In this article, we provide background on what solicitors certificates are and explain how to obtain them.
Whether you are taking out a loan for property purchase, refinance or acting as a guarantor in a commercial context, we can advise you on the risks and obligations of borrowers and guarantors to help safeguard your interests and provide better certainty.
Our lawyers based in Melbourne are experienced in providing solicitors certificates and ensure the process is prompt and streamlined to help you get on with securing your finance for your home finance, next project or business matter.
What is a solicitors certificate?
A solicitors certificate is a certificate that confirms that a person has received independent legal advice regarding the potential risks and liabilities prior to signing loan and security documents.
In short, solicitors certificates help:
- ensure the borrower or guarantor is aware and understands the risks and obligations associated with entering into the loan or guarantee;
- verifies the identity of the borrower or guarantor in person; and
- confirm that the borrower or guarantor has sought and received independent legal advice.
This process is not merely just a matter of a solicitor witnessing the borrower sign a loan agreement.
The solicitor will carefully review the loan documents or guarantee and indemnity to review and understand their contents before setting up a face-to-face interview with the borrower or guarantor.
Solicitors certificates explained
Lenders (typically a bank, credit union or private lender) will require you to sign a loan agreement that sets out:
- the terms and conditions for the loan;
- repayment of the loan;
- how interest will be charged and paid;
- what happens if the borrower is late making loan repayments or interest payments; and
- indemnities and liabilities.
Lenders also often require borrowers and guarantors (as the case may be) to obtain solicitors certificates prior to providing finance to ensure the borrower understands the potential risks and their obligations as a borrower or guarantor and also confirm that the borrower/ guarantor has obtained legal advice, and enter into the loan agreement or guarantee and indemnity freely, voluntarily and without pressure from the lender or another person.
The solicitor is required by law to verify your identity to ensure that the person they are interviewing is the same as the person named in the loan agreement or warranty and indemnity.
The solicitor certificate process effectively passes the risk from the lender to the solicitor who provides the certificates.
These processes must be completed prior to signing the loan documents.
What is a guarantee and indemnity?
A guarantee and indemnity are often required by a lender to reduce its credit risk and entitle it to demand payment from a guarantor if the borrower is unable to meet its obligations under the loan agreement.
A guarantee means that another person is liable for the same obligations as the borrower. It provides to lender with further protection if the borrower cannot meet its obligations or defaults. This means the guarantor effectively steps in the shoes of the borrower and takes over the borrower’s risks and obligations.
The indemnity provides that the guarantor will provide compensation to the lender for its economic losses. This may include repayment of the principal loan amount, interest, legal and court fees, collection costs and other charges and taxes, as set out in the specific guarantee and indemnity document.
What solicitors certificates don’t provide?
It is important to note that during the meeting with the solicitor, the solicitor does not express any opinion nor advise the borrower or guarantor in respect of the:
- viability of the transaction to which the loan relates;
- borrower’s ability to make payments to the lender; and
- the guarantor’s ability to make payment to the lender or the solicitor.
Should you have any doubt regarding the above, or require advice regarding your financial matters more generally, you should obtain independent financial advice before entering into a loan agreement or acting as a guarantor.
How can I obtain a solicitors certificate?
In Victoria, to obtain a solicitors certificate, you must engage a solicitor to review the loan agreement and/ or guarantee and indemnity documents and attend a face-to-face meeting with the solicitor.
At the meeting, the solicitor will advise the borrower or guarantor of the contents of the loan or guarantee and indemnity documents and then ‘interview’ the borrower or guarantor concerning the general nature of the documents and the inherent risks and obligations entailed in entering inter such arrangements with a lender.
Once the interview component concludes, assuming all the requisite formalities have been met, the solicitor will issue the solicitors certificates. The borrower can then sign the loan agreement or guarantee and indemnity, as the case may be.
How much do solicitors certificates cost?
The cost of obtaining solicitors certificates varies, depending on:
- the number of documents required to be reviewed;
- whether a trust deed needs to be reviewed;
- company searches;
- the number of parties involved in the borrower entity (eg if the borrower is a company);
- when and where the meeting takes place.
Contact us now to obtain a fixed fee proposal.
What do I need to provide?
Before the meeting with the solicitor can occur, a client must send us:
- copies of all relevant documents provided by the lender;
- copies of your personal identification documents (eg drivers licence and passport); and
- schedule a time to meet with us face-to-face.
The client must also bring the originals of the same personal identification documents to the face-to-face meeting.
Benefits of engaging Art & Commerce
Our lawyers based in Melbourne are experienced in providing solicitors certificates in Melbourne. You can be assured the review of your loan documents, your interview and the preparation of your letter of advice will all be completed by a lawyer, not a student or an admin assistant.
We are also flexible and can work around your schedule, even meeting with you outside of business hours if that assists you.
We are a fixed-fee firm. This means you will know the cost upfront before engaging us.
Contact us now to discuss your matter.
What related services do Art & Commerce provide?
As a commercial law firm based in Melbourne, we provide a range of related legal services to our clients, including:
- Drafting loan agreements on behalf of private lenders (eg inter-company or parent to child)
- Financial assistance ‘white wash process’ documents for company loans to shareholders/ share purchasers.
- Sale or purchase of business/ asset sale agreements and matter conduct from ‘heads of agreement’ stage through to completion.
- Share and unit sale/ transfer agreements and formalities documents.
- Shareholder and unitholder agreements
- Corporate power of attorney documentation
- Company secretary services
- Personal law (wills and estates, binding financial agreements, binding power of attorney and medical decision-maker forms)
- General commercial law
- Intellectual property law
Next steps
Should you require assistance with solicitors certificates in Melbourne, either email us or book a free 15-minute consult via our website so we can discuss our fees and availability.
Disclaimer
The information in this article is general in nature, does not constitute legal advice and should not be treated as such. You must not rely on this information as an alternative to legal advice from a qualified lawyer.