies", that is, the total amount owing now and in the future, for example, for a loan with a line of credit the amount guaranteed could be increasing. It could have a specific payback time, or have no specific time, for example, an overdraft, and is generally for an amount which would include the lender's enforcement costs/legal fees.

The lender can take possession of, or sell, any of the assets of the guarantor that have been listed as security to repay the debt, for example, their house.

You should get both independent legal and financial advice before signing a guarantee, and an Independent Solicitor's Certificate is nowadays increasingly required by a lender to be provided by a person(s) who is acting as a third party guarantor, surety mortgagor, or indemnifier for a principal borrower, or co-borrower (for example, if you are 'going guarantor' on a home loan for one of your children). It is crucially important to know your liabilities in such an arrangement, and there are requirements under legislation in the process of issuing an Independent Solicitor's Certificate as to the information that a prospective guarantor/borrower must be provided.

Springdale Legal provides this advice and prepares Independent Solicitor's Certificates in compliance with lenders' requirements for clients throughout Western Australia. This process can be completed remotely in some circumstances.